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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
NETWORK APPLIANCE, INC.
AND
INTERNET MIDDLEWARE CORPORATION
MARCH 17, 1997
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing; Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Articles of Incorporation; Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Surrender of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 No Further Ownership Rights in Target Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.8 Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.9 Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.10 Exemption from Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.11 Taking of Necessary Action; Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF TARGET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.8 Restrictions on Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.9 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.10 Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.11 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.15 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.16 Interested Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.18 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.19 Minute Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.20 Complete Copies of Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.21 Brokers' and Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.22 Information Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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2.23 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.24 Board Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.25 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.26 Representations Complete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACQUIROR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.1 Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.4 SEC Documents; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.5 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.8 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.9 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.10 Broker's and Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.11 Information Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.12 Continuity of Business Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.13 Representations Complete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1 Conduct of Business of Target and Acquiror . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.2 Conduct of Business of Target . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.3 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.1 Preparation of Information Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.2 Written Consent of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.3 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.5 Public Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.6 Consents; Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.7 Shareholder Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.8 FIRPTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.9 Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.10 Blue Sky Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.12 Form S-8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.13 Listing of Additional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.14 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.15 Stock Option Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.16 Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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5.17 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.18 Reasonable Commercial Efforts and Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VI CONDITIONS TO THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.1 Conditions to Obligations of Each Party to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . 34
6.2 Additional Conditions to Obligations of Target . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.3 Additional Conditions to the Obligations of Acquiror . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.3 Expenses and Termination Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.4 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.5 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VIII GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.1 Non-Survival at Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.6 Entire Agreement; Nonassignability; Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.8 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.10 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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SCHEDULES
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Schedule 2.2 - Capital Structure
Schedule 2.7 - Litigation
Schedule 2.10 - Real Property
Schedule 2.11 - Intellectual Property
Schedule 2.13 - Taxes
Schedule 2.14 - Employee Benefit Plans
Schedule 2.14(e) - Acceleration of Benefits
Schedule 2.15 - Employee Matters
Schedule 2.16 - Interested Party Transactions
Schedule 2.20 - Material Agreements
Schedule 3.1 - Acquiror Capitalization
Schedule 4.1 - Conduct of Business of Target and Acquiror
Schedule 5.7 - Target Affiliates
Schedule 5.11 - Outstanding Target Options
Schedule 5.14 - Employees
Schedule 5.17 - Expenses
Schedule 6.3(c) - Consents
EXHIBITS
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Exhibit A - Agreement of Merger
Exhibit B - Shareholder Agreement
Exhibit C - FIRPTA Notice
Exhibit D-1, et seq. - Form of Employment and Non-Competition Agreement
Exhibit E - Stock Option Agreement
Exhibit F - Form of Tax Opinions
Exhibit G - Form of Acquiror's Legal Opinion
Exhibit H - Form of Target's Legal Opinion
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
made and entered into as of March 17, 1997, by and between Network Appliance,
Inc., a California corporation ("Acquiror") and Internet Middleware
Corporation, a California corporation ("Target").
RECITALS
A. The Boards of Directors of Target and Acquiror believe it is
in the best interests of their respective companies and the shareholders of
their respective companies that Target and Acquiror combine into a single
company through the statutory merger of Target with and into Acquiror (the
"Merger") and, in furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, all of the
outstanding shares of Target common stock ("Target Capital Stock") shall be
converted into shares of Acquiror Common Stock ("Acquiror Common Stock"), at
the rate set forth herein.
C. Target and Acquiror desire to make certain representations and
warranties and other agreements in connection with the Merger.
D. The parties intend, by executing this Agreement, to adopt a
plan of reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"), and to cause the Merger to
qualify as a reorganization under the provisions of Section 368(a)(1)(A) of the
Code.
NOW, THEREFORE, in consideration of the covenants and representations
set forth herein, and for other good and valuable consideration, the parties
agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in
Section 1.2) and subject to and upon the terms and conditions of this
Agreement, the Agreement of Merger attached hereto as Exhibit A (the "Agreement
of Merger") and the applicable provisions of the California Corporations Code
("California Law"), Target shall be merged with and into Acquiror, the separate
corporate existence of Target shall cease and Acquiror shall continue as the
surviving corporation. Acquiror, as the surviving corporation after the
Merger, is hereinafter sometimes referred to as the "Surviving Corporation."
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1.2 Closing; Effective Time. The closing of the
transactions contemplated hereby (the "Closing") shall take place as soon as
practicable after the satisfaction or waiver of each of the conditions set
forth in Article VI hereof or at such other time as the parties hereto agree
(the "Closing Date"). The Closing shall take place at a location to be
mutually agreed upon by the parties. In connection with the Closing, the
parties hereto shall cause the Merger to be consummated by filing the Agreement
of Merger with the Secretary of State of the State of California in accordance
with the relevant provisions of California Law (the time of such filing being
the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in this Agreement, the Agreement of
Merger and the applicable provisions of California Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
the property, rights, privileges, powers and franchises of Target shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Target
shall become the debts, liabilities and duties of the Surviving Corporation.
1.4 Articles of Incorporation; Bylaws.
(a) At the Effective Time, the Restated Articles
of Incorporation (the "Articles of Incorporation") of Acquiror, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
of the Surviving Corporation until thereafter amended as provided by California
Law and such Articles of Incorporation.
(b) The Bylaws of Acquiror, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 Effect on Capital Stock. By virtue of the Merger and
without any action on the part of Acquiror or Target or the holders of any of
the following securities:
(a) Conversion of Target Common Stock. At the
Effective Time, each share of Target Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of Target Common
Stock to be canceled pursuant to Section 1.5(b)) will be canceled and
extinguished and be converted automatically into the right to receive that
number of shares of Acquiror Common Stock obtained by dividing $1.3569 by the
average of the closing prices of Acquiror's Common Stock as quoted on the
Nasdaq National Market for the ten trading days immediately preceding (and
including) the second trading day prior to the Closing (the "Closing Price"),
provided that, if the Closing Price is less than thirty-six dollars ($36.00)
per share, then the Closing Price shall be thirty-six dollars ($36.00) per
share, and, if the Closing Price is more than fifty-four dollars ($54.00) per
share, then the Closing Price shall be fifty-four dollars per share (the
"Exchange Ratio").
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(b) Target Stock Option Plan. At the Effective
Time, the Target's 1996 Long Term Equity Incentive Plan (the "Target Stock
Option Plan") and all options to purchase Target Common Stock then outstanding
under the Target Stock Option Plan (each a "Target Right") shall be assumed by
Acquiror in accordance with Section 5.12.
(c) Adjustments to Exchange Ratio. The Exchange
Ratio shall be adjusted to reflect fully the effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into Acquiror Common Stock or Target Capital Stock),
reorganization, recapitalization or other like change with respect to Acquiror
Common Stock or Target Capital Stock.
(d) Fractional Shares. No fraction of a share of
Acquiror Common Stock will be issued, but in lieu thereof each holder of shares
of Target Capital Stock who would otherwise be entitled to a fraction of a
share of Acquiror Common Stock (after aggregating all fractional shares of
Acquiror Common Stock to be received by such holder) shall receive from
Acquiror an amount of cash (rounded to the nearest whole cent) equal to the
product of (i) such fraction, multiplied by (ii) the Closing Price.
(e) Dissenters' Rights. Any dissenting shares as
defined by Section 1300 of California Law ("Dissenting Shares") shall not be
converted into Acquiror Common Stock but shall instead be converted into the
right to receive such consideration as may be determined to be due with respect
to such Dissenting Shares pursuant to California Law. Target agrees that,
except with the prior written consent of Acquiror, or as required under
California Law, it will not voluntarily make any payment with respect to, or
settle or offer to settle, any such purchase demand. Each holder of Dissenting
Shares ("Dissenting Shareholder") who, pursuant to the provisions of California
Law, becomes entitled to payment for shares of Target Capital Stock shall
receive payment therefor (but only after the value therefor shall have been
agreed upon or finally determined pursuant to such provisions). If, after the
Effective Time, any Dissenting Shares shall lose their status as Dissenting
Shares, Acquiror shall issue and deliver, upon surrender by such shareholder of
certificate or certificates representing shares of Target Capital Stock, the
number of shares of Acquiror Common Stock to which such shareholder would
otherwise be entitled under this Section 1.5 and the Agreement of Merger.
1.6 Surrender of Certificates.
(a) Exchange Agent. The Xxxxxx Trust Company of
California shall act as exchange agent (the "Exchange Agent") in the Merger.
(b) Acquiror to Provide Common Stock and Cash.
Promptly after the Effective Time, Acquiror shall make available to the
Exchange Agent for exchange in accordance with this Article I, through such
reasonable procedures as Acquiror may adopt, (i)
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the shares of Acquiror Common Stock issuable pursuant to Section 1.5(a) in
exchange for shares of Target Capital Stock outstanding immediately prior to
the Effective Time and (ii) cash in an amount sufficient to permit payment of
cash in lieu of fractional shares pursuant to Section 1.5(d).
(c) Exchange Procedures. Promptly after the
Effective Time, the Surviving Corporation shall cause to be mailed to each
holder of record of a certificate or certificates (the "Certificates") which
immediately prior to the Effective Time represented outstanding shares of
Target Capital Stock, whose shares were converted into the right to receive
shares of Acquiror Common Stock (and cash in lieu of fractional shares)
pursuant to Section 1.5, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon receipt of the Certificates by the Exchange Agent, and
shall be in such form and have such other provisions as Acquiror may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Acquiror
Common Stock (and cash in lieu of fractional shares). Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Acquiror, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing the number of whole
shares of Acquiror Common Stock and payment in lieu of fractional shares which
such holder has the right to receive pursuant to Section 1.5, and the
Certificate so surrendered shall forthwith be canceled. Until so surrendered,
each outstanding Certificate that, prior to the Effective Time, represented
shares of Target Capital Stock will be deemed from and after the Effective
Time, for all corporate purposes, other than the payment of dividends, to
evidence the ownership of the number of full shares of Acquiror Common Stock
into which such shares of Target Capital Stock shall have been so converted and
the right to receive an amount in cash in lieu of the issuance of any
fractional shares in accordance with Section 1.5.
(d) Distributions With Respect to Unexchanged
Shares. No dividends or other distributions with respect to Acquiror Common
Stock with a record date after the Effective Time will be paid to the holder of
any unsurrendered Certificate with respect to the shares of Acquiror Common
Stock represented thereby until the holder of record of such Certificate shall
surrender such Certificate. Subject to applicable law, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Acquiror Common Stock issued in
exchange therefor, without interest, at the time of such surrender, the amount
of any such dividends or other distributions with a record date after the
Effective Time theretofore payable (but for the provisions of this Section
1.6(d)) with respect to such shares of Acquiror Common Stock.
(e) Transfers of Ownership. If any certificate
for shares of Acquiror Common Stock is to be issued in a name other than that
in which the Certificate surrendered in
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exchange therefor is registered, it will be a condition of the issuance thereof
that the Certificate so surrendered will be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange will have
paid to Acquiror or any agent designated by it any transfer or other taxes
required by reason of the issuance of a certificate for shares of Acquiror
Common Stock in any name other than that of the registered holder of the
Certificate surrendered, or established to the satisfaction of Acquiror or any
agent designated by it that such tax has been paid or is not payable.
(f) No Liability. Notwithstanding anything to
the contrary in this Section 1.6, none of the Exchange Agent, the Surviving
Corporation or any party hereto shall be liable to any person for any amount
properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(g) Dissenting Shares. The provisions of this
Section 1.6 shall also apply to Dissenting Shares that lose their status as
such, except that the obligations of Acquiror under this Section 1.6 shall
commence on the date of loss of such status and the holder of such shares shall
be entitled to receive in exchange for such shares the number of shares of
Acquiror Common Stock to which such holder is entitled pursuant to Section 1.5
hereof.
1.7 No Further Ownership Rights in Target Capital Stock.
All shares of Acquiror Common Stock issued upon the surrender for exchange of
shares of Target Capital Stock in accordance with the terms hereof (including
any cash paid in lieu of fractional shares) shall be deemed to have been issued
in full satisfaction of all rights pertaining to such shares of Target Capital
Stock and there shall be no further registration of transfers on the records of
the Surviving Corporation of shares of Target Capital Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
1.8 Lost, Stolen or Destroyed Certificates. In the event
any Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof, such shares of
Acquiror Common Stock (and cash in lieu of fractional shares) as may be
required pursuant to Section 1.5; provided, however, that Acquiror may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against Acquiror, the Surviving Corporation or the Exchange Agent with respect
to the Certificates alleged to have been lost, stolen or destroyed.
