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Exhibit 2.1
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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
CISCO SYSTEMS, INC.,
GERONIMO MERGER CORP.
AND
GEOTEL COMMUNICATIONS CORPORATION
DATED AS OF APRIL 12, 1999
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TABLE OF CONTENTS
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ARTICLE I THE MERGER.........................................................................2
1.1 The Merger.................................................................2
1.2 Closing; Effective Time....................................................2
1.3 Effect of the Merger.......................................................2
1.4 Certificate of Incorporation; Bylaws.......................................2
1.5 Directors and Officers.....................................................3
1.6 Effect on Capital Stock....................................................3
1.7 Surrender of Certificates..................................................4
1.8 No Further Ownership Rights in Company Common Stock........................5
1.9 Lost, Stolen or Destroyed Certificates.....................................5
1.10 Tax and Accounting Consequences............................................6
1.11 Withholding Rights.........................................................6
1.12 Taking of Necessary Action; Further Action.................................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY.........................................6
2.1 Organization, Standing and Power...........................................7
2.2 Capital Structure..........................................................7
2.3 Authority..................................................................8
2.4 SEC Documents; Financial Statements........................................9
2.5 Absence of Certain Changes................................................10
2.6 Absence of Undisclosed Liabilities........................................10
2.7 Litigation................................................................10
2.8 Restrictions on Business Activities.......................................11
2.9 Governmental Authorization................................................11
2.10 Title to Property.........................................................11
2.11 Intellectual Property.....................................................11
2.12 Environmental Matters.....................................................13
2.13 Taxes.....................................................................14
2.14 Employee Benefit Plans....................................................15
2.15 Certain Agreements Affected by the Merger.................................17
2.16 Employee Matters..........................................................17
2.17 Interested Party Transactions.............................................18
2.18 Insurance.................................................................18
2.19 Compliance With Laws......................................................18
2.20 Brokers' and Finders' Fees................................................18
2.21 Registration Statement; Proxy Statement/Prospectus........................19
2.22 Opinion of Financial Advisor..............................................19
2.23 Vote Required.............................................................19
2.24 Board Approval............................................................19
2.25 State Takeover Statutes...................................................19
2.26 Export Control Laws.......................................................20
2.27 Year 2000.................................................................20
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TABLE OF CONTENTS (CONTINUED)
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2.28 Accounting and Tax Matters................................................20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.........................20
3.1 Organization, Standing and Power..........................................21
3.2 Capital Structure.........................................................21
3.3 Authority.................................................................21
3.4 SEC Documents; Financial Statements.......................................22
3.5 Absence of Undisclosed Liabilities........................................22
3.6 Litigation................................................................22
3.7 Broker's and Finders' Fees................................................23
3.8 Registration Statement; Proxy Statement/Prospectus........................23
3.9 No Shareholder Vote Required..............................................23
3.10 Board Approval............................................................23
3.11 Accounting and Tax Matters................................................23
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME..............................................24
4.1 Conduct of Business of Company............................................24
4.2 Restrictions on Conduct of Business of Company............................24
4.3 No Solicitation...........................................................27
ARTICLE V ADDITIONAL AGREEMENTS.............................................................28
5.1 Proxy Statement/Prospectus; Registration Statement........................28
5.2 Meeting of Stockholders...................................................29
5.3 Access to Information.....................................................29
5.4 Confidentiality...........................................................29
5.5 Public Disclosure.........................................................30
5.6 Consents; Cooperation.....................................................30
5.7 Affiliates................................................................31
5.8 Legal Requirements........................................................31
5.9 Blue Sky Laws.............................................................31
5.10 Employee Benefit Plans....................................................32
5.11 Form S-8..................................................................34
5.12 Option Agreement..........................................................34
5.13 Listing of Additional Shares..............................................34
5.14 Nasdaq Quotation..........................................................34
5.15 Employees.................................................................34
5.16 Indemnification...........................................................34
5.17 Pooling Accounting........................................................36
5.18 Tax Treatment.............................................................36
5.19 Stockholder Litigation....................................................36
5.20 Commercially Reasonable Efforts and Further Assurances....................36
ARTICLE VI CONDITIONS TO THE MERGER.........................................................36
6.1 Conditions to Obligations of Each Party to Effect the Merger..............36
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TABLE OF CONTENTS (CONTINUED)
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6.2 Additional Conditions to Obligations of Company...........................37
6.3 Additional Conditions to the Obligations of Parent and Merger Sub.........38
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER...............................................39
7.1 Termination...............................................................39
7.2 Effect of Termination.....................................................40
7.3 Expenses and Termination Fees.............................................41
7.4 Amendment.................................................................43
7.5 Extension; Waiver.........................................................43
ARTICLE VIII GENERAL PROVISIONS.............................................................43
8.1 Non-Survival at Effective Time............................................43
8.2 Notices...................................................................44
8.3 Interpretation............................................................44
8.4 Counterparts..............................................................45
8.5 Entire Agreement; Nonassignability; Parties in Interest...................45
8.6 Severability..............................................................45
8.7 Remedies Cumulative.......................................................45
8.8 Governing Law.............................................................45
8.9 Rules of Construction.....................................................45
EXHIBITS
Exhibit A -Form of Option Agreement
Exhibit B -Form of Stockholder Agreement
Exhibit C -Form of Certificate of Merger
Exhibit D-1 -Form of Company Affiliate Agreement
Exhibit D-2 -Form of Parent Affiliate Agreement
Exhibit E-1 -Form of Employment and Non-Competition Agreement
Exhibit E-2 -Form of Employment and Non-Competition Agreement
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the
"Agreement") is made and entered into as of April 12, 1999, by and among Cisco
Systems, Inc., a California corporation ("Parent"), Geronimo Merger Corporation,
a Delaware corporation ("Merger Sub") and wholly owned subsidiary of Parent, and
GeoTel Communications Corporation, a Delaware corporation ("Company").
RECITALS
A. The Boards of Directors of Company, Parent and Merger
Sub believe it is in the best interests of their respective companies and the
stockholders of their respective companies that Merger Sub merge with and into
Company (the "Merger") and, in furtherance thereof, have unanimously approved
the Merger.
B. Pursuant to the Merger, among other things, the
outstanding shares of Company Common Stock, $0.01 par value ("Company Common
Stock"), shall be converted into shares of Parent Common Stock, $0.001 par value
("Parent Common Stock"), at the rate set forth herein.
C. Company, Parent and Merger Sub desire to make certain
representations and warranties and other agreements in connection with the
Merger.
D. The parties intend, by executing this Agreement, to
adopt a plan of reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"), and to cause the Merger to
qualify as a reorganization under the provisions of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code and as a pooling of interests for financial accounting
purposes.
E. Concurrently with the execution of this Agreement and
as an inducement to Parent and Merger Sub to enter into this Agreement, (a)
Company and Parent have entered into a stock option agreement dated the date
hereof in the form attached hereto as EXHIBIT A (the "Option Agreement")
providing for the purchase by Parent of newly-issued shares of Company's Common
Stock, and (b) certain stockholders of the Company have on the date hereof
entered into a stockholder agreement in the form attached hereto as EXHIBIT B
(the "Stockholder Agreement") to, among other things, vote the shares of Company
Common Stock owned by such persons to approve the Merger.