1.9 Tax Consequences. It is intended by the parties
hereto that the Merger shall constitute a reorganization within the meaning of
Section 368 of the Code.
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1.10 Exemption from Registration. The shares of Acquiror
Common Stock to be issued in connection with the Merger will be issued in a
transaction exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act"), by reason of Section 4(2) thereof. Acquiror
shall use commercially reasonable efforts to prepare and file, as promptly as
practicable, and, in any event, within 45 days following the Closing, a
registration statement with the Securities and Exchange Commission covering the
resale of such shares of Acquiror Common Stock issued in connection with the
Merger and Acquiror shall use commercially reasonable efforts to cause such
registration statement to become effective as promptly as practicable after
filing and to keep such registration statement effective until two (2) years
after the Effective Time. Any such registration shall be subject to the normal
terms and conditions used in connection with resale prospectuses. Pursuant to
the filing of a registration statement pursuant to this Article I:
(a) Acquiror will indemnify each holder of shares
of Acquiror Common Stock issued in connection with the Merger (a "Holder"),
each of Target's officers, directors and partners and such Target's legal
counsel and independent accountants, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they are
made, not misleading, or any violation by Acquiror of any rule or regulation
promulgated under the Securities Act, or state securities laws, or common law,
applicable to Acquiror in connection with any such registration, qualification
or compliance, and will reimburse each such Holder, each of Target's officers,
directors and partners and such Target's legal counsel and independent
accountants, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action as such expenses
are incurred, provided that Acquiror will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based in any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to Acquiror in an instrument duly executed by such Holder or
underwriter and stated to be specifically for use therein.
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(b) Each Holder will, if securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify Acquiror, each of
Acquiror's directors and officers and its legal counsel and independent
accountants, each underwriter, if any, of Acquiror's securities covered by such
a registration statement, each person who controls Acquiror or such underwriter
within the meaning of Section 15 of the Securities Act, and each other such
Holder, each of Target's officers and directors and each person controlling
such other Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) or a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
Acquiror, such other Holders, such directors, officers, legal counsel,
independent accountants, underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action as such expenses
are incurred, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to Acquiror by an instrument duly executed by such Holder and stated
to be specifically for use therein; provided, however, that the obligations of
such Holders hereunder shall be limited to an amount equal to the proceeds
received by each such Holder from the sale of the Registrable Securities sold
as contemplated herein.
(c) Each party entitled to indemnification under
this Section 1.10 (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has written notice of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall
not be unreasonably withheld), and the Indemnified Party may participate in
such defense at such party's expense, and provided further that the failure of
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, except to the
extent, but only to the extent, that the Indemnifying Party's ability to defend
against such claim or litigation is impaired as a result of such failure to
give notice. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
7.
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(d) The indemnification obligations of Acquiror
and each Holder under this Section 1.10 shall survive the completion of any
offering of stock in a registration statement under this Section 1.10. It is
intended that each Holder shall be a third party beneficiary of the Company's
obligations set forth in this Section 1.10.
1.11 Taking of Necessary Action; Further Action. If, at
any time after the Effective Time, any further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of Target, the officers and directors
of Acquiror and Target are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action, so long as such action is not inconsistent with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TARGET
In this Agreement, any reference to any event, change,
condition or effect being "material" with respect to Target or Acquiror means
any material event, change, condition or effect related to the condition
(financial or otherwise), properties, assets (including intangible assets),
liabilities, business, operations or results of operations of Target or
Acquiror, respectively. In this Agreement, any reference to a "Material
Adverse Effect" with respect to Target or Acquiror means any event, change or
effect that is materially adverse to the condition (financial or otherwise),
properties, assets, liabilities, business, operations or results of operations
of Target or Acquiror, respectively.
In this Agreement, any reference to a party's "knowledge"
means such party's actual knowledge after due and diligent inquiry of officers,
directors and other employees of such party reasonably believed to have
knowledge of such matters.
Except as disclosed in a document of even date herewith and
delivered by Target to Acquiror prior to the execution and delivery of this
Agreement and specifically referring to the relevant section and subsection of
this Article II (the "Target Disclosure Schedule"), Target represents and
warrants to Acquiror as follows:
2.1 Organization, Standing and Power. Target is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of organization. Target has the corporate power to
own its properties and to carry on its business as now being conducted and as
proposed to be conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the failure to be so qualified and in
good standing would have a Material Adverse Effect on Target. Target has
delivered a true and correct copy of its Articles of Incorporation (the
"Articles of Incorporation") and its Bylaws,
8.
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each as amended to date, to Acquiror. Target is not in violation of any of the
provisions of its Articles of Incorporation or Bylaws or equivalent
organizational documents. Target does not directly or indirectly own any
equity or similar interest in, or any interest convertible or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
2.2 Capital Structure. The authorized capital stock of
Target consists of 25,000,000 shares of Common Stock, of which there were
issued and outstanding as of the close of business on March 14, 1997, 4,992,500
shares of Common Stock. There are no other outstanding shares of capital stock
or voting securities and no outstanding commitments to issue any shares of
capital stock or voting securities after March 14, 1997 other than pursuant to
the exercise of options outstanding as of such date under the Target Stock
Option Plan. All outstanding shares of Target Capital Stock are duly
authorized, validly issued, fully paid and non-assessable and are free of any
liens or encumbrances created by Target and, to Target's knowledge, free of any
other liens or encumbrances other than any liens or encumbrances created by or
imposed upon the holders thereof, and are not subject to preemptive rights or
rights of first refusal created by statute, the Articles of Incorporation or
Bylaws of Target or any agreement to which Target is a party or by which it is
bound. As of the close of business on March 14, 1997, Target has reserved (i)
10,000,000 shares of Common Stock for issuance to employees, officers,
directors and consultants pursuant to the Target Stock Option Plan, of which no
shares have been issued pursuant to option exercises, 424,290 shares are
subject to outstanding, unexercised options, and no shares are subject to
outstanding stock purchase rights. Since March 14, 1997, Target has not (i)
issued or granted additional options under the Target Stock Option Plan or (ii)
granted additional warrants or options to acquire Target Capital Stock. Except
as set forth in Schedule 2.2 and except for (i) the rights created pursuant to
this Agreement, (ii) Target's right to repurchase restricted shares or shares
issued upon the exercise of stock options granted under the Target Stock Option
Plan and (iii) options referred to in this Section 2.2, there are no other
options, warrants, calls, rights, commitments or agreements of any character to
which Target is a party or by which it is bound obligating Target to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of capital stock of Target or obligating
Target to grant, extend, accelerate the vesting of, change the price of, or
otherwise amend or enter into any such option, warrant, call, right, commitment
or agreement. Except as set forth in Schedule 2.2, there are no other
contracts, commitments or agreements relating to voting, purchase or sale of
Target's capital stock (i) between or among Target and any of its shareholders
and (ii) to Target's knowledge, between or among any of Target's shareholders,
except for the shareholders delivering Shareholder Agreement (as defined
below.) The terms of the Target Stock Option Plan permit the assumption or
substitution of options or warrants, as applicable, to purchase Acquiror Common
Stock as provided in this Agreement, without the consent or approval of the
holders of such securities, the Target shareholders, or otherwise and without
any acceleration of the exercise schedule or vesting provisions in effect for
those options. True and complete copies of all agreements and instruments
relating to or issued under the
9.
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Target Stock Option Plan have been made available to Acquiror and such
agreements and instruments have not been amended, modified or supplemented, and
there are no agreements to amend, modify or supplement such agreements or
instruments in any case from the form made available to Acquiror. All
outstanding Target Capital Stock was issued in compliance with all applicable
federal and state securities laws.
2.3 Authority. Target has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Target, subject only to the
approval of the Merger by Target's shareholders as contemplated by Section
6.1(a). This Agreement has been duly executed and delivered by Target and
constitutes the valid and binding obligation of Target enforceable against
Target in accordance with its terms, except that such enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
or relating to creditors' rights generally, and is subject to general
principles of equity. The execution and delivery of this Agreement by Target
does not, and the consummation of the transactions contemplated hereby will
not, conflict with, or result in any violation of, or default under (with or
without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (i) any provision of the Articles of Incorporation or Bylaws of
Target, or (ii) any material mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Target
or any of its properties or assets. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality ("Governmental Entity") is required by or with respect to
Target in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for (i) the filing
of the Agreement of Merger; (ii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under applicable state securities laws and the securities laws of any foreign
country; and (iii) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material Adverse
Effect on Target and would not prevent, or alter or delay any of the
transactions contemplated by this Agreement.
2.4 Financial Statements. Target has delivered to
Acquiror its unaudited financial statements for the months ended January 31,
1997 (collectively, the "Financial Statements"). The Financial Statements are
complete and correct in all material respects. The Financial Statements fairly
present the consolidated financial condition and operating results of Target at
the dates and during the periods indicated therein (subject, in the case of
unaudited statements, to normal, recurring year-end adjustments).
10.
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2.5 Absence of Certain Changes. Since January 31, 1997,
(the "Target Balance Sheet Date"), Target has conducted its business in the
ordinary course consistent with past practice and there has not occurred: (i)
any change, event or condition (whether or not covered by insurance) that has
resulted in, or is reasonably expected by Target to result in, a Material
Adverse Effect to Target; (ii) any acquisition, sale or transfer of any
material asset of Target other than in the ordinary course of business and
consistent with past practice; (iii) any change in accounting methods or
practices (including any change in depreciation or amortization policies or
rates) by Target or any revaluation by Target of any of its assets; (iv) any
declaration, setting aside, or payment of a dividend or other distribution with
respect to the shares of Target Capital Stock, or any direct or indirect
redemption, purchase or other acquisition by Target of any shares of Target
Capital Stock; (v) any material contract entered into by Target, other than in
the ordinary course of business and as provided to Acquiror, or any amendment
or termination of, or default under, any material contract to which Target is a
party or by which it is bound; (vi) any amendment or change to the Articles of
Incorporation or Bylaws of Target; (vii) any increase in or modification of the
compensation or benefits payable or to become payable by Target to any of its
directors or employees or (viii) any negotiation or agreement by Target to do
any of the things described in the preceding clauses (i) through (vii) (other
than negotiations with Acquiror and its representatives regarding the
transactions contemplated by this Agreement).
2.6 Absence of Undisclosed Liabilities. Target has no
material obligations or liabilities of any nature (matured or unmatured, fixed
or contingent) other than (i) those set forth or adequately provided for in its
Balance Sheet as of January 31, 1997 (the "Target Balance Sheet"), (ii) those
incurred in the ordinary course of business and not required to be set forth in
the Target Balance Sheet under generally accepted accounting principles, (iii)
those incurred in the ordinary course of business since the Target Balance
Sheet Date and consistent with past practice, and (iv) those incurred in
connection with the execution of this Agreement.
2.7 Litigation. To the knowledge of Target, there is no
private or governmental action, suit, proceeding, claim, arbitration or
investigation pending before any agency, court or tribunal, foreign or
domestic, or threatened against Target or any of its properties or any of its
officers or directors (in their capacities as such) that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect
on Target. There is no judgment, decree or order against Target or, to the
knowledge of Target, any of its directors or officers (in their capacities as
such), that could prevent, enjoin, alter or delay any of the transactions
contemplated by this Agreement, or that could reasonably be expected to have a
Material Adverse Effect on Target. To the knowledge of Target, all litigation
to which Target is a party (or threatened to become a party) is disclosed in
Schedule 2.7.
2.8 Restrictions on Business Activities. There is no
agreement, judgment, injunction, order or decree binding upon Target which has
or could reasonably be expected to have the effect of prohibiting or impairing
any current or future business practice of Target,
11.
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any acquisition of property by Target or the conduct of business by Target as
currently conducted or as proposed to be conducted by Target.
2.9 Governmental Authorization. Target has obtained each
federal, state, county, local or foreign governmental consent, license, permit,
grant, or other authorization of a Governmental Entity (i) pursuant to which
Target currently operates or holds any interest in any of its properties or
(ii) that is required for the operation of Target's business or the holding of
any such interest ((i) and (ii) herein collectively called "Target
Authorizations"), and all of such Target Authorizations are in full force and
effect, except where the failure to obtain or have any such Target
Authorizations could not reasonably be expected to have a Material Adverse
Effect on Target.
2.10 Title to Property. Target has good and marketable
title to all of its properties, interests in properties and assets, real and
personal, reflected in the Target Balance Sheet or acquired after the Target
Balance Sheet Date (except properties, interests in properties and assets sold
or otherwise disposed of since the Target Balance Sheet Date in the ordinary
course of business), or with respect to leased properties and assets, valid
leasehold interests in, free and clear of all mortgages, liens, pledges,
charges or encumbrances of any kind or character, except (i) the lien of
current taxes not yet due and payable, (ii) such imperfections of title, liens
and easements as do not and will not materially detract from or interfere with
the use of the properties subject thereto or affected thereby, or otherwise
materially impair business operations involving such properties and (iii) liens
securing debt which is reflected on the Target Balance Sheet. The plants,
property and equipment of Target that are used in the operation of its business
are taken as a whole in all material respects in good operating condition and
repair. All properties used in the operations of Target are reflected in the
Target Balance Sheet to the extent generally accepted accounting principles
require the same to be reflected. Schedule 2.10 identifies each parcel of real
property owned or leased by Target.
2.11 Intellectual Property.
(a) Except as set forth in Schedule 2.11, Target
owns, or is licensed or otherwise possesses legally enforceable rights to use
all patents, trademarks, trade names, service marks, copyrights, and any
applications therefor, maskworks, net lists, schematics, technology, know-how,
trade secrets, inventory, ideas, algorithms, processes, computer software
programs or applications (in both source code and object code form), and
tangible or intangible proprietary information or material ("Intellectual
Property") that are used or currently proposed to be used in the business of
Target as currently conducted or as currently proposed to be conducted by
Target, except to the extent that the failure to have such rights has not had
and would not reasonably be expected to have a Material Adverse Effect on
Target.
12.
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(b) Schedule 2.11 also lists (i) all patents and
patent applications and all registered and unregistered trademarks, trade names
and service marks, registered and unregistered copyrights, and maskworks,
included in the Intellectual Property, including the jurisdictions in which
each such Intellectual Property right has been issued or registered or in which
any application for such issuance and registration has been filed, (ii) all
licenses, sublicenses and other agreements to which Target is a party and
pursuant to which any person is authorized to use any Target Intellectual
Property, and (iii) all licenses, sublicenses and other agreements as to which
Target is a party and pursuant to which Target is authorized to use any third
party patents, trademarks or copyrights, including software ("Third Party
Intellectual Property Rights") which are incorporated in, are, or form a part
of any Target product.
(c) To the knowledge of Target, there is no
unauthorized use, disclosure, infringement or misappropriation of any
Intellectual Property rights of Target, any trade secret of Target, or any
Intellectual Property right of any third party to the extent licensed by or
through Target, by any third party, including any employee or former employee
of Target. Target has not entered into any agreement to indemnify any person
against any charge of infringement of any Intellectual Property, other than
indemnification provisions contained in sales invoices arising in the ordinary
course of business.
(d) Target is not, nor will it be as a result of
the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, in breach of any license, sublicense or other
agreement relating to the Intellectual Property or Third Party Intellectual
Property Rights, the breach of which would have a Material Adverse Effect on
Target.
(e) All patents, registered trademarks, service
marks and copyrights held by Target are valid and subsisting. Target (i) has
not to Target's knowledge been sued in any suit, action or proceeding which
involves a claim of infringement of any patents, trademarks, service marks,
copyrights or violation of any trade secret or other proprietary right of any
third party; and (ii) has not brought any action, suit or proceeding for
infringement of Intellectual Property or breach of any license or agreement
involving Intellectual Property against any third party. The manufacturing,
marketing, licensing or sale of Target's products does not infringe any patent,
trademark, service xxxx, copyright, trade secret or other proprietary right of
any third party, where such infringement would have a Material Adverse Effect
on Target.
(f) Target has secured valid written assignments
from all consultants and employees who contributed to the creation or
development of Target Intellectual Property of the rights to such contributions
that Target does not already own by operation of law, the absence of which
would have a Material Adverse Effect on Target.
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(g) All use, disclosure or appropriation of
Intellectual Property not otherwise protected by patents, patent applications
or copyright ("Confidential Information"), owned by Target by or to a third
party has been pursuant to the terms of a written agreement between Target and
such third party. All use, disclosure or appropriation of Confidential
Information not owned by Target has been pursuant to the terms of a written
agreement between Target and the owner of such Confidential Information, or is
otherwise lawful.
2.12 Environmental Matters.
(a) The following terms shall be defined as
follows:
(i) "Environmental and Safety Laws"
shall mean any federal, state or local laws, ordinances, codes, regulations,
rules, written policies and written orders that are intended to assure the
protection of the environment, or that classify, regulate, call for the
remediation of, require reporting with respect to, or list or define air,
water, groundwater, solid waste, hazardous or toxic substances, materials,
wastes, pollutants or contaminants, or which are intended to assure the safety
of employees, workers or other persons, including the public.
(ii) "Hazardous Materials" shall mean any
toxic or hazardous substance, material or waste or any pollutant or
contaminant, or infectious or radioactive substance or material, including
without limitation, those substances, materials and wastes regulated under any
Environmental and Safety Laws.
(iii) "Property" shall mean all real
property leased or owned by Target either currently or in the past.
(iv) "Facilities" shall mean all
buildings and improvements on the Property of Target.
(b) Target represents and warrants: (i) to
Target's knowledge, no methylene chloride or asbestos is contained in or has
been used at or released from the Facilities; (ii) to Target's knowledge, all
Hazardous Materials and wastes have been disposed of in accordance with all
applicable Environmental and Safety Laws; and (iii) Target has received no
written notice of any noncompliance of the Facilities or Target's past or
present operations with Environmental and Safety Laws; (iv) no notices,
administrative actions or suits are pending, or, to Target's knowledge,
threatened relating to a violation by Target of any Environmental and Safety
Laws; (v) to Target's knowledge, Target is not a potentially responsible party
under the federal Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), or state analog statute, arising out of events
occurring prior to the Closing Date; (vi) to Target's knowledge, there have not
been in the past, and are not now, any Hazardous Materials on, under or
migrating to or from the Facilities or Property;
14.
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(vii) to Target's knowledge, there have not been in the past, and are not now,
any underground tanks or underground improvements at, on or under the Property
including without limitation, treatment or storage tanks, sumps, or water, gas
or oil xxxxx; (viii) Target has not deposited, stored, disposed of or located
polychlorinated biphenyls (PCB) on the Property or Facilities or any equipment
on the Property containing PCBs at a level in excess of 50 parts per million;
(ix) to Target's knowledge, there is no formaldehyde on the Property or in the
Facilities, nor any insulating material containing urea formaldehyde in the
Facilities; (x) to Target's knowledge, the Facilities and Target's uses and
activities therein have at all times complied with all applicable Environmental
and Safety Laws; and (xi) Target has all the permits and licenses required to
be issued under all applicable Environmental and Safety Laws and is in full
compliance with the terms and conditions of those permits.
2.13 Taxes. Target, and any consolidated, combined or
unitary group for Tax purposes of which Target is or has been a member have
timely filed all Tax Returns required to be filed by them and have paid all
Taxes shown thereon to be due. The Financial Statements (i) fully accrue all
actual and contingent liabilities for Taxes with respect to all periods through
January 31, 1997 and Target has not and will not incur any Tax liability in
excess of the amount reflected on the Financial Statements with respect to such
periods, and (ii) properly accrue all liabilities for Taxes payable after
January 31, 1997 with respect to all transactions and events occurring on or
prior to such date. No material Tax liability since January 31, 1997 has been
incurred by Target other than in the ordinary course of business and adequate
provision has been made in the Financial Statements for all Taxes since that
date. Target has withheld and paid to the applicable financial institution or
Tax Authority all amounts required to be withheld. No notice of deficiency or
similar document of any Tax Authority has been received by Target, and there
are no liabilities for Taxes with respect to the issues that have been raised
(and are currently pending) by any Tax Authority that could, if determined
adversely to Target, materially and adversely affect the liability of Target
for Taxes. Target has received no notification of any audit of any Tax Return
of Target being conducted pending or threatened by a Tax authority. There is
(i) no material claim for Taxes that is a lien against the property of Target
other than liens for Taxes not yet due and payable, (ii) no extension or waiver
of the statute of limitations on the assessment of any Taxes granted by Target
and currently in effect, and (iii) except as set forth in Schedule 2.13, no
agreement, contract or arrangement to which Target is a party that may result
in the payment of any material amount that would not be deductible by reason of
Sections 280G or 404 of the Code. Except as set forth in Schedule 2.13, Target
will not be required to include any material adjustment in Taxable income for
any Tax period (or portion thereof) pursuant to Section 481 or 263A of the Code
or any comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Merger.
Target is not a party to any tax-sharing or tax allocation agreement nor does
Target owe any amount under any such agreement. For purposes of this
Agreement, "Tax" (and, with correlative meaning, "Taxes" and "Taxable") means
(i) any net income, alternative or add-on minimum tax, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
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21
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, environmental or windfall profit tax, custody duty or other
tax governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any Governmental Entity (a "Tax Authority") responsible for the
imposition of any such tax (domestic or foreign), (ii) any liability for the
payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group for any
Taxable period and (iii) any liability for the payment of any amounts of the
type described in (i) or (ii) as a result of any express or implied obligation
to indemnify any other person. As used herein, "Tax Return" shall mean any
return, statement, report or form (including, without limitation,) estimated
Tax returns and reports, withholding Tax returns and reports and information
reports and returns required to be filed with respect to Taxes. Target is in
full compliance with all terms and conditions of any Tax exemptions or other
Tax-sharing agreement or order of a foreign government applicable to them and
the consummation of the Merger shall not have any adverse effect on the
continued validity and effectiveness of any such Tax exemptions or other
Tax-sharing agreement or order. Target operates at least one historic business
line, or owns at least a significant portion of its historic business assets,
in each case within the meaning of Section 1.368-1(d) of the Treasury
Regulations.
2.14 Employee Benefit Plans.
(a) Schedule 2.14 lists, with respect to Target
and any trade or business (whether or not incorporated) which is treated as a
single employer with Target (an "ERISA Affiliate") within the meaning of
Section 414(b), (c), (m) or (o) of the Code, (i) all material employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), (ii) each loan to a non-officer employee in
excess of $10,000, loans to officers and directors and any stock option, stock
purchase, phantom stock, stock appreciation right, supplemental retirement,
severance, sabbatical, medical, dental, vision care, disability, employee
relocation, cafeteria benefit (Code section 125) or dependent care (Code
Section 129), life insurance or accident insurance plans, programs or
arrangements, (iii) all material bonus, pension, profit sharing, savings,
deferred compensation or incentive plans, programs or arrangements, (iv) other
material fringe or employee benefit plans, programs or arrangements that apply
to senior management of Target and that do not generally apply to all employees
and (v) any current or former employment or executive compensation or severance
agreements, written or otherwise, as to which unsatisfied obligations of Target
of greater than $10,000 remain for the benefit of, or relating to, any present
or former employee, consultant or director of Target (collectively, the "Target
Employee Plans").