NOW, THEREFORE, in consideration of the covenants and
representations set forth herein, and for other good and valuable consideration,
the parties agree as follows:
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ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in
Section 1.2) and subject to and upon the terms and conditions of this Agreement,
the Certificate of Merger attached hereto as EXHIBIT C (the "Certificate of
Merger") and the applicable provisions of the Delaware General Corporation Law
("Delaware Law"), Merger Sub shall be merged with and into Company, the separate
corporate existence of Merger Sub shall cease and Company shall continue as the
surviving corporation. Company as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "Surviving Corporation."
1.2 CLOSING; EFFECTIVE TIME. The closing of the
transactions contemplated hereby (the "Closing") shall take place as soon as
practicable (in any event not later than two business days) after the
satisfaction or waiver of each of the conditions set forth in Article VI hereof
or at such other time as the parties hereto agree (the "Closing Date"). The
Closing shall take place at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, Two
Embarcadero Place, 0000 Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, or at such other
location as the parties hereto agree. In connection with the Closing, the
parties hereto shall cause the Merger to be consummated by filing the
Certificate of Merger with the Secretary of State of the State of Delaware, in
accordance with the relevant provisions of Delaware Law (the time of such
filing, or such later time as may be agreed to by the parties and set forth in
the Certificate of Merger, being the "Effective Time").
1.3 EFFECT OF THE MERGER. At the Effective Time, the
effect of the Merger shall be as provided in this Agreement, the Certificate of
Merger and the applicable provisions of Delaware Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of Company and Merger Sub
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Certificate of
Incorporation of Company, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation;
PROVIDED, HOWEVER, that immediately after the Effective Time the Certificate of
Incorporation of the Surviving Corporation shall be amended so as to read in its
entirety like the Certificate of Incorporation of Merger Sub with Article I of
the Certificate of Incorporation amended to read as follows: "The name of the
corporation is GeoTel Communications Corporation."
(b) The Bylaws of Company, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation; PROVIDED, HOWEVER, that
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immediately after the Effective Time the Bylaws of the Surviving Corporation
shall be amended so as to read like the Bylaws of Merger Sub.
1.5 DIRECTORS AND OFFICERS. At the Effective Time, the
directors of the Surviving Corporation shall be the directors of Merger Sub. The
officers of the Surviving Corporation shall be the initial officers of Merger
Sub, until their respective successors are duly elected or appointed and
qualified.
1.6 EFFECT ON CAPITAL STOCK. By virtue of the Merger and
without any action on the part of Merger Sub, Company or the holders of any of
the following securities:
(a) CONVERSION OF COMPANY COMMON STOCK. At the
Effective Time, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of Company Common
Stock to be canceled pursuant to Section 1.6(b)) will be canceled and
extinguished and be converted automatically into the right to receive 0.5138
shares of Parent Common Stock (the "Exchange Ratio"). All references in this
Agreement to Parent Common Stock to be issued pursuant to the Merger shall be
deemed to include the corresponding rights ("Parent Rights") to purchase shares
of Parent Series A Junior Participating Preferred Stock, no par value, pursuant
to the Parent Rights Agreement dated as of June 10, 1998 between Parent and Bank
Boston, N.A., except where the context otherwise requires.
(b) CANCELLATION OF COMPANY COMMON STOCK OWNED
BY PARENT OR COMPANY. At the Effective Time, all shares of Company Common Stock
that are owned by Company as treasury stock and each share of Company Common
Stock owned by Parent or any direct or indirect wholly owned subsidiary of
Parent or of Company immediately prior to the Effective Time shall be canceled
and extinguished without any conversion thereof.
(c) COMPANY STOCK OPTION PLANS. At the Effective
Time, the Company 1995 Stock Option Plan, as amended, the Company 1993
Restricted Stock Purchase Plan and the Company Second Amended and Restated 1998
Non-Executive Employee Stock Option Plan (collectively, the "Company Stock
Option Plans") and all options to purchase Company Common Stock then outstanding
under the Company Stock Option Plans shall be assumed by Parent in accordance
with Section 5.10.
(d) CAPITAL STOCK OF MERGER SUB. At the
Effective Time, each share of Common Stock, $0.01 par value, of Merger Sub
("Merger Sub Common Stock") issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of Common Stock, $0.01 par value, of the
Surviving Corporation, and the Surviving Corporation shall be a wholly-owned
subsidiary of Parent. Each stock certificate of Merger Sub evidencing ownership
of any such shares shall continue to evidence ownership of such shares of
capital stock of the Surviving Corporation.
(e) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange
Ratio shall be adjusted in the event of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
Parent Common Stock or Company Common Stock), reorganization, recapitalization
or other like change with respect to Parent Common Stock or
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Company Common Stock occurring after the date hereof and prior to the Effective
Time and of any increase in the number of shares of Company Common Stock on a
fully diluted, as converted basis relative to such number as derived from
Section 2.2 hereof, so as to provide holders of Company Common Stock and Parent
the same economic effect as contemplated by this Agreement prior to such stock
split, reverse split, stock dividend, reorganization, recapitalization, like
change or increase.
(f) FRACTIONAL SHARES. No fraction of a share
of Parent Common Stock will be issued, but in lieu thereof each holder of shares
of Company Common Stock who would otherwise be entitled to a fraction of a share
of Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock to be received by such holder) shall receive from Parent an amount of cash
(rounded to the nearest whole cent) equal to the product of (i) such fraction,
multiplied by (ii) the closing price for a share of Parent Company Stock on the
Nasdaq National Market on the last full trading day prior to the Effective Time.
1.7 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. Parent's transfer agent
shall act as exchange agent (the "Exchange Agent") in the Merger.
(b) PARENT TO PROVIDE COMMON STOCK AND CASH.
Promptly after the Effective Time, Parent shall deliver to the Exchange Agent
for exchange in accordance with this Article I, through such reasonable
procedures as Parent may adopt, (i) the shares of Parent Common Stock issuable
pursuant to Section 1.6(a) in exchange for shares of Company Common Stock
outstanding immediately prior to the Effective Time and (ii) cash in an amount
sufficient to permit payment of cash in lieu of fractional shares pursuant to
Section 1.6(f).
(c) EXCHANGE PROCEDURES. Promptly and in any
event not later than 15 business days after the Effective Time, the Surviving
Corporation shall cause to be mailed to each holder of record of a certificate
or certificates (the "Certificates") which immediately prior to the Effective
Time represented outstanding shares of Company Common Stock, whose shares were
converted into the right to receive shares of Parent Common Stock (and cash in
lieu of fractional shares) pursuant to Section 1.6, (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon receipt of the Certificates by the
Exchange Agent, and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing shares
of Parent Common Stock (and cash in lieu of fractional shares). Upon surrender
of a Certificate for cancellation to the Exchange Agent or to such other agent
or agents as may be appointed by Parent, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing the number of whole
shares of Parent Common Stock and payment in lieu of fractional shares which
such holder has the right to receive pursuant to Section 1.6, and the
Certificate so surrendered shall forthwith be canceled. Until so surrendered,
each outstanding Certificate that, prior to the Effective Time, represented
shares of Company Common Stock will be deemed from and after the Effective Time,
for all corporate purposes, other than the payment of dividends, to evidence the
ownership of the number of full shares of
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Parent Common Stock into which such shares of Company Common Stock shall have
been so converted and the right to receive an amount in cash in lieu of the
issuance of any fractional shares in accordance with Section 1.6.