(b) Target has furnished to Acquiror a copy of
each of the Target Employee Plans and related plan documents (including trust
documents, insurance policies or contracts, employee booklets, summary plan
descriptions and other authorizing documents,
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and, to the extent still in its possession, any material employee
communications relating thereto) and has, with respect to each Target Employee
Plan which is subject to ERISA reporting requirements, provided copies of the
Form 5500 reports filed for the last three plan years. Any Target Employee
Plan intended to be qualified under Section 401(a) of the Code has either
obtained from the Internal Revenue Service a favorable determination letter as
to its qualified status under the Code, including all amendments to the Code
effected by the Tax Reform Act of 1986 and subsequent legislation, or has
applied to the Internal Revenue Service for such a determination letter prior
to the expiration of the requisite period under applicable Treasury Regulations
or Internal Revenue Service pronouncements in which to apply for such
determination letter and to make any amendments necessary to obtain a favorable
determination, or has been established under a standardized prototype plan for
which an Internal Revenue Service opinion letter has been obtained by the plan
sponsor and is valid as to the adopting employer. Target has also furnished
Acquiror with the most recent Internal Revenue Service determination or opinion
letter issued with respect to each such Target Employee Plan, and nothing has
occurred since the issuance of each such letter which could reasonably be
expected to cause the loss of the tax-qualified status of any Target Employee
Plan subject to Code Section 401(a).
(c) (i) None of the Target Employee Plans
promises or provides retiree medical or other retiree welfare benefits to any
person; (ii) there has been no "prohibited transaction," as such term is
defined in Section 406 of ERISA and Section 4975 of the Code, with respect to
any Target Employee Plan, which could reasonably be expected to have, in the
aggregate, a Material Adverse Effect; (iii) each Target Employee Plan has been
administered in accordance with its terms and in compliance with the
requirements prescribed by any and all statutes, rules and regulations
(including ERISA and the Code), except as would not have, in the aggregate, a
Material Adverse Effect, and Target and each ERISA Affiliate has performed all
material obligations required to be performed by them under, are not in any
material respect in default under or violation of, and have no knowledge of any
material default or violation by any other party to, any of the Target Employee
Plans; (iv) neither Target nor any ERISA Affiliate is subject to any liability
or penalty under Sections 4976 through 4980 of the Code or Title I of ERISA
with respect to any of the Target Employee Plans; (v) all material
contributions required to be made by Target or any ERISA Affiliate to any
Target Employee Plan have been made on or before their due dates and a
reasonable amount has been accrued for contributions to each Target Employee
Plan for the current plan years; (vi) with respect to each Target Employee
Plan, no "reportable event" within the meaning of Section 4043 of ERISA
(excluding any such event for which the thirty (30) day notice requirement has
been waived under the regulations to Section 4043 of ERISA) nor any event
described in Section 4062, 4063 or 4041 or ERISA has occurred; and (vii) no
Target Employee Plan is covered by, and neither Target nor any ERISA Affiliate
has incurred or expects to incur any liability under Title IV of ERISA or
Section 412 of the Code. With respect to each Target Employee Plan subject to
ERISA as either an employee pension plan within the
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meaning of Section 3(2) of ERISA or an employee welfare benefit plan within the
meaning of Section 3(l) of ERISA, Target has prepared in good faith and timely
filed all requisite governmental reports (which were true and correct as of the
date filed) and has properly and timely filed and distributed or posted all
notices and reports to employees required to be filed, distributed or posted
with respect to each such Target Employee Plan. No suit, administrative
proceeding, action or other litigation has been brought, or to the knowledge of
Target is threatened, against or with respect to any such Target Employee Plan,
including any audit or inquiry by the IRS or United States Department of Labor.
Neither Target nor any ERISA Affiliate is a party to, or has made any
contribution to or otherwise incurred any obligation under, any "multiemployer
plan" as defined in Section 3(37) of ERISA.
(d) With respect to each Target Employee Plan,
Target has complied with (i) the applicable health care continuation and notice
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") and the proposed regulations thereunder and (ii) the applicable
requirements of the Family Leave Act of 1993 and the regulations thereunder,
except to the extent that such failure to comply would not, in the aggregate,
have a Material Adverse Effect.
(e) Except as set forth in Schedule 2.14(e)
either the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) entitle any current or former
employee, director, or other service provider of Target or any ERISA Affiliate
to severance benefits or any other payment (including, without limitation,
unemployment compensation, golden parachute or bonus), except as expressly
provided in this Agreement, or (ii) accelerate the time of payment or vesting
of any such benefits, or increase the amount of compensation due any such
employee, director, or service provider, or (iii) increase any benefits
otherwise payable by Target.
(f) There has been no amendment to, written
interpretation or announcement (whether or not written) by Target or any ERISA
Affiliate relating to, or change in participation or coverage under, any Target
Employee Plan which would materially increase the expense of maintaining such
Plan above the level of expense incurred with respect to that Plan for the most
recent fiscal year included in Target's financial statements.
2.15 Employee Matters. To Target's knowledge, Target is
in compliance in all material respects with all currently applicable laws and
regulations respecting employment, discrimination in employment, terms and
conditions of employment, wages, hours and occupational safety and health and
employment practices, and are not engaged in any unfair labor practice. There
are no pending claims against Target under any workers compensation plan or
policy or for long term disability. Target has no material obligations under
COBRA with respect to any former employees or qualifying beneficiaries
thereunder. To the knowledge of Target, there are no proceedings pending or
threatened, between Target and its employees, which proceedings have or could
reasonably be expected to have a Material
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Adverse Effect on Target. Target is not a party to any collective bargaining
agreement or other labor unions contract nor does Target know of any activities
or proceedings of any labor union or organize any such employees. In addition,
except as set forth in Schedule 2.15, Target has provided all employees with
all relocation benefits, stock options, bonuses and incentives, and all other
compensation that such employee has earned up through the date of this
Agreement or that such employee was otherwise promised in their employment
agreements with Target.
2.16 Interested Party Transactions. Except as set forth
in Schedule 2.16, Target is not indebted to any director, officer, employee or
agent of Target (except for amounts due as normal salaries and bonuses and in
reimbursement of ordinary expenses), and no such person is indebted to Target.
2.17 Insurance. Target has policies of insurance and
bonds of the type and in amounts described in Target's Disclosure Schedule.
There is no material claim pending under any of such policies or bonds as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds. All premiums due and payable under all such policies
and bonds have been paid and Target is otherwise in compliance with the terms
of such policies and bonds. Target has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
2.18 Compliance With Laws. To Target's knowledge, Target
has complied with, is not in violation of, and has not received any notices of
violation with respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for such violations or failures to comply as
could not be reasonably expected to have a Material Adverse Effect on Target.
2.19 Minute Books. The minute books of Target made
available to Acquiror contain a complete and accurate summary of all meetings
of directors and shareholders or actions by written consent since the time of
incorporation of Target through the date of this Agreement, and reflect all
transactions referred to in such minutes accurately in all material respects.
2.20 Complete Copies of Materials. Target has delivered
or made available true and complete copies of each document which has been
requested by Acquiror or its counsel in connection with their legal and
accounting review of Target. All the material contracts and agreements (as
such terms are defined in Regulation S-K promulgated under the Securities Act)
to which Target is a party are listed in Schedule 2.20 hereto.
2.21 Brokers' and Finders' Fees. Target has not incurred,
nor will it incur, directly or indirectly, any liability for brokerage or
finders' fees or agents' commissions or
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investment bankers' fees or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
2.22 Information Statement. The information supplied by
Target for inclusion in the information statement to be sent to the
shareholders of Target in connection with the Action by Written Consent of
Target's shareholders to consider the Merger (the "Written Consent") (such
information statement as amended or supplemented is referred to herein as the
"Information Statement") shall not, on the date the Information Statement is
first mailed to Target's shareholders, at the time of the Written Consent and
at the Effective Time, contain any statement which, at such time, is false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not false or misleading; or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of the Target Written Consent
which has become false or misleading. Notwithstanding the foregoing, Target
makes no representation, warranty or covenant with respect to any information
supplied by Acquiror which is contained in any of the foregoing documents.
2.23 Vote Required. The affirmative vote of the holders
of a majority of the shares of Target's Common Stock issued and outstanding are
the only votes of the holders of any of Target's Capital Stock necessary under
California law, Target's Articles of Incorporation and Bylaws, or any agreement
to which Target or any of its shareholders is a party, to approve this
Agreement and the transactions contemplated hereby.
2.24 Board Approval. The Board of Directors of Target has
(i) unanimously approved this Agreement and the Merger, (ii) determined that in
its opinion the Merger is in the best interests of the shareholders of Target
and (iii) recommended that the shareholders of Target approve this Agreement
and the Merger.
2.25 Assets. Target (i) is not engaged in manufacturing
and has total assets of less than ten million dollars ($10,000,000.00) and (ii)
has annual net sales or total assets of less than one hundred million dollars
($100,000,000.00).
2.26 Representations Complete. None of the
representations or warranties made by Target herein or in any Schedule or
Exhibit hereto, including the Target Disclosure Schedule, or certificate
furnished by Target pursuant to this Agreement or any written statement
furnished to Acquiror pursuant hereto or in connection with the transactions
contemplated hereby, when all such documents are read together in their
entirety, contains or will contain at the Effective Time any untrue statement
of a material fact, or omits or will omit at the Effective Time to state any
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading;
provided, however, that, for purposes of this representation, any document
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26
attached hereto and any document specifically referenced in the Target
Disclosure Schedule as a "Superseding Document" (even if not attached hereto)
that provides information inconsistent with or in addition to any other written
statement furnished to Acquiror in connection with the transaction contemplated
hereby, shall be deemed to supersede any other document or written statement
furnished to Acquiror with respect to such inconsistent or additional
information.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Except as disclosed in a document of even date herewith and
delivered by Acquiror to Target prior to the execution and delivery of this
Agreement and specifically referring to the relevant section and subsection of
this Article III (the "Acquiror Disclosure Schedule"), Acquiror represents and
warrants to Target as follows:
3.1 Organization, Standing and Power. Each of Acquiror
and its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Each of
Acquiror and its subsidiaries has the corporate power to own its properties and
to carry on its business as now being conducted and as proposed to be conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the failure to be so qualified and in good standing would
have a Material Adverse Effect on Acquiror. Acquiror has delivered a true and
correct copy of the Articles of Incorporation and Bylaws or other charter
documents, as applicable, of Acquiror, each as amended to date, to Target.
Neither Acquiror nor any of its subsidiaries is in violation of any of the
provisions of its Articles of Incorporation or Bylaws or equivalent
organizational documents. Except as set forth on Schedule 3.1, Acquiror is the
owner of all outstanding shares of capital stock of each of its subsidiaries
and all such shares are duly authorized, validly issued, fully paid and
nonassessable. All of the outstanding shares of capital stock of each such
subsidiary are owned by Acquiror free and clear of all liens, charges, claims
or encumbrances or rights of others. There are no outstanding subscriptions,
options, warrants, puts, calls, rights, exchangeable or convertible securities
or other commitments or agreements of any character relating to the issued or
unissued capital stock or other securities of any such subsidiary, or otherwise
obligating Acquiror or any such subsidiary to issue, transfer, sell, purchase,
redeem or otherwise acquire any such securities. Except as disclosed in the
Acquiror SEC Documents (as defined in Section 3.4), Acquiror does not directly
or indirectly own any equity or similar interest in, or any interest
convertible or exchangeable or exercisable for, any equity or similar interest
in, any corporation, partnership, joint venture or other business association
or entity.
3.2 Capital Structure. The authorized capital stock of
Acquiror consists of 55,000,000 shares of Common Stock, no par value, and
5,000,000 shares of Preferred Stock, no par value, of which there were issued
and outstanding as of the close of business on
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March 14, 1997, 15,753,147 shares of Common Stock and no shares of Preferred
Stock. There are no other outstanding shares of capital stock or voting
securities of Acquiror other than shares of Acquiror Common Stock issued after
March 14, 1997 upon the exercise of options issued under the Acquiror's 1993
and 1995 Stock Incentive Plans (collectively, the "Acquiror Stock Option
Plans"). All outstanding shares of Acquiror have been duly authorized, validly
issued, fully paid and are nonassessable and free of any liens or encumbrances
other than any liens or encumbrances created by or imposed upon the holders
thereof. As of the close of business on March 14, 1997, Acquiror has reserved
5,650,000 shares of Common Stock for issuance to employees, directors and
independent contractors pursuant to the Acquiror Stock Option Plans, of which
2,102,236 shares are subject to outstanding, unexercised options. Other than
pursuant to this Agreement, the Acquiror Stock Option Plans there are no other
options, warrants, calls, rights, commitments or agreements of any character to
which Acquiror is a party or by which it is bound obligating Acquiror to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of the capital stock of Acquiror or
obligating Acquiror to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. The shares of Acquiror Common Stock to
be issued pursuant to the Merger will be duly authorized, validly issued, fully
paid, and non-assessable.