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED
SHARES. No dividends or other distributions with respect to Parent Common Stock
with a record date after the Effective Time will be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby until the holder of record of such Certificate shall
surrender such Certificate. Subject to applicable law, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, at the time of such surrender, the amount of any
such dividends or other distributions with a record date after the Effective
Time theretofore payable (but for the provisions of this Section 1.7(d)) with
respect to such shares of Parent Common Stock.
(e) TRANSFERS OF OWNERSHIP. If any certificate
for shares of Parent Common Stock is to be issued in a name other than that in
which the Certificate surrendered in exchange therefor is registered, it will be
a condition of the issuance thereof that the Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of a certificate
for shares of Parent Common Stock in any name other than that of the registered
holder of the Certificate surrendered, or established to the satisfaction of
Parent or any agent designated by it that such tax has been paid or is not
payable.
(f) NO LIABILITY. Notwithstanding anything to
the contrary in this Section 1.7, none of the Exchange Agent, the Surviving
Corporation, Parent or any party hereto shall be liable to any person for any
amount properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK.
All shares of Parent Common Stock issued upon the surrender for exchange of
shares of Company Common Stock in accordance with the terms hereof (including
any cash paid in lieu of fractional shares) shall be deemed to have been issued
in full satisfaction of all rights pertaining to such shares of Company Common
Stock, and there shall be no further registration of transfers on the records of
the Surviving Corporation of shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
1.9 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event
any Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof, such shares of
Parent Common Stock (and cash in lieu of fractional shares) as may be required
pursuant to Section 1.6; PROVIDED, HOWEVER, that Parent may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any
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claim that may be made against Parent, the Surviving Corporation or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
1.10 TAX AND ACCOUNTING CONSEQUENCES. It is intended by
the parties hereto that the Merger shall constitute a reorganization within the
meaning of Section 368 of the Code and a pooling of interests for accounting
purposes.
1.11 WITHHOLDING RIGHTS. Parent and the Surviving
Corporation shall be entitled to deduct and withhold from the number of shares
of Parent Common Stock otherwise deliverable under this Agreement, and from any
other payments made pursuant to this Agreement, such amounts as Parent and the
Surviving Corporation are required to deduct and withhold with respect to such
delivery and payment under the Code or any provision of state, local, provincial
or foreign tax law. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes of this Agreement as having been
delivered and paid to the holder of shares of Company Common Stock in respect of
which such deduction and withholding was made by Parent and the Surviving
Corporation.
1.12 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at
any time after the Effective Time, any further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of Company and Merger Sub, the
officers and directors of Company and Merger Sub are fully authorized in the
name of their respective corporations or otherwise to take, and will take, all
such lawful and necessary action, so long as such action is not inconsistent
with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
In this Agreement, any reference to a "Material Adverse
Effect" with respect to any person means any event, change or effect that is
materially adverse to the condition (financial or otherwise), properties,
assets, liabilities, business, operations or results of operations of such
person and its subsidiaries, taken as a whole, provided, however, that none of
the following shall be deemed by itself or by themselves, either alone or in
combination, to constitute a Material Adverse Effect on such person: (a) any
change in the market price or trading volume of such person; (b) with respect to
Company, any adverse effect on the bookings, revenues, gross margins or earnings
of Company, or any delay in or reduction or cancellation of orders of Company's
products, following execution of this Agreement which is primarily attributable
to the announcement of the execution of this Agreement and the transactions
contemplated hereby; (c) any change arising out of conditions affecting the
economy or industry of such person in general which does not affect such person
in a materially disproportionate manner relative to other participants in the
economy or such industry, respectively; or (d) with respect to the Company,
employee attrition which is primarily attributable to (i) the announcement of
the execution of this Agreement and the transactions contemplated hereby or (ii)
any action directly required of Company by Parent under Section 4.2 or any
omission of
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Company directly resulting from Parent's failure to consent to actions requested
to be taken by Company under Section 4.2.
In this Agreement, any reference to a party's "knowledge"
means such party's actual knowledge after reasonable inquiry of officers,
directors and other employees of such party charged with senior administrative
or operational responsibility for such matters.
Except as disclosed in a document of even date herewith and
delivered by Company to Parent prior to the execution and delivery of this
Agreement and referring to the representations and warranties in this Agreement
(the "Company Disclosure Schedule"), any exception so disclosed in the Company
Disclosure Schedule to specifically identify the Section, Subsection or clause
hereof to which such exception relates or to otherwise have its applicability to
any Section, Subsection or clause be reasonably apparent on the face of such
exception, Company represents and warrants to Parent and Merger Sub as follows:
2.1 ORGANIZATION, STANDING AND POWER. Each of Company and
its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. Each of Company and
its subsidiaries has the corporate power to own its properties and to carry on
its business as now being conducted and as proposed to be conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the failure to be so qualified and in good standing would have a Material
Adverse Effect on Company. Company has delivered or made available a true and
correct copy of the Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), and Amended and Restated Bylaws or other
charter documents, as applicable, of Company and each of its subsidiaries, each
as amended to date, to Parent. Neither Company nor any of its subsidiaries is in
violation of any of the provisions of its Certificate of Incorporation or Bylaws
or equivalent organizational documents. Company is the owner of all outstanding
shares of capital stock of each of its subsidiaries (other than directors'
qualifying shares) and all such shares are duly authorized, validly issued,
fully paid and nonassessable. All of the outstanding shares of capital stock of
each such subsidiary are owned by Company free and clear of all liens, charges,
claims or encumbrances or rights of others. There are no outstanding
subscriptions, options, warrants, puts, calls, rights, exchangeable or
convertible securities or other commitments or agreements of any character
relating to the issued or unissued capital stock or other securities of any such
subsidiary, or otherwise obligating Company or any such subsidiary to issue,
transfer, sell, purchase, redeem or otherwise acquire any such securities.
Except as disclosed in the Company SEC Documents (as defined in Section 2.4),
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity.
2.2 CAPITAL XXXXXXXXX.Xx of the date hereof, the
authorized capital stock of Company consists of 40,000,000 shares of Common
Stock, $0.01 par value, and 5,000,000 shares of Preferred Stock, $0.01 par
value, of which there were issued and outstanding as of the close of business on
April 8, 1999, 27,160,093 shares of Common Stock and no shares of Preferred
Stock. There are no other outstanding shares of capital stock or voting
securities and no outstanding commitments to issue any shares of capital stock
or voting securities after April 8, 1999 other than pursuant to the Option
Agreement, the exercise of options outstanding
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as of such date under the Company Stock Option Plans, pursuant to the Company
1996 Employee Stock Purchase Plan, as amended (the "Company ESPP"), or grants of
capital stock of Company or options to purchase capital stock of Company
permitted by Article IV of this Agreement. All outstanding shares of Company
Common Stock are duly authorized, validly issued, fully paid and non-assessable
and are free of any liens or encumbrances other than any liens or encumbrances
created by or imposed upon the holders thereof, and are not subject to
preemptive rights or rights of first refusal created by statute, the Certificate
of Incorporation or Bylaws of Company or any agreement to which Company is a
party or by which it is bound. As of the close of business on April 7, 1999,
Company has reserved (i) 8,527,671 shares of Common Stock for issuance to
employees, consultants and directors pursuant to the Company Stock Option Plans,
of which 1,145,633 shares have been issued pursuant to option exercises or
direct stock purchases, 5,440,640 shares are subject to outstanding, unexercised
options, and no shares are subject to outstanding stock purchase rights, and
(ii) 500,000 shares of Common Stock for issuance to employees pursuant to the
Company ESPP, of which 121,218 shares have been issued. Except for (i) the
rights created pursuant to this Agreement, the Option Agreement, the Company
Stock Option Plans and the Company ESPP and (ii) the Company's rights to
repurchase any unvested shares under the Company Stock Option Plans, there are
no other options, warrants, calls, rights, commitments or agreements of any
character to which Company is a party or by which it is bound obligating Company
to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of capital stock of Company or
obligating Company to grant, extend, accelerate the vesting of, change the price
of, or otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement. Except as contemplated by this Agreement, there are no
contracts, commitments or agreements relating to voting, purchase or sale of
Company's capital stock (i) between or among Company and any of its stockholders
and (ii) to Company's knowledge, between or among any of Company's stockholders.
The terms of the Company Stock Option Plans permit the assumption or
substitution of options to purchase Parent Common Stock as provided in this
Agreement, without the consent or approval of the holders of such securities,
the Company stockholders, or otherwise. True and complete copies of all
agreements and instruments relating to or issued under the Company Stock Option
Plans or Company ESPP have been made available to Parent and such agreements and
instruments have not been amended, modified or supplemented other than as
permitted by Article IV of this Agreement, and there are no agreements to amend,
modify or supplement such agreements or instruments in any case from the form
made available to Parent other than as permitted by Article IV of this
Agreement.
2.3 AUTHORITY. Company has all requisite corporate power
and authority to enter into this Agreement and the Option Agreement and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Company, subject only to the approval
of the Merger by Company's stockholders as contemplated by Section 6.1(a). Each
of this Agreement and the Option Agreement has been duly executed and delivered
by Company and constitutes the valid and binding obligation of Company
enforceable against Company in accordance with its terms, except as
enforceability may be limited by bankruptcy and other laws affecting the rights
and remedies of creditors generally and general principles of equity. The
execution and delivery of this Agreement and the Option Agreement by Company
does not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any
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violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any benefit under (i) any provision of the Certificate
of Incorporation or Bylaws of Company or any of its subsidiaries, as amended,
or, subject to obtaining the approval of the Company's stockholders of the
Merger and compliance with the requirements set forth in the next sentence of
this Section 2.3, (ii) any material mortgage, indenture, lease, contract or
other agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Company
or any of its subsidiaries or any of their properties or assets. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality ("Governmental Entity") is required by or with
respect to Company or any of its subsidiaries in connection with the execution
and delivery of this Agreement, the Option Agreement, or the consummation of the
transactions contemplated hereby and thereby, except for (i) the filing of the
Certificate of Merger as provided in Section 1.2; (ii) the filing with the
Securities and Exchange Commission (the "SEC") and the National Association of
Securities Dealers, Inc. (the "NASD") of the Proxy Statement (as defined in
Section 2.23) relating to the Company Stockholders Meeting (as defined in
Section 2.23); (iii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities laws and the securities laws of any foreign country; (iv) such
filings as may be required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended ("HSR"); (v) the filing of a Form S-4 Registration
Statement with the SEC in accordance with the Securities Act of 1933, as
amended; (vi) the filing of a Current Report on Form 8-K with the SEC; and (vii)
such other consents, authorizations, filings, approvals and registrations which,
if not obtained or made, would not have a Material Adverse Effect on Company and
would not prevent, or materially alter or delay any of the transactions
contemplated by this Agreement or the Option Agreement.
2.4 SEC DOCUMENTS; FINANCIAL STATEMENTS. Company has
furnished or made available to Parent a true and complete copy of each
statement, report, registration statement (with the prospectus in the form filed
pursuant to Rule 424(b) of the Securities Act of 1933, as amended (the
"Securities Act")), definitive proxy statement and other filing filed with the
SEC by Company since November 20, 1996, and, prior to the Effective Time,
Company will have furnished Parent with true and complete copies of any
additional documents filed with the SEC by Company prior to the Effective Time
(collectively, the "Company SEC Documents"). In addition, Company has made
available to Parent all exhibits to the Company SEC Documents filed prior to the
date hereof, and will promptly make available to Parent all exhibits to any
additional Company SEC Documents filed prior to the Effective Time. All
documents required to be filed as exhibits to the Company SEC Documents have
been so filed, and all material contracts so filed as exhibits are in full force
and effect, except those which have expired in accordance with their terms, and
neither Company nor any of its subsidiaries is in default thereunder. As of
their respective filing dates, the Company SEC Documents complied in all
material respects with the requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the Securities Act, and none of the Company
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a subsequently filed Company
SEC Document. The financial statements of Company, including the notes thereto,
included in
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the Company SEC Documents (the "Company Financial Statements") were complete and
correct in all material respects as of their respective dates, complied as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto as of their
respective dates, and have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a basis consistent
throughout the periods indicated and consistent with each other (except as may
be indicated in the notes thereto or, in the case of unaudited statements
included in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q of the
SEC). The Company Financial Statements fairly present the consolidated financial
condition and operating results of Company and its subsidiaries at the dates and
during the periods indicated therein (subject, in the case of unaudited
statements, to normal, recurring year-end adjustments).
2.5 ABSENCE OF CERTAIN CHANGES. Since December 31, 1998
(the "Company Balance Sheet Date"), Company has conducted its business in the
ordinary course consistent with past practice and there has not occurred: (i)
any change, event or condition (whether or not covered by insurance) that has
resulted in a Material Adverse Effect to Company; (ii) any acquisition, sale or
transfer of any material asset of Company or any of its subsidiaries other than
in the ordinary course of business and consistent with past practice; (iii) any
change in accounting methods or practices (including any change in depreciation
or amortization policies or rates) by Company or any revaluation by Company of
any of its or any of its subsidiaries' assets; (iv) any declaration, setting
aside, or payment of a dividend or other distribution with respect to the shares
of Company, or any direct or indirect redemption, purchase or other acquisition
by Company of any of its shares of capital stock; (v) any amendment or change to
the Certificate of Incorporation or Bylaws; (vi) any increase in or modification
of the compensation or benefits payable or to become payable by Company to any
of its directors or employees other than in the ordinary course consistent with
past practice; or (vii) any negotiation or agreement by Company or any of its
subsidiaries to do any of the things described in the preceding clauses (i)
through (vi) (other than negotiations with Parent and its representatives
regarding the transactions contemplated by this Agreement).