3.3 Authority. Acquiror has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Acquiror. This
Agreement has been duly executed and delivered by Acquiror and constitutes the
valid and binding obligation of Acquiror enforceable against Acquiror in
accordance with its terms, except that such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to creditors' rights generally, and is subject to general principles of equity.
The execution and delivery of this Agreement do not, and the consummation of
the transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any material obligation or loss of a material benefit under (i) any provision
of the Articles of Incorporation or Bylaws of Acquiror or any of its
subsidiaries, as amended, or (ii) any material mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Acquiror or any of its subsidiaries or their properties or
assets. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or with
respect to Acquiror or any of its subsidiaries in connection with the execution
and delivery of this Agreement by Acquiror or the consummation by Acquiror of
the transactions contemplated hereby, except for (i) the filing of the
Agreement of Merger, as provided in Section 1.2, (ii) the filing of a
registration statement on Form S-3 or other applicable form, (iii) the filing
of a Form 8-K with the Securities and Exchange Commission
22.
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("SEC") and the National Association of Securities Dealers, Inc. ("NASD")
within 15 days after the Closing Date, (iv) any filings as may be required
under applicable state securities laws and the securities laws of any foreign
country, (v) the filing with the Nasdaq National Market of a Notification Form
for Listing of Additional Shares with respect to the shares of Acquiror Common
Stock issuable upon conversion of the Target Common Stock in the Merger and
upon exercise of the options under the Target Stock Option Plans assumed by
Acquiror, and (vi) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material Adverse
Effect on Acquiror and would not prevent, materially or delay any of the
transactions contemplated by this Agreement.
3.4 SEC Documents; Financial Statements. Acquiror has
made available to Target a true and complete copy of each statement, report,
registration statement (with the prospectus in the form filed pursuant to Rule
424(b) of the Securities Act), definitive proxy statement, and other filing
filed with the SEC by Acquiror since November 21, 1995, and, prior to the
Effective Time, Acquiror will have furnished Target with true and complete
copies of any additional documents filed with the SEC by Acquiror prior to the
Effective Time (collectively, the "Acquiror SEC Documents"). In addition,
Acquiror has made available to Target all exhibits to the Acquiror SEC
Documents filed prior to the date hereof, and will promptly make available to
Target all exhibits to any additional Acquiror SEC Documents filed prior to the
Effective Time. All documents required to be filed as exhibits to the Acquiror
SEC Documents have been so filed, and all material contracts so filed as
exhibits are in full force and effect, except those which have expired in
accordance with their terms, and neither Acquiror nor any of its subsidiaries
is in default thereunder. As of their respective filing dates, the Acquiror
SEC Documents complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
Securities Act, and none of the Acquiror SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances in which they were made, not misleading, except to the extent
corrected by a subsequently filed Acquiror SEC Document prior to the date
hereof. The financial statements of Acquiror, including the notes thereto,
included in the Acquiror SEC Documents (the "Acquiror Financial Statements")
were complete and correct in all material respects as of their respective
dates, complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto as of their respective dates, and have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in Quarterly Reports on Form 10-Qs, as permitted by Form
10-Q of the SEC). The Acquiror Financial Statements fairly present the
consolidated financial condition and operating results of Acquiror and its
subsidiaries at the dates and during the periods indicated therein (subject, in
the case of unaudited statements, to normal, recurring year-end adjustments).
There has been no change in Acquiror accounting policies except as described in
the notes to the Acquiror Financial
23.
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Statements. Acquiror has filed in a timely manner all reports required to be
filed with the Securities and Exchange Commission pursuant to Sections 13, 14
or 15(d) of the Exchange Act during the 12 calendar months prior to the date
hereof.
3.5 Absence of Certain Changes. Since January 24, 1997,
(the "Acquiror Balance Sheet Date"), Acquiror has conducted its business in the
ordinary course consistent with past practice and there has not occurred: (i)
any change, event or condition (whether or not covered by insurance) that has
resulted in, or might reasonably be expected to result in, a Material Adverse
Effect to Acquiror; (ii) any acquisition, sale or transfer of any material
asset of Acquiror or any of its subsidiaries other than in the ordinary course
of business and consistent with past practice; (iii) any change in accounting
methods or practices (including any change in depreciation or amortization
policies or rates) by Acquiror or any revaluation by Acquiror of any of its
assets; (iv) any declaration, setting aside, or payment of a dividend or other
distribution with respect to the shares of Acquiror, or any direct or indirect
redemption, purchase or other acquisition by Acquiror of any of its shares of
capital stock; (v) any material contract entered into by Acquiror, other than
in the ordinary course of business and as provided to Target, or any material
amendment or termination of, or default under, any material contract to which
Acquiror is a party or by which it is bound; (vi) any amendment or change to
Acquiror's Articles of Incorporation or Bylaws; or (vii) any negotiation or
agreement by Acquiror or any of its subsidiaries to do any of the things
described in the preceding clauses (i) through (vi) (other than negotiations
with Target and its representatives regarding the transactions contemplated by
this Agreement).
3.6 Absence of Undisclosed Liabilities. Acquiror has no
material obligations or liabilities of any nature (matured or unmatured, fixed
or contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet included in Acquiror's Quarterly Report on Form 10-Q for the
period ended January 24, 1997 (the "Acquiror Balance Sheet"), (ii) those
incurred in the ordinary course of business and not required to be set forth in
the Acquiror Balance Sheet under generally accepted accounting principles, and
(iii) those incurred in the ordinary course of business since the Acquiror
Balance Sheet Date and consistent with past practice.
3.7 Litigation. There is no private or governmental
action, suit, proceeding, claim, arbitration or investigation pending before
any agency, court or tribunal, foreign or domestic, or, to the knowledge of
Acquiror or any of its subsidiaries, threatened against Acquiror or any of its
subsidiaries or any of their respective properties or any of their respective
officers or directors (in their capacities as such) that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect
on Acquiror. There is no judgment, decree or order against Acquiror or any of
its subsidiaries or, to the knowledge of Acquiror or any of its subsidiaries,
any of their respective directors or officers (in their capacities as such)
that could prevent, enjoin, or materially alter or delay any of the
24.
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transactions contemplated by this Agreement, or that could reasonably be
expected to have a Material Adverse Effect on Acquiror.
3.8 Governmental Authorization. Acquiror and each of its
subsidiaries have obtained each federal, state, county, local or foreign
governmental consent, license, permit, grant, or other authorization of a
Governmental Entity (i) pursuant to which Acquiror or any of its subsidiaries
currently operates or holds any interest in any of its properties or (ii) that
is required for the operation of Acquiror's or any of its subsidiaries'
business or the holding of any such interest ((i) and (ii) herein collectively
called "Acquiror Authorizations"), and all of such Acquiror Authorizations are
in full force and effect, except where the failure to obtain or have any of
such Acquiror Authorizations could not reasonably be expected to have a
Material Adverse Effect on Acquiror.
3.9 Compliance With Laws. Each of Acquiror and its
subsidiaries has complied with, are not in violation of, and have not received
any notices of violation with respect to, any federal, state, local or foreign
statute, law or regulation with respect to the conduct of its business, or the
ownership or operation of its business, except for such violations or failures
to comply as could not be reasonably expected to have a Material Adverse Effect
on Acquiror.
3.10 Broker's and Finders' Fees. Acquiror has not
incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or investment bankers' fees
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
3.11 Information Statement. The information supplied by
Acquiror for inclusion in the Information Statement shall not, on the date the
Information Statement is first mailed to Target's shareholders, at the time of
the Written Consent and at the Effective Time, contain any statement which, at
such time, is false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which it is made, not false or misleading; or
omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of the Written Consent
which has become false or misleading. Notwithstanding the foregoing, Acquiror
makes no representation, warranty or covenant with respect to any information
supplied by Target which is contained in any of the foregoing documents.
3.12 Continuity of Business Enterprise. It is the present
intention of the Acquiror to continue at least one significant business of the
Target, or to use at least a significant portion of Target's historic business
assets, in each case within the meaning of Section 1.368-1(d) of the Treasury
Regulation.
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3.13 Representations Complete. None of the
representations or warranties made by Acquiror herein or in any Schedule or
Exhibit hereto, including the Acquiror Disclosure Schedule, or certificate
furnished by Acquiror pursuant to this Agreement, or the Acquiror SEC
Documents, or any written statement furnished to Target pursuant hereto or in
connection with the transactions contemplated hereby, when all such documents
are read together in their entirety, contains or will contain at the Effective
Time any untrue statement of a material fact, or omits or will omit at the
Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading; provided, however, that for purposes of this
representation, any document attached hereto and any document specifically
referenced in the Acquiror Disclosure Schedule as a "Superseding Document"
(even if not attached hereto) that provides information inconsistent with or in
addition to any other written statement furnished to Target in connection with
the transaction contemplated hereby, shall be deemed to supersede any other
document or written statement furnished to Target with respect to such
inconsistent or additional information.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business of Target and Acquiror. During
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Effective Time, each of Target and
Acquiror agrees (except to the extent expressly contemplated by this Agreement
or as consented to in writing by the other), to carry on its and its
subsidiaries' business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, to pay and to cause its
subsidiaries to pay debts and Taxes when due subject (i) to good faith disputes
over such debts or Taxes and (ii) in the case of Taxes of Target to Acquiror's
consent to the filing of material Tax Returns if applicable, to pay or perform
other obligations when due, and to use all reasonable efforts consistent with
past practice and policies to preserve intact its present business
organizations, keep available the services of its and its subsidiaries' present
officers and key employees and preserve its and its subsidiaries' relationships
with customers, suppliers, distributors, licensors, licensees, and others
having business dealings with it or its subsidiaries, to the end that its and
its subsidiaries' goodwill and ongoing businesses shall be unimpaired at the
Effective Time. Each of Target and Acquiror agrees to promptly notify the
other of (x) any event or occurrence not in the ordinary course of its or its
subsidiaries' business, and of any event which could have a Material Adverse
Effect and (y) any material change in its capitalization as set forth in
Sections 2.2 and 3.2, respectively. Without limiting the foregoing, except as
expressly contemplated by this Agreement or the Target Disclosure Schedule or
the Acquiror Disclosure Schedule, neither Target nor Acquiror, respectively,
shall do, cause or permit any of the following, or allow, cause or permit any
of its subsidiaries to do, cause or permit any of the following, without the
prior written consent of the other:
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(a) Charter Documents. Cause or permit any
amendments to its Articles of Incorporation or Bylaws;
(b) Dividends; Changes in Capital Stock. Except
as set forth in the Acquiror Disclosure Schedule, declare or pay any dividends
on or make any other distributions (whether in cash, stock or property) in
respect of any of its capital stock, or split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or
repurchase or otherwise acquire, directly or indirectly, any shares of its
capital stock except from former employees, directors and consultants in
accordance with agreements providing for the repurchase of shares in connection
with any termination of service to it or its subsidiaries;
(c) Stock Option Plan. Except as set forth in
Schedule 4.1, accelerate, amend or change the period of exercisability or
vesting of options or other rights granted under its stock option plans or
authorize cash payments in exchange for any options or other rights granted
under any of such plans; or
(d) Other. Take, or agree in writing or
otherwise to take, any of the actions described in Sections 4.1(a) through (c)
above, or any action which would cause a material breach of its representations
or warranties contained in this Agreement or prevent it from materially
performing or cause it not to materially perform its covenants hereunder.