2.6 ABSENCE OF UNDISCLOSED LIABILITIES. Company has no
material obligations or liabilities of any nature (matured or unmatured, fixed
or contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet or in the related Notes to Consolidated Financial Statements
included in Company's Annual Report on Form 10-K for the period ended December
31, 1998 (the "Company Balance Sheet"), (ii) those incurred in the ordinary
course of business since the date of the Company Balance Sheet and not
reasonably likely to have a Material Adverse Effect on the Company, and (iii)
those incurred in connection with the execution of this Agreement.
2.7 LITIGATION. There is no private or governmental
action, suit, proceeding, claim, arbitration or investigation pending before any
agency, court or tribunal, foreign or domestic, or, to the knowledge of Company
or any of its subsidiaries, threatened against Company or any of its
subsidiaries or any of their respective properties or any of their respective
officers or directors (in their capacities as such) that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on
Company. There is no judgment, decree or order against Company or any of its
subsidiaries, or, to the knowledge of Company and its subsidiaries, any of their
respective directors or officers (in their capacities as such), that
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could prevent, enjoin, alter or materially delay any of the transactions
contemplated by this Agreement, or that could reasonably be expected to have a
Material Adverse Effect on Company.
2.8 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no
agreement, judgment, injunction, order or decree binding upon Company or any of
its subsidiaries which has or reasonably could be expected to have the effect of
prohibiting or materially impairing any business practice of Company or any of
its subsidiaries, any acquisition of property by Company or any of its
subsidiaries or the conduct of business by Company or any of its subsidiaries.
2.9 GOVERNMENTAL AUTHORIZATION. Company and each of its
subsidiaries have obtained each federal, state, county, local or foreign
governmental consent, license, permit, grant, or other authorization of a
Governmental Entity (i) pursuant to which Company or any of its subsidiaries
currently operates or holds any interest in any of its properties or (ii) that
is required for the operation of Company's or any of its subsidiaries' business
or the holding of any such interest ((i) and (ii) herein collectively called
"Company Authorizations"), and all of such Company Authorizations are in full
force and effect, except where the failure to obtain or have any of such Company
Authorizations could not reasonably be expected to have a Material Adverse
Effect on Company.
2.10 TITLE TO PROPERTY. Company and its subsidiaries have
good and valid title to all of their respective properties, interests in
properties and assets, real and personal, reflected in the Company Balance Sheet
or acquired after the Company Balance Sheet Date (except properties, interests
in properties and assets sold or otherwise disposed of since the Company Balance
Sheet Date in the ordinary course of business), or in the case of leased
properties and assets, valid leasehold interests in, free and clear of all
mortgages, liens, pledges, charges or encumbrances of any kind or character,
except (i) the lien of current taxes not yet due and payable, (ii) such
imperfections of title, liens and easements as do not and will not materially
detract from or interfere with the use of the properties subject thereto or
affected thereby, or otherwise materially impair business operations involving
such properties, (iii) liens securing debt which is reflected on the Company
Balance Sheet, and (iv) liens that in the aggregate would not have a Material
Adverse Effect on Company. The plants, property and equipment of Company and its
subsidiaries that are used in the operations of their businesses are in good
operating condition and repair. All properties used in the operations of Company
and its subsidiaries are reflected in the Company Balance Sheet to the extent
generally accepted accounting principles require the same to be reflected.
SCHEDULE 2.10 identifies each parcel of real property owned or leased by Company
or any of its subsidiaries. No lease relating to a foreign parcel contains any
extraordinary payment obligation.
2.11 INTELLECTUAL PROPERTY.
(a) Company and its subsidiaries own, or are
licensed or otherwise possess legally enforceable and unencumbered rights to use
all patents, trademarks, trade names, service marks, domain names, database
rights, copyrights, and any applications therefor, maskworks, net lists,
schematics, technology, know-how, trade secrets, inventory, ideas, algorithms,
processes, computer software programs or applications (in both source code and
object code form), and tangible or intangible proprietary information or
material ("Intellectual Property") that are used in the business of Company and
its subsidiaries as currently conducted.
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Except as permitted by Article IV of this Agreement, Company has not (i)
licensed any of its Intellectual Property in source code form to any party or
(ii) entered into any exclusive agreements relating to its Intellectual
Property. No royalties or other continuing payment obligations are due in
respect of Third Party Intellectual Property Rights.
(b) SCHEDULE 2.11 lists (i) all patents and
patent applications and all registered and unregistered trademarks, trade names
and service marks, registered copyrights, and maskworks owned by the Company,
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 material licenses, sublicenses and other
agreements as to which Company is a party and pursuant to which any person is
authorized to use any Intellectual Property owned by the Company, and (iii) all
licenses, sublicenses and other agreements as to which Company is a party and
pursuant to which Company is authorized to use any third party patents,
trademarks or copyrights, including software ("Third Party Intellectual Property
Rights") which are incorporated in, are, or form a part of any product material
to Company's business, other than commercially available, off-the-shelf
software.
(c) To the knowledge of Company, there is no
unauthorized use, disclosure, infringement or misappropriation of any
Intellectual Property rights owned by Company or any of its subsidiaries, or any
Intellectual Property right of any third party to the extent licensed by or
through Company or any of its subsidiaries, by any third party, including any
employee or former employee of Company or any of its subsidiaries. Except as
permitted by Article IV of this Agreement, neither Company nor any of its
subsidiaries has entered into any agreement to indemnify any other person
against any charge of infringement of any Intellectual Property owned by the
Company, other than indemnification provisions contained in purchase orders,
distribution agreements and license agreements arising in the ordinary course of
business.
(d) Company is not, and will not be, as a result
of the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, in breach of any license, sublicense or other
agreement relating to the Intellectual Property or Third Party Intellectual
Property Rights.
(e) All patents, trademarks, service marks and
copyrights held by Company are valid and subsisting. Company (i) has not been
sued in any suit, action or proceeding, or received any notice or, to Company's
knowledge, threat, which involves a claim of infringement of any patents,
trademarks, service marks, copyrights or violation of any trade secret or other
intellectual property right of any third party and (ii) has not brought any
action, suit or proceeding for infringement of Intellectual Property or breach
of any license or agreement involving Intellectual Property against any third
party. The manufacture, marketing, licensing or sale of Company's products does
not infringe any patent, trademark, service xxxx, copyright, trade secret or
other intellectual property right of any third party.
(f) Company has secured from all consultants and
employees who contributed to the creation or development of Intellectual
Property valid written assignments of the rights to such contributions that
Company does not already own by operation of law.
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(g) Company has taken reasonable measures
consistent with industry practice to protect and preserve the confidentiality of
all non-public Intellectual Property not otherwise protected by patents, or
patent applications or copyright ("Confidential Information"). All authorized
use, disclosure or appropriation of Confidential Information owned by Company by
or to a third party has been pursuant to the terms of a written agreement
between Company and such third party. All use, disclosure or appropriation of
Confidential Information not owned by Company has been pursuant to the terms of
a written agreement between Company and the owner of such Confidential
Information, or is otherwise lawful.
(h) Except as set forth on SCHEDULE 2.11,
Company has not assumed any contracts pursuant to its acquisition of the assets
of Danar Corporation or TeleQuery, Inc.
(i) To Company's knowledge, all users of
Company's products are using Release 4.0, Release 3.0, Release 2.5 or Release
2.0 of such products.
(j) Company has not received any opinion of
counsel in relation to third party patents.
2.12 ENVIRONMENTAL MATTERS.
(a) The following terms shall be defined
as follows:
(i) "Environmental and Safety Laws"
shall mean any federal, state or local laws, ordinances, codes, regulations,
rules, policies and orders that are intended to assure the protection of the
environment, or that classify, regulate, call for the remediation of, require
reporting with respect to, or list or define air, water, groundwater, solid
waste, hazardous or toxic substances, materials, wastes, pollutants or
contaminants, or which are intended to assure the safety of employees, workers
or other persons, including the public.
(ii) "Hazardous Materials" shall mean
any toxic or hazardous substance, material or waste or any pollutant or
contaminant, or infectious or radioactive substance or material, including
without limitation, those substances, materials and wastes defined in or
regulated under any Environmental and Safety Laws.
(iii) "Property" shall mean all real
property leased or owned by Company or its subsidiaries either currently or in
the past.
(iv) "Facilities" shall mean all
buildings and improvements on the Property of Company or its subsidiaries.
(b) Company represents and warrants that, except
in all cases as, in the aggregate, would not have a Material Adverse Effect on
Company, as follows: (i) to Company's knowledge, no methylene chloride or
asbestos is contained in or has been used at or released from the Facilities;
(ii) all Hazardous Materials and wastes have been disposed of in accordance with
all Environmental and Safety Laws; (iii) Company and its subsidiaries have
received no notice (verbal or written) of any noncompliance of the Facilities or
its past or present operations with Environmental and Safety Laws; (iv) no
notices, administrative actions or suits are pending or, to Company's knowledge,
threatened relating to a violation of any Environmental and Safety
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Laws; (v) neither Company nor its subsidiaries are a potentially responsible
party under the federal Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), or state analog statute, arising out of events occurring
prior to the Closing Date; (vi) there have not been in the past, and are not
now, any Hazardous Materials on, under or migrating to or from the Facilities or
Property; (vii) to Company'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) to Company's knowledge, there are no
polychlorinated biphenyls (PCBs) deposited, stored, disposed of or located on
the Property or Facilities or any equipment on the Property containing PCBs at
levels in excess of 50 parts per million; (ix) to Company's knowledge, there is
no formaldehyde on the Property or in the Facilities, nor any insulating
material containing urea formaldehyde in the Facilities; (x) Company's and its
subsidiaries uses and activities in the Facilities, and, to Company's knowledge,
the Facilities, have at all times complied with all Environmental and Safety
Laws; and (xi) Company and its subsidiaries have all the permits and licenses
required to be issued and are in full compliance with the terms and conditions
of those permits.
2.13 TAXES. The Company and each of its subsidiaries, and
any consolidated, combined, unitary or aggregate group for Tax (as defined
below) purposes of which the Company or any of its subsidiaries is or has been a
member, have properly completed and timely filed all Tax Returns required to be
filed by them and have paid all Taxes shown thereon to be due, other than any
Taxes for which adequate reserves under generally accepted accounting principles
have been recorded in the Financial Statements. The Company has provided
adequate accruals in accordance with generally accepted accounting principles in
its Financial Statements for any Taxes that have not been paid, whether or not
shown as being due on any Tax Returns. The Company has no material liability for
unpaid Taxes accruing after the date of its latest Financial Statements other
than Taxes arising in the ordinary course of its business. There is (i) no
material claim for Taxes that is a lien against the property of the Company or
any of its subsidiaries or is being asserted against the Company or any of its
subsidiaries other than liens for Taxes not yet due and payable, (ii) the
Company has not been notified and has no other knowledge that any audit of any
Tax Return of the Company or any of its subsidiaries is being conducted by a Tax
Authority, and (iii) no extension of the statute of limitations on the
assessment of any Taxes granted by the Company or any of its subsidiaries and
currently in effect. The Company has not been and 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. Neither the Company nor any of
its subsidiaries has filed or will file any consent to have the provisions of
paragraph 341(f)(2) of the Code (or comparable provisions of any state Tax laws)
apply to the Company or any of its subsidiaries. Neither the Company nor any of
its subsidiaries is a party to any Tax sharing or Tax allocation agreement nor
does the Company or any of its subsidiaries have any liability or potential
liability to another party under any such agreement. Neither the Company nor any
of its subsidiaries has filed any disclosures under Section 6662 or comparable
provisions of state, local or foreign law to prevent the imposition of penalties
with respect to any Tax reporting position taken on any Tax Return. Neither the
Company nor any of its subsidiaries has ever been a member of a consolidated,
combined or unitary group of which the Company was not the ultimate parent
corporation. The Company and each of its subsidiaries have in their possession
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receipts for any Taxes paid to foreign Tax authorities. For purposes of this
Agreement, the following terms have the following meanings: "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means (i) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
governmental entity (a "Tax Authority") responsible for the imposition of any
such tax (domestic or foreign), (ii) any liability for the payment of any
amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period, and
(iii) any liability for the payment of any amounts of the type described in (i)
or (ii) as a result of being a transferee of or successor to any person or as a
result of any express or implied obligation to indemnify any other person. 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.
2.14 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 2.14 lists, with respect to
Company, any subsidiary of Company and any trade or business (whether or not
incorporated) which is treated as a single employer with Company (an "ERISA
Affiliate") within the meaning of Section 414(b), (c), (m) or (o) of the Code,
(i) all material employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), (ii)
each loan to a non-officer employee in excess of $50,000, loans to officers and
directors and any stock option, stock purchase, phantom stock, stock
appreciation right, supplemental retirement, severance, sabbatical, medical,
dental, vision care, disability, employee relocation, cafeteria benefit (Code
section 125) or dependent care (Code Section 129), life insurance or accident
insurance plans, programs or arrangements, (iii) all bonus, pension, profit
sharing, savings, deferred compensation or incentive plans, programs or
arrangements, (iv) other fringe or employee benefit plans, programs or
arrangements that apply to senior management of Company and that do not
generally apply to all employees, and (v) any current or former employment or
executive compensation or severance agreements, written or otherwise, as to
which unsatisfied obligations of Company of greater than $50,000 remain for the
benefit of, or relating to, any present or former employee, consultant or
director of Company (together, the "Company Employee Plans").
(b) Company has furnished or made available to
Parent a copy of each of the Company Employee Plans and related plan documents
(including trust documents, insurance policies or contracts, employee booklets,
summary plan descriptions and other authorizing documents, and any material
employee communications relating thereto) and has, with respect to each Company
Employee Plan which is subject to ERISA reporting requirements, provided copies
of the Form 5500 reports filed for the last three plan years. Any Company
Employee Plan intended to be qualified under Section 401(a) of the Code may rely
on an opinion letter issued by the Internal Revenue Service for a prototype plan
or has either obtained from the Internal Revenue Service a favorable
determination letter as to its qualified status under the Code, including all
amendments to the Code effected by the Tax Reform Act of 1986 and
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subsequent legislation, or has applied to the Internal Revenue Service for such
a determination letter prior to the expiration of the requisite period under
applicable Treasury Regulations or Internal Revenue Service pronouncements in
which to apply for such determination letter and to make any amendments
necessary to obtain a favorable determination. Company has also furnished Parent
with the most recent Internal Revenue Service determination letter or opinion
letter, if applicable, issued with respect to each such Company 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
Company Employee Plan subject to Code Section 401(a). Company has also furnished
Parent with all registration statements and prospectuses prepared in connection
with each Company Employee Plan.