4.2 Conduct of Business of Target. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, except as expressly
contemplated by this Agreement or the Target Disclosure Schedule, Target shall
not do, cause or permit any of the following, without the prior written consent
of Acquiror:
(a) Material Contracts. Enter into any material
contract or commitment, or violate, amend or otherwise modify or waive any of
the terms of any of its material contracts, other than in the ordinary course
of business consistent with past practice;
(b) Issuance of Securities. Issue, deliver or
sell or authorize or propose the issuance, delivery or sale of, or purchase or
propose the purchase of, any shares of its capital stock or securities
convertible into, or subscriptions, rights, warrants or options to acquire, or
other agreements or commitments of any character obligating it to issue any
such shares or other convertible securities, including the grant of options
pursuant to the Target Stock Option Plan, other than the issuance of shares of
its Common Stock pursuant to the exercise of stock options, warrants or other
rights therefor outstanding as of the date of this Agreement;
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(c) Intellectual Property. Transfer to any
person or entity any rights to its Intellectual Property other than in the
ordinary course of business consistent with past practice;
(d) Exclusive Rights. Enter into or amend any
agreements pursuant to which any other party is granted exclusive marketing or
other exclusive rights of any type or scope with respect to any of its products
or technology;
(e) Dispositions. Sell, lease, license or
otherwise dispose of or encumber any of its properties or assets which are
material, individually or in the aggregate, to its business; taken as a whole,
except in the ordinary course of business consistent with past practice;
(f) Indebtedness. Incur any indebtedness for
borrowed money or guarantee any such indebtedness or issue or sell any debt
securities or guarantee any debt securities of others;
(g) Leases. Enter into any operating lease in
excess of $10,000;
(h) Payment of Obligations. Pay, discharge or
satisfy in an amount in excess of $10,000 in any one case or $50,000 in the
aggregate, any claim, liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise) arising other than in the ordinary course
of business, other than the payment, discharge or satisfaction of liabilities
reflected or reserved against in the Target Financial Statements;
(i) Capital Expenditures. Make any capital
expenditures, capital additions or capital improvements except in the ordinary
course of business and consistent with past practice;
(j) Insurance. Materially reduce the amount of
any material insurance coverage provided by existing insurance policies;
(k) Termination or Waiver. Terminate or waive
any right of substantial value, other than in the ordinary course of business;
(l) Employee Benefit Plans; New Hires; Pay
Increases. Adopt or amend any employee benefit or stock purchase or option
plan, or hire any new officer level employee (except that it may hire a
replacement for any current director level or officer level employee if it
first provides Acquiror advance notice regarding such hiring decision), pay any
special bonus or special remuneration to any employee or director (except
payments made pursuant to written agreements outstanding on the date hereof),
or increase the salaries or
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wage rates of its employees except in the ordinary course of business in
accordance with its standard past practice;
(m) Severance Arrangements. Grant any severance
or termination pay (i) to any director or officer or (ii) to any other employee
except (A) payments made pursuant to written agreements outstanding on the date
hereof or (B) grants which are made in the ordinary course of business in
accordance with its standard past practice;
(n) Lawsuits. Commence a lawsuit other than (i)
for the routine collection of bills, (ii) in such cases where it in good faith
determines that failure to commence suit would result in the material
impairment of a valuable aspect of its business, provided that it consults with
Acquiror prior to the filing of such a suit, or (iii) for a breach of this
Agreement;
(o) Acquisitions. Acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to its business;
(p) Taxes. Other than in the ordinary course of
business, make or change any material election in respect of Taxes, adopt or
change any accounting method in respect of Taxes, file any material Tax Return
or any amendment to a material Tax Return, enter into any closing agreement,
settle any material claim or assessment in respect of Taxes, or consent to any
extension or waiver of the limitation period applicable to any material claim
or assessment in respect of Taxes;
(q) Notices. Fail to give all notices and other
information required to be given to the employees of Target, any collective
bargaining unit representing any group of employees of Target, and any
applicable government authority under the WARN Act, the National Labor
Relations Act, the Internal Revenue Code, the Consolidated Omnibus Budget
Reconciliation Act, and other applicable law in connection with the
transactions provided for in this Agreement;
(r) Revaluation. Revalue any of its assets,
including without limitation writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course of business; or
(s) Other. Take or agree in writing or otherwise
to take, any of the actions described in Sections 4.2(a) through (r) above, or
any action which would make any of its representations or warranties contained
in this Agreement untrue or incorrect or prevent it from materially or cause it
not to perform its covenants hereunder.
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4.3 No Solicitation. Target and its officers, directors,
employees or other agents will not, directly or indirectly, (i) take any action
to solicit, initiate or encourage any Takeover Proposal (defined below) or (ii)
except as required in the exercise of its fiduciary duty, engage in
negotiations with, or disclose any nonpublic information relating to Target to,
or afford access to the properties, books or records of Target to, any person
that has advised Target that it may be considering making, or that has made, a
Takeover Proposal. Target will promptly notify Acquiror after receipt of any
Takeover Proposal or any notice that any person is considering making a
Takeover Proposal or any request for nonpublic information relating to Target
or for access to the properties, books or records of Target by any person that
has advised Target that it may be considering making, or that has made, a
Takeover Proposal and will keep Acquiror fully informed of the status and
details of any such Takeover Proposal notice or request. For purposes of this
Agreement, "Takeover Proposal" means any offer or proposal for, or any
indication of interest in, a merger or other business combination involving
Target or the acquisition of any significant equity interest in, or a
significant portion of the assets of, Target, other than the transactions
contemplated by this Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of Information Statement. Target shall
have prepared, with the cooperation of Acquiror, an Information Statement for
the shareholders of Target to approve this Agreement, the Agreement of Merger
and the transactions contemplated hereby and thereby. The Information
Statement shall constitute a disclosure document for the offer and issuance of
the shares of Acquiror Common Stock to be received by the holders of Target
Capital Stock in the Merger. Acquiror and Target shall each use reasonable
commercial efforts to cause the Information Statement to comply with applicable
federal and state securities laws requirements. Each of Acquiror and Target
agrees to provide promptly to the other such information concerning its
business and financial statements and affairs as, in the reasonable judgment of
the providing party or its counsel, may be required or appropriate for
inclusion in the Information Statement, or in any amendments or supplements
thereto, and to cause its counsel and auditors to cooperate with the other's
counsel and auditors in the preparation of the Information Statement. Target
will promptly advise Acquiror, and Acquiror will promptly advise Target, in
writing if at any time prior to the Effective Time either Target or Acquiror
shall obtain knowledge of any facts that might make it necessary or appropriate
to amend or supplement the Information Statement in order to make the
statements contained or incorporated by reference therein not misleading or to
comply with applicable law. The Information Statement shall contain the
recommendation of the Board of Directors of Target that the Target shareholders
approve the Merger and this Agreement and the conclusion of the Board of
Directors that the terms and conditions of the Merger are in the best interests
of the shareholders of Target; provided that such recommendation may not be
included or may be withdrawn if previously included if Target's Board of
Directors believes in good faith that a
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superior Takeover Proposal has been made and, upon advice of its outside legal
counsel, shall determine that to include such recommendation or not withdraw
such recommendation if previously included would constitute a breach of the
Board's fiduciary duty under applicable law. Anything to the contrary
contained herein notwithstanding, Target shall not include in the Information
Statement any information with respect to Acquiror or its affiliates or
associates, the form and content of which information shall not have been
approved by Acquiror prior to such inclusion.
5.2 Written Consent of Shareholders. Target shall,
concurrent with the execution of this Agreement, take all action prior to or at
the time of the Closing Date required by California Law and its Articles of
Incorporation and Bylaws to solicit Written Consents. Subject to its fiduciary
duties, Target shall take all action necessary or advisable to secure the vote
or consent of shareholders required to effect the Merger.
5.3 Access to Information.
(a) Target shall afford Acquiror and its
accountants, counsel and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time to (i) all of
Target's properties, books, contracts, commitments and records, and (ii) all
other information concerning the business, properties and personnel of Target
as Acquiror may reasonably request. Target agrees to provide to Acquiror and
its accountants, counsel and other representatives copies of internal financial
statements promptly upon request. Acquiror shall afford Target and its
accountants, counsel and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time to (i) all of
Acquiror's and its subsidiaries' properties, books, contracts, commitments and
records, and (ii) all other information concerning the business, properties and
personnel of Acquiror and its subsidiaries as Target may reasonably request.
Acquiror agrees to provide to Target and its accountants, counsel and other
representatives copies of internal financial statements promptly upon request.
(b) Subject to compliance with applicable law,
from the date hereof until the Effective Time, each of Acquiror and Target
shall confer on a regular and frequent basis with one or more representatives
of the other party to report operational matters of materiality and the general
status of ongoing operations.
(c) No information or knowledge obtained in any
investigation pursuant to this Section 5.2 shall affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
5.4 Confidentiality. The parties acknowledge that
Acquiror and Target have previously executed a non-disclosure agreement on
January 24, 1997 (the "Confidentiality
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Agreement"), which Confidentiality Agreement shall continue in full force and
effect in accordance with its terms.
5.5 Public Disclosure. Unless otherwise permitted by
this Agreement, Acquiror and Target shall consult with each other before
issuing any press release or otherwise making any public statement or making
any other public (or non-confidential) disclosure (whether or not in response
to an inquiry) regarding the terms of this Agreement and the transactions
contemplated hereby, and neither shall issue any such press release or make any
such statement or disclosure without the prior approval of the other (which
approval shall not be unreasonably withheld), except as may be required by law
or by obligations pursuant to any listing agreement with any national
securities exchange or with the NASD.
5.6 Consents; Cooperation.
(a) Each of Acquiror and Target shall promptly
apply for or otherwise seek, and use reasonable best efforts to obtain, all
consents and approvals required to be obtained by it for the consummation of
the Merger and shall use reasonable best efforts to obtain all necessary
consents, waivers and approvals under any of its material contracts in
connection with the Merger for the assignment thereof or otherwise. The
parties hereto will consult and cooperate with one another, and consider in
good faith the views of one another, in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under any other federal or state antitrust or fair trade law.
(b) Each of Acquiror and Target further agrees to
notify the other promptly of the receipt of any comments from any government
officials for amendments or supplements to any filing or for additional
information and will supply the other with copies of all correspondence between
such company or any of its representatives, on the one hand, and the government
officials, on the other hand, with respect to such filing in accordance with an
appropriate confidentiality agreement between the parties. Whenever any event
occurs which is required to be set forth in an amendment or supplement to any
such filing, Acquiror or Target, as the case may be, shall promptly inform the
other of such occurrence and cooperate in filing with the government.
(c) Notwithstanding anything to the contrary in
Section 5.6(a), (i) neither Acquiror nor any of it subsidiaries shall be
required to divest any of their respective businesses, product lines or assets,
or to take or agree to take any other action or agree to any limitation and
(ii) Target shall not be required to divest any of its business, product lines
or assets, or to take or agree to take any other action or agree to any
limitation.
5.7 Shareholder Agreements. Schedule 5.7 sets forth
those persons who are, in Target's reasonable judgment, "Affiliates" of Target
within the meaning of Rule 145
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promulgated under the Securities Act ("Rule 145"). Target shall provide
Acquiror such information and documents as Acquiror shall reasonably request
for purposes of reviewing such list. Target shall use its best efforts to
deliver or cause to be delivered to Acquiror, concurrently with the execution
of this Agreement from each of the shareholders of Target, an executed
Shareholder Agreement in the form attached hereto as Exhibit B. Acquiror shall
be entitled to place appropriate legends on the certificates evidencing any
Acquiror Common Stock to be received by Affiliates of Target pursuant to the
terms of this Agreement, and to issue appropriate stop transfer instructions to
the transfer agent for Acquiror Common Stock, consistent with the terms of such
Shareholder Agreement.
5.8 FIRPTA. Target shall, on the Closing Date, provide
Acquiror with a properly executed Foreign Investment and Real Property Tax Act
of 1980 ("FIRPTA") Notification Letter, substantially in the form of Exhibit C
attached hereto, which states that shares of capital stock of Target do not
constitute "United States real property interests" under Section 897(c) of the
Code, for purposes of satisfying Acquiror's obligations under Treasury
Regulation Section 1.1445-2(c)(3). In addition, simultaneously with delivery of
such Notification Letter, Target shall have provided to Acquiror, as agent for
Target, a form of notice to the Internal Revenue Service in accordance with the
requirements of Treasury Regulation Section 1.897-2(h)(2) and substantially in
the form of Exhibit C attached hereto along with written authorization for
Acquiror to deliver such notice form to the Internal Revenue Service on behalf
of Target upon the Closing of the Merger.