(c) (i) None of the Company Employee Plans
promises or provides retiree medical or other retiree welfare benefits to any
person, except as required by applicable law; (ii) there has been no "prohibited
transaction," as such term is defined in Section 406 of ERISA and Section 4975
of the Code, with respect to any Company Employee Plan, which could reasonably
be expected to have, in the aggregate, a Material Adverse Effect on Company;
(iii) each Company Employee Plan has been administered in accordance with its
terms and in compliance with the requirements prescribed by any and all
statutes, rules and regulations (including ERISA and the Code), except as would
not have, in the aggregate, a Material Adverse Effect on Company, and Company
and each subsidiary or ERISA Affiliate have performed 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 default or material
violation by any other party to, any of the Company Employee Plans; (iv) neither
Company nor any subsidiary or ERISA Affiliate is subject to any liability or
penalty under Sections 4976 through 4980 of the Code or Title I of ERISA with
respect to any of the Company Employee Plans; (v) all material contributions
required to be made by Company or any subsidiary or ERISA Affiliate to any
Company Employee Plan have been made on or before their due dates and a
reasonable amount has been accrued for contributions to each Company Employee
Plan for the current plan years; (vi) with respect to each Company Employee
Plan, no "reportable event" within the meaning of Section 4043 of ERISA
(excluding any such event for which the thirty (30) day notice requirement has
been waived under the regulations to Section 4043 of ERISA) nor any event
described in Section 4062, 4063 or 4041 or ERISA has occurred; (vii) no Company
Employee Plan is covered by, and neither Company nor any subsidiary or ERISA
Affiliate has incurred or expects to incur any liability under Title IV of ERISA
or Section 412 of the Code; and (viii) each Company Employee Plan can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to Parent (other than for benefits
accrued through the date of termination and ordinary administrative expenses
typically incurred in a termination event). With respect to each Company
Employee Plan subject to ERISA as either an employee pension plan within the
meaning of Section 3(2) of ERISA or an employee welfare benefit plan within the
meaning of Section 3(1) of ERISA, Company has prepared in good faith and timely
filed all requisite governmental reports (which were true and correct as of the
date filed) and has properly and timely filed and distributed or posted all
notices and reports to employees required to be filed, distributed or posted
with respect to each such Company Employee Plan, except to the extent that
failure to do so would not, in the aggregate, have a Material Adverse Effect on
the Company. No suit, administrative proceeding, action or other litigation has
been brought, or to the knowledge of Company is threatened (other than routine
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claims for benefits), against or with respect to any such Company Employee Plan,
including any audit or inquiry by the IRS or United States Department of Labor.
(d) With respect to each Company Employee Plan,
Company and each of its United States subsidiaries have complied except to the
extent that such failure to comply would not, individually or in the aggregate,
have a Material Adverse Effect on Company, with (i) the applicable health care
continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and the regulations (including proposed
regulations) thereunder, (ii) the applicable requirements of the Family Medical
and Leave Act of 1993 and the regulations thereunder, and (iii) the applicable
requirements of the Health Insurance Portability and Accountability Act of 1996
and the regulations (including proposed regulations) thereunder.
(e) Except as permitted by Article IV of this
Agreement, there has been no amendment to, written interpretation or
announcement (whether or not written) by Company, any Company subsidiary or
other ERISA Affiliate relating to, or change in participation or coverage under,
any Company Employee Plan which would materially increase the expense of
maintaining such Plan above the level of expense incurred with respect to that
Plan for the most recent fiscal year included in Company's financial statements.
(f) Company does not currently maintain,
sponsor, participate in or contribute to, nor has it ever maintained,
established, sponsored, participated in, or contributed to, any pension plan
(within the meaning of Section 3(2) of ERISA) which is subject to Part 3 of
Subtitle B of Title I of ERISA, Title IV of ERISA or Section 4.12 of the Code.
(g) Neither Company nor any Company subsidiary
or other ERISA Affiliate is a party to, or has made any contribution to or
otherwise incurred any obligation under, any "multiemployer plan" as defined in
Section 3(37) of ERISA.
2.15 CERTAIN AGREEMENTS AFFECTED BY THE MERGER. Neither
the execution and delivery of this Agreement nor the consummation of the
transaction contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation, golden parachute,
bonus or otherwise) becoming due to any director or employee of Company or any
of its subsidiaries, (ii) materially increase any benefits otherwise payable by
Company or (iii) result in the acceleration of the time of payment or vesting of
any such benefits.
2.16 EMPLOYEE MATTERS. Company and each of its
subsidiaries are in compliance in all 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 is not engaged in any unfair
labor practice, except where the failure to be in compliance or the engagement
in such unfair labor practices would not have a Material Adverse Effect on
Company. Company has in all material respects withheld all amounts required by
law or by agreement to be withheld from the wages, salaries, and other payments
to employees; and is not liable for any material arrears of wages or any
material taxes or any material penalty for failure to comply with any of the
foregoing. Company is not liable for any material payment to any trust or other
fund or to any governmental or administrative authority, with respect to
unemployment compensation benefits,
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social security or other benefits or obligations for employees (other than
routine payments to be made in the normal course of business and consistent with
past practice). There are no pending claims against Company or any of its
subsidiaries for any material amounts under any workers compensation plan or
policy or for long term disability that are not covered by insurance. Neither
Company nor any of its subsidiaries has any obligations under COBRA with respect
to any former employees or qualifying beneficiaries thereunder, except for
obligations that are not material in amount or covered by insurance. There are
no material controversies pending or, to the knowledge of Company or any of its
subsidiaries, threatened, between Company or any of its subsidiaries and any of
their respective employees, which controversies have or could reasonably be
expected to result in a material action, suit, proceeding, claim, arbitration or
investigation before any agency, court or tribunal, foreign or domestic. Neither
Company nor any of its subsidiaries is a party to any collective bargaining
agreement or other labor union contract nor does Company nor any of its
subsidiaries know of any activities or proceedings of any labor union to
organize any such employees. To Company's knowledge, no employees of Company are
in violation of any term of any employment contract, patent disclosure
agreement, noncompetition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed by Company
because of the nature of the business conducted or presently proposed to be
conducted by Company or to the use of trade secrets or proprietary information
of others. No employees of Company have given notice to Company, nor is Company
otherwise aware, that any such employee intends to terminate his or her
employment with Company.
2.17 INTERESTED PARTY TRANSACTIONS. Except as disclosed in
the Company SEC Documents, neither Company nor any of its subsidiaries is
indebted to any director or officer of Company or any of its subsidiaries
(except for amounts due as normal salaries and bonuses and in reimbursement of
ordinary expenses), and no such person is indebted to Company or any of its
subsidiaries, and there are no other transactions of the type required to be
disclosed pursuant to Items 402 and 404 of Regulation S-K under the Securities
Act and the Exchange Act.
2.18 INSURANCE. Company has made available to Parent all
material policies of insurance and bonds. To the Company's knowledge, there is
no material claim pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds. All premiums due and payable under all such policies and
bonds have been paid and Company and its subsidiaries are otherwise in
compliance in all material respects with the terms of such policies and bonds.