5.9 Legal Requirements. Each of Acquiror and Target
will, and will cause any subsidiaries to, take all reasonable actions necessary
to comply promptly with all legal requirements which may be imposed on them
with respect to the consummation of the transactions contemplated by this
Agreement and will promptly cooperate with and furnish information to any party
hereto necessary in connection with any such requirements imposed upon such
other party in connection with the consummation of the transactions
contemplated by this Agreement and will take all reasonable actions necessary
to obtain (and will cooperate with the other parties hereto in obtaining) any
consent, approval, order or authorization of, or any registration, declaration
or filing with, any Governmental Entity or other person, required to be
obtained or made in connection with the taking of any action contemplated by
this Agreement.
5.10 Blue Sky Laws. Acquiror shall take such steps as may
be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable to the issuance of the Acquiror Common Stock
in connection with the Merger. Target shall use its best efforts to assist
Acquiror as may be necessary to comply with the securities and blue sky laws of
all jurisdictions which are applicable in connection with the issuance of
Acquiror Common Stock in connection with the Merger.
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5.11 Employee Benefit Plans. At the Effective Time, the
Target Stock Option Plan and each outstanding option to purchase shares of
Target Common Stock under the Target Stock Option Plan, whether vested or
unvested, will be assumed by Acquiror and any outstanding repurchase right
shall be assigned to Acquiror. Schedule 5.11 hereto sets forth a true and
complete list as of the date hereof of all holders of outstanding options under
the Target Stock Option Plan including the number of shares of Target Capital
Stock subject to each such option, the exercise or vesting schedule, the
exercise price per share and the term of each such option. Each such option so
assumed by Acquiror under this Agreement shall continue to have, and be subject
to, the same terms and conditions set forth in the Target Stock Option Plan
immediately prior to the Effective Time, except that (i) such option will be
exercisable for that number of whole shares of Acquiror Common Stock equal to
the product of the number of shares of Target Common Stock that were issuable
upon exercise of such option immediately prior to the Effective Time multiplied
by the Exchange Ratio and rounded down to the nearest whole number of shares of
Acquiror Common Stock, and (ii) the per share exercise price for the shares of
Acquiror Common Stock issuable upon exercise of such assumed option will be
equal to the quotient determined by dividing the exercise price per share of
Target Common Stock at which such option was exercisable immediately prior to
the Effective Time by the Exchange Ratio, rounded up to the nearest whole cent.
Consistent with the terms of the Target Stock Option Plan and the documents
governing the outstanding options under such Plans, the Merger will not
terminate any of the outstanding options under the Target Stock Option Plan
(other than outstanding options that have been granted to nonemployee members
of Target's Board of Directors) or accelerate the exercisability or vesting of
such options or the shares of Acquiror Common Stock which will be subject to
those options upon the Acquiror's assumption of the options in the Merger. It
is the intention of the parties that the options so assumed by Acquiror qualify
following the Effective Time as incentive stock options as defined in Section
422 of the Code to the extent such options qualified as incentive stock options
prior to the Effective Time. Within 10 business days after the Effective Time,
Acquiror will issue to each person who, immediately prior to the Effective Time
was a holder of an outstanding option under the Target Stock Option Plan a
document in form and substance satisfactory to Target evidencing the foregoing
assumption of such option by Acquiror.
5.12 Form S-8. Acquiror agrees to use commercially
reasonable efforts to file as soon as possible, and in no event later than 30
days after the Closing, a registration statement on Form S-8 covering the
shares of Acquiror Common Stock issuable pursuant to outstanding options under
the Target Stock Option Plan assumed by Acquiror. Target shall cooperate with
and assist Acquiror in the preparation of such registration statement. The
shares of Acquiror Common Stock to be issued upon exercise of such options will
be duly authorized, validly issued, fully paid and nonassessable.
5.13 Listing of Additional Shares. Prior to the Effective
Time, Acquiror shall file with the Nasdaq National Market a Notification Form
for Listing of Additional
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Shares with respect to the shares of Acquiror Common Stock issuable upon
conversion of the Target Common Stock in the Merger and upon exercise of the
options under the Target Stock Option Plan assumed by Acquiror.
5.14 Employees. Set forth on Schedule 5.14 is a list
of employees of Target to whom Acquiror will make an offer to enter into an
Employment and Non-Competition Agreement substantially in the form attached
hereto as Exhibit D-1 et seq., as applicable. Target shall cooperate with
Acquiror to assist Acquiror in employing such employees.
5.15 Stock Option Agreements. Acquiror will make an offer
to enter into a Stock Option Agreement, substantially in the form attached
hereto as Exhibit E, to each employee set forth on Schedule 5.14.
5.16 Reorganization. Acquiror and Target shall each use
its best efforts to cause the business combination to be effected by the Merger
to be qualified as a "reorganization" described in Section 368(a) of the Code.
5.17 Expenses. Whether or not the Merger is consummated,
all costs and expenses incurred in connection with this Agreement, the
Agreement of Merger and the transactions contemplated hereby and thereby shall
be paid by the party incurring such expense; provided, however, that any
out-of-pocket expenses incurred by Target in excess of $220,000 for fees and
expenses of legal counsel plus any other expenses, including, without
limitation, fees and expenses of financial advisors and accountants, if any,
shall remain an obligation of Target's shareholders.
5.18 Reasonable Commercial Efforts and Further Assurances.
Each of the parties to this Agreement shall use reasonable commercial efforts
to effectuate the transactions contemplated hereby and to fulfill and cause to
be fulfilled the conditions to closing under this Agreement. Each party
hereto, at the reasonable request of another party hereto, shall execute and
deliver such other instruments and do and perform such other acts and things as
may be necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each party to this Agreement to
consummate and effect this Agreement and the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Effective Time of each
of the following conditions, any of which may be waived, in writing, by
agreement of all the parties hereto:
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(a) Shareholder Approval. This Agreement and the
Merger shall have been approved and adopted by the holders of at least
fifty-one percent (51%) of each of the issued and outstanding shares of Target
Common Stock.
(b) No Injunctions or Restraints; Illegality. No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint or prohibition preventing the consummation of the Merger shall be and
remain in effect, nor shall any proceeding brought by an administrative agency
or commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending, which would have a Material
Adverse Effect on such party. Nor shall there be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger illegal.
In the event an injunction or other order shall have been issued, each party
agrees to use its reasonable diligent efforts to have such injunction or other
order lifted.
(c) Governmental Approval. Acquiror and Target
and any subsidiaries shall have timely obtained from each Governmental Entity
all approvals, waivers and consents, if any, necessary for consummation of or
in connection with the Merger and the several transactions contemplated hereby,
including such approvals, waivers and consents as may be required under the
Securities Act, under state Blue Sky laws (other than filings and approvals
relating to the Merger or affecting Acquiror's ownership of Target or any of
its properties if failure to obtain such approval, waiver or consent would not
have a Material Adverse Effect to either party).
(d) Tax-Free Reorganization. Each of Acquiror
and Target shall have received written opinions from their respective counsel
to the effect that the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code, which opinions shall be in the form
attached hereto as Exhibit F. In rendering such opinions, counsel shall be
entitled to rely upon representations of Acquiror and Target and each of the
shareholders of Target.
6.2 Additional Conditions to Obligations of Target. The
obligations of Target to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, by Target:
(a) Representations, Warranties and Covenants.
(i) The representations and warranties of Acquiror in this Agreement shall be
true and correct in all material respects (except for such representations and
warranties that are qualified by their terms by a reference to materiality
which representations and warranties as so qualified shall be true in all
respects) on and as of the Effective Time as though such representations and
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warranties were made on and as of such time and (ii) Acquiror shall have
performed and complied in all material respects with all covenants, obligations
and conditions of this Agreement required to be performed and complied with by
them as of the Effective Time.
(b) Certificate of Acquiror. Target shall have
been provided with a certificate executed on behalf of Acquiror by its
President and its Chief Financial Officer to the effect that, as of the
Effective Time:
(i) all representations and warranties
made by Acquiror under this Agreement are true and complete in all material
respects; and
(ii) all covenants, obligations and
conditions of this Agreement to be performed by Acquiror on or before such date
have been so performed in all material respects.
(c) Legal Opinion. Target shall have received a
legal opinion from Acquiror's legal counsel substantially in the form of
Exhibit G hereto.
(d) Stock Option Agreement. Acquiror shall have
entered into a Stock Option Agreement substantially in the form attached hereto
as Exhibit H with each of the employees of Target set forth on Schedule 5.14.
(e) No Material Adverse Changes. There shall not
have occurred any material adverse change in the financial condition,
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of Acquiror and its subsidiaries, taken as
a whole.
6.3 Additional Conditions to the Obligations of Acquiror.
The obligations of Acquiror to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, by Acquiror:
(a) Representations, Warranties and Covenants.
(i) The representations and warranties of Target in this Agreement shall be
true and correct in all material respects (except for such representations and
warranties that are qualified by their terms by a reference to materiality
which representations and warranties as so qualified shall be true in all
respects) on and as of the Effective Time as though such representations and
warranties were made on and as of such time and (ii) Target shall have
performed and complied in all material respects with all covenants, obligations
and conditions of this Agreement required to be performed and complied with by
it as of the Effective Time.
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(b) Certificate of Target. Acquiror shall have
been provided with a certificate executed on behalf of Target by its President
and Chief Financial Officer to the effect that, as of the Effective Time:
(i) all representations and warranties
made by Target under this Agreement are true and complete in all material
respects; and
(ii) all covenants, obligations and
conditions of this Agreement to be performed by Target on or before such date
have been so performed in all material respects.
(c) Third Party Consents. Acquiror shall have
been furnished with evidence satisfactory to it of the consent or approval of
those persons whose consent or approval shall be required in connection with
the Merger under the contracts of Target set forth on Schedule 6.3(c) hereto.
(d) Injunctions or Restraints on Conduct of
Business. No temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal or
regulatory restraint provision limiting or restricting Acquiror's conduct or
operation of the business of Target and its subsidiaries, following the Merger
shall be in effect, nor shall any proceeding brought by an administrative
agency or commission or other Governmental Entity, domestic or foreign, seeking
the foregoing be pending.
(e) Legal Opinion. Acquiror shall have received
a legal opinion from Target's legal counsel, in substantially the form of
Exhibit K.
(f) No Material Adverse Changes. There shall not
have occurred any material adverse change in the financial condition,
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of Target.
(g) Shareholder Agreements. Acquiror shall have
received from each of the shareholders of Target an executed Shareholder
Agreement in substantially the form attached hereto as Exhibit B.
(h) FIRPTA Certificate. Target shall, on the
Closing Date, provide Acquiror with a properly executed FIRPTA Notification
Letter, substantially in the form of Exhibit C attached hereto, which states
that shares of capital stock of Target do not constitute "United States real
property interests" under Section 897(c) of the Code, for purposes of
satisfying Acquiror's obligations under Treasury Regulation Section
1.1445-2(c)(3). In addition, simultaneously with delivery of such Notification
Letter, Target shall have provided to Acquiror, as agent for Target, a form of
notice to the Internal Revenue Service in
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accordance with the requirements of Treasury Regulation Section 1.897-2(h)(2)
and substantially in the form of Exhibit C attached hereto along with written
authorization for Acquiror to deliver such notice form to the Internal Revenue
Service on behalf of Target upon the Closing of the Merger.
(i) Resignation of Directors. The directors of
Target in office immediately prior to the Effective Time shall have resigned as
directors of the Surviving Corporation effective immediately following the
Effective Time.
(j) Employment and Non-Competition Agreements.
The employees of Target set forth on Schedule 5.14 shall have accepted
employment with Acquiror and shall have entered into an Employment and
Non-Competition Agreement substantially in the form attached hereto as Exhibits
D-1, et. seq.
(k) Expense Statement. Acquiror shall have
received from Target a statement of all out-of-pocket expenses incurred by
Target which are subject to the limitation described in Section 5.17 hereto.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. At any time prior to the Effective
Time, whether before or after approval of the matters presented in connection
with the Merger by the shareholders of Target, this Agreement may be
terminated:
(a) by mutual consent of the Board of Directors
of Acquiror and Target;
(b) by either Acquiror or Target, if, without
fault of the terminating party, the Closing shall not have occurred on or
before May 1, 1997;
(c) by Acquiror (provided Acquiror is not
otherwise in material breach), if (i) Target shall materially breach any of its
representations, warranties or obligations hereunder and such breach shall not
have been cured within ten business days of receipt by Target of written notice
of such breach, (ii) the Board of Directors of Target shall have withdrawn or
modified its recommendation of this Agreement or the Merger in a manner adverse
to Acquiror or shall have resolved to do any of the foregoing, or (iii) for any
reason Target fails to call and hold the Target Shareholders Meeting or obtain
appropriate written consent of Target's shareholders by May 1, 1997;
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(d) by Target (provided Target is not otherwise
in material breach), if Acquiror shall materially breach any of its
representations, warranties or obligations hereunder and such breach shall not
have been cured within ten days following receipt by Acquiror of written notice
of such breach;
(e) by either Acquiror or Target if a Takeover
Proposal or a Trigger Event (as defined in Section 7.3(b)) shall have occurred
and the Board of Directors of Target in connection therewith, after
consultation with its legal counsel, withdraws or modifies its approval and
recommendation of this Agreement and the transactions contemplated hereby after
determining that to cause Target to proceed with the transactions contemplated
hereby would not be consistent with the Board of Directors' fiduciary duty to
the shareholders of Target;
(f) by either Acquiror or Target if (i) any
permanent injunction or other order of a court or other competent authority
preventing the consummation of the Merger shall have become final and
nonappealable or (ii) any required approval of the shareholders of Target shall
not have been obtained by reason of the failure to obtain the required vote
upon a vote held at a duly held meeting of shareholders or at any adjournment
thereof or by written consent; or
(g) by Target, in the event (i) of the
acquisition, by any person or group of persons (other than persons or groups of
persons who (A) acquired shares of Acquiror Common Stock pursuant to any merger
of Acquiror in which Acquiror was the surviving corporation and shareholders of
Acquiror represent less than 70% of the outstanding shares of the surviving
corporation following such transaction or any acquisition by Acquiror of all or
substantially all of the capital stock or assets of another person or (B)
disclose their beneficial ownership of shares of Acquiror Common Stock on
Schedule 13G under the Exchange Act), of beneficial ownership of 30% or more of
the outstanding shares of Acquiror Common Stock (the terms "person," "group"
and "beneficial ownership" having the meanings ascribed thereto in Section
13(d) of the Exchange Act and the regulations promulgated thereunder), or (ii)
the Board of Directors of Acquiror accepts or publicly recommends acceptance of
an offer from a third party to acquire 50% or more of the outstanding shares of
Acquiror Common Stock or of Acquiror's consolidated assets.
7.2 Effect of Termination. In the event of termination
of this Agreement as provided in Section 7.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of
Acquiror or Target or their respective officers, directors, shareholders or
affiliates, except to the extent that such termination results from the breach
by a party hereto of any of its representations, warranties or covenants set
forth in this Agreement; provided that, the provisions of Section 5.4
(Confidentiality), Section 7.3 (Expenses and Termination Fees) and this Section
7.2 shall remain in full force and effect and survive any termination of this
Agreement.
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7.3 Expenses and Termination Fees.
(a) Subject to subsections (b), (c), and (d) of
this Section 7.3, whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, the fees and expenses of
its advisers, accountants and legal counsel) shall be paid by the party
incurring such expense.
(b) In the event that (i) either Acquiror or
Target shall terminate this Agreement pursuant to Section 7.1(e), (ii) either
Acquiror or Target shall terminate this Agreement pursuant to Section
7.1(f)(ii) following a failure of the shareholders of Target to approve this
Agreement and, prior to such failure, there shall have been (A) a Trigger Event
with respect to Target or (B) a Takeover Proposal with respect to Target which
at the time of Target's shareholders' vote regarding the Merger shall not have
been (x) rejected by Target or (y) withdrawn by the third party, or (iii)
Acquiror shall terminate this Agreement pursuant to Section 7.1(c), due in
whole or in part to any failure by Target to use commercially reasonable
efforts to perform and comply with all agreements and conditions required by
this Agreement to be performed or complied with by Target prior to or on the
Closing Date or any failure by Target's Affiliates to take any actions required
to be taken hereby, and prior thereto there shall have been (A) a Trigger Event
with respect to Target or (B) a Takeover Proposal with respect to Target which
shall not have been (x) rejected by Target or (y) withdrawn by the third party,
then Target shall reimburse Acquiror for all of the reasonable out-of-pocket
costs and expenses incurred by Acquiror in connection with this Agreement and
the transactions contemplated hereby (including, without limitation, the
reasonable fees and expenses of its advisors, accountants and legal counsel)
and, in addition, Target shall promptly pay to Acquiror the sum of $330,000.00;
provided, however, that with respect to Section 7.3(b)(ii)(A) and Section
7.3(b)(iii)(A), a Trigger Event shall not be deemed to include the acquisition
by any Person of securities representing 10% or more of Target if such Person
has acquired such securities not with the purpose nor with the effect of
changing or influencing the control of Target, nor in connection with or as a
participant in any transaction having such purpose or effect, including without
limitation not in connection with such Person (i) making any public
announcement with respect to the voting of such shares at any meeting to
consider any merger, consolidation, sale of substantial assets or other
business combination or extraordinary transaction involving Target, (ii)
making, or in any way participating in, any "solicitation" of "proxies" (as
such terms are defined or used in Regulation 14A under the Exchange Act) to
vote any voting securities of Target or seeking to advise or influence any
Person with respect to the voting of any voting securities of Target, (iii)
forming, joining or in any way participating in any it group to within the
meaning of Section 13(d)(3) of the Exchange Act with respect to any voting
securities of Target or (iv) otherwise acting, alone or in concert with others,
to seek control of Target or to seek to control or influence the management or
policies of Target. As used herein, a "Trigger Event" shall occur if any
Person acquires securities representing 10% or more, or commences a tender or
exchange offer following the successful consummation of
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which the offeror and its affiliate would beneficially own securities
representing 25% or more, of the voting power of Target.
(c) In the event that (i) Acquiror shall
terminate this Agreement pursuant to Section 7.1(c) or (ii) Acquiror shall
terminate this Agreement pursuant to Section 7.1(f)(ii), Target shall promptly
reimburse Acquiror for all of the out-of-pocket costs and expenses incurred by
Acquiror in connection with this Agreement and the transactions contemplated
hereby (including, without limitation, the fees and expenses of its advisors,
accountants and legal counsel).
(d) In the event that Target shall terminate this
Agreement pursuant to Section 7.1(d) Acquiror shall promptly reimburse Target
for all of the out-of-pocket costs and expenses incurred by Target in
connection with this Agreement and the transactions contemplated hereby
(including, without limitation, the fees and expenses of its advisors,
accountants and legal counsel).
(e) In the event that Target shall terminate this
Agreement pursuant to Section 7.1(g)(ii), Acquiror shall reimburse Target for
all of the out-of-pocket costs and expenses incurred by Target in connection
with this Agreement and the transactions contemplated hereby (including without
limitation the fees and expenses of its advisors, accountants and legal
counsel), and, in addition, Acquiror shall promptly pay to Target the sum of
$330,000.
7.4 Amendment. The boards of directors of the parties
hereto may cause this Agreement to be amended at any time by execution of an
instrument in writing signed on behalf of each of the parties hereto; provided
that an amendment made subsequent to adoption of the Agreement by the
shareholders of Target shall not (i) alter or change the amount or kind of
consideration to be received on conversion of the Target Capital Stock, (ii)
alter or change any term of the Articles of Incorporation of the Surviving
Corporation to be effected by the Merger, or (iii) alter or change any of the
terms and conditions of the Agreement if such alteration or change would
adversely affect the holders of Target Common Stock.
7.5 Extension; Waiver. At any time prior to the
Effective Time any party hereto may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.
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ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival at Effective Time. The representations,
warranties and agreements set forth in this Agreement shall terminate at the
Effective Time, except that the agreements set forth in Article I, Section 5.4
(Confidentiality), 5.7 (Shareholder Agreement), 5.8 (FIRPTA), 5.11 (Employee
Benefit Plans), 5.12 (Form S-8), 5.13 (Listing of Additional Shares), 5.14
(Employees), 5.15 (Stock Option Agreements), 5.16 (Reorganization), 5.18
(Reasonable Commercial Efforts and Further Assurances), 7.3 (Expenses and
Termination Fees), 7.4 (Amendment) and this Article VIII shall survive the
Effective Time.
8.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or by commercial delivery service, or mailed by registered or certified mail
(return receipt requested) or sent via facsimile (with confirmation of receipt)
to the parties at the following address (or at such other address for a party
as shall be specified by like notice):
(a) if to Acquiror, to:
Network Appliance, Inc.
0000 Xxx Xxxxx Xxxxxxxxxx
Xxxxx Xxxxx, XX 00000
Attention: President
Fax: (000) 000-0000
Tel: (000) 000-0000
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
Tel: (000) 000-0000
(b) if to Target, to
Internet Middleware Corporation
00 Xxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Attention: President
Fax: (000) 000-0000
Tel: (000) 000-0000
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with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
Tel: (000) 000-0000
8.3 Interpretation. When a reference is made in this
Agreement to Exhibits or Schedules, such reference shall be to an Exhibit or
Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available
if requested by the party to whom such information is to be made available.
The phrases "the date of this Agreement," "the date hereof," and terms of
similar import, unless the context otherwise requires, shall be deemed to refer
to March 17, 1997. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
8.4 Indemnification. After the Effective Time, Acquiror
will, and will cause the Surviving Corporation to, indemnify and hold harmless
the present and former officers, directors, employees and agents of Target (the
"Indemnified Parties") in respect of matters arising out of acts or omissions
occurring on or prior to the Effective Time to the full extent permitted by law
and to the full extent provided under Target's Articles of Incorporation and
Bylaws or any indemnification agreement with Target officers and directors to
which Target is a party, in each case in effect on the date hereof. Without
limitation of the foregoing, in the event any such Indemnified Party is or
becomes involved in any capacity in any action, proceeding or investigation in
connection with any matter relating to this Agreement or the transactions
contemplated hereby occurring on or prior to the Effective Time, Acquiror shall
pay as incurred such Indemnified Party's reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in
connection therewith.
8.5 Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
8.6 Entire Agreement; Nonassignability; Parties in
Interest. This Agreement and the documents and instruments and other
agreements specifically referred to herein or delivered pursuant hereto,
including the Exhibits, the Schedules, including the Target Disclosure Schedule
and the Acquiror Disclosure Schedule (a) constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
agreements
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and understandings, both written and oral, among the parties with respect to
the subject matter hereof, except for the Confidentiality Agreement, which
shall continue in full force and effect, and shall survive any termination of
this Agreement or the Closing, in accordance with its terms; (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically set forth herein; and (c) shall not be assigned by
operation of law or otherwise except as otherwise specifically provided.
8.7 Severability. In the event that any provision of
this Agreement, or the application thereof, becomes or is declared by a court
of competent jurisdiction to be illegal, void or unenforceable, the remainder
of this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
8.8 Remedies Cumulative. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy.
8.9 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of California, without giving effect
to principles of conflicts of law. Each of the parties hereto irrevocably
consents to the exclusive jurisdiction of any court located within Santa Xxxxx
or San Mateo County, State of California, in connection with any matter based
upon or arising out of this Agreement or the matters contemplated herein,
agrees that process may be served upon them in any manner authorized by the
laws of the State of California for such persons and waives and covenants not
to assert or plead any objection which they might otherwise have to such
jurisdiction and such process.
8.10 Rules of Construction. The parties hereto agree that
they have been represented by counsel during the negotiation, preparation and
execution of this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing that ambiguities in an
agreement or other document will be construed against the party drafting such
agreement or document.
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IN WITNESS WHEREOF, Target and Acquiror have caused this
Agreement to be executed and delivered by their respective officers thereunto
duly authorized, all as of the date first written above.
ACQUIROR
By: /s/ Xxxxxx X. Xxxxxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
--------------------------------
Title: President & CEO
--------------------------------
TARGET
By: /s/ Xxx Xxxx
---------------------------------
Name: Xxx Xxxx
---------------------------------
Title: CEO
----------------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