Company has no knowledge of any threatened termination of, or material premium
increase with respect to, any of such policies.
2.19 COMPLIANCE WITH LAWS. Each of Company and its
subsidiaries has complied with, are not in violation of, and have not received
any notices of violation with respect to, any federal, state, local or foreign
statute, law or regulation with respect to the conduct of its business, or the
ownership or operation of its business, except for such violations or failures
to comply as could not be reasonably expected to have a Material Adverse Effect
on Company.
2.20 BROKERS' AND FINDERS' FEES. Except for payment
obligations to Xxxx Xxxxxxxx Xxxxxxx, a division of Xxxx Xxxxxxxx Incorporated
("DRW"), and to BT Alex. Xxxxx
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Incorporated set forth in engagement letters, copies of which have been provided
to Parent, Company has not incurred, nor will it incur, directly or indirectly,
any liability for brokerage or finders' fees or agents' commissions or
investment bankers' fees or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
2.21 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS.
The information supplied by Company for inclusion in the registration statement
on Form S-4 (or such other or successor form as shall be appropriate) pursuant
to which the shares of Parent Common Stock to be issued in the Merger will be
registered with the SEC (the "Registration Statement") shall not at the time the
Registration Statement (including any amendments or supplements thereto) is
declared effective by the SEC contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The information supplied by Company for
inclusion in the proxy statement/prospectus to be sent to the stockholders of
Company in connection with the meeting of Company's stockholders to consider the
Merger (the "Company Stockholders Meeting") (such proxy statement/prospectus as
amended or supplemented is referred to herein as the "Proxy Statement") shall
not, on the date the Proxy Statement is first mailed to Company's stockholders,
at the time of the Company Stockholders Meeting and at the Effective Time,
contain any statement which, at such time, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made therein, in light of the circumstances under which they
are made, not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Company Stockholders Meeting which has become
false or misleading. If at any time prior to the Effective Time any event or
information should be discovered by Company which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy Statement,
Company shall promptly inform Parent and Merger Sub. Notwithstanding the
foregoing, Company makes no representation, warranty or covenant with respect to
any information supplied by Parent or Merger Sub which is contained in any of
the foregoing documents.
2.22 OPINION OF FINANCIAL ADVISOR. Company has been
advised in writing by its financial advisor, DRW, that in DRW's opinion, as of
the date hereof, the Exchange Ratio is fair, from a financial point of view, to
the stockholders of Company.
2.23 VOTE REQUIRED. The affirmative vote of the holders of
a majority of the shares of Company Common Stock outstanding on the record date
set for the Company Stockholders Meeting is the only vote of the holders of any
of Company's capital stock necessary to approve this Agreement and the
transactions contemplated hereby.
2.24 BOARD APPROVAL. The Board of Directors of Company has
unanimously (i) approved this Agreement and the Merger, (ii) determined that the
Merger is advisable and in the best interests of the stockholders of Company and
is on terms that are fair to such stockholders and (iii) recommended that the
stockholders of Company approve this Agreement and consummation of the Merger.
2.25 STATE TAKEOVER STATUTES. The Board of Directors of
Company has taken all actions so that the restrictions contained in Section 203
of the Delaware Law applicable to a
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"business combination" (as defined in Section 203) will not apply to the
execution, delivery or performance of this Agreement or the Option Agreement or
the consummation of the Merger or the other transactions contemplated by this
Agreement or by the Option Agreement. No other state takeover statute is
applicable to the Merger, the Merger Agreement, the Option Agreement or the
transaction contemplated hereby and thereby.
2.26 EXPORT CONTROL LAWS. Company has conducted its export
transactions in accordance with applicable provisions of United States export
control laws and regulations, including but not limited to the Export
Administration Act and implementing Export Administration Regulations, except
for such violations which would not have a Material Adverse Effect on Company.
2.27 YEAR 2000. Company's current products are "Year 2000
Compliant," where "Year 2000 Compliant" means that such products have been
designed and tested so that, when used in accordance with their associated
documentation, they are capable upon installation of accurately processing,
providing and/or receiving (i) date-related data from, into and between the
Twentieth (20th) and Twenty-First (21st) centuries, or (ii) date-related data in
connection with any valid date in the Twentieth (20th) and Twenty-First (21st)
centuries; PROVIDED that all other products used in combination in any way with
Company's current products properly exchange date-related data with them.
Company has commenced efforts to ensure that the information technology systems
and non-information technology systems used by Company in its internal
operations will function properly beyond 1999. Company has made inquiries to its
key third-party vendors and providers as to the status of their Year 2000
efforts, and has not uncovered any problems that would aversely affect the
operation of the products or that could disrupt or harm the day-to-day
functioning of the business or operations of Company.
2.28 ACCOUNTING AND TAX MATTERS. As of the date hereof,
neither Company nor, to Company's knowledge, any of its Affiliates has taken or
agreed to take any action, nor does Company have knowledge of any fact or
circumstance, that would prevent Parent from accounting for the business
combination to be effected by the Merger as a pooling of interests or prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in a document of even date herewith and
delivered by Parent to Company prior to the execution and delivery of this
Agreement and referring to the representations and warranties in this Agreement
(the "Parent Disclosure Schedule"), any exception so disclosed in the Parent
Disclosure Schedule to specifically identify the Section, Subsection or clause
hereof to which such exception relates or to otherwise have its applicability to
any Section, Subsection or clause be reasonably apparent on the face of such
exception, Parent and Merger Sub represent and warrant to Company as follows:
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3.1 ORGANIZATION, STANDING AND POWER. Each of Parent and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. Each of Parent and
Merger Sub has the corporate power to own its properties and to carry on its
business as now being conducted and as proposed to be conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the failure to be so qualified and in good standing would have a Material
Adverse Effect on Parent. Neither Parent nor Merger Sub is in violation of any
of the provisions of its Articles of Incorporation or Bylaws or equivalent
organizational documents.
3.2 CAPITAL STRUCTURE. The authorized capital stock of
Parent consists of 2,700,000,000 shares of Common Stock, $0.001 par value, and
5,000,000 shares of Preferred Stock, no par value, of which there were issued
and outstanding as of the close of business on April 12, 1999, 1,605,498,499
shares of Common Stock and no shares of Preferred Stock. The authorized capital
stock of Merger Sub consists of 1,000 shares of Common Stock, $.0001 par value,
all of which are issued and outstanding and are held by Parent. The shares of
Parent Common Stock to be issued pursuant to the Merger will be duly authorized,
validly issued, fully paid, and non-assessable.
3.3 AUTHORITY. Parent and Merger Sub have all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub. This Agreement has been duly executed and delivered by Parent and Merger
Sub and constitutes the valid and binding obligations of Parent and Merger Sub.
The execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a benefit under (i) any provision of the Articles of
Incorporation or Bylaws of Parent or any of its subsidiaries, as amended, or
(ii) any material mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or any of its
subsidiaries or their properties or assets, except where such conflict,
violation, default, termination, cancellation or acceleration with respect to
the foregoing provisions of (ii) would not have had and would not reasonably be
expected to have a Material Adverse Effect on Parent. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity, is required by or with respect to Parent or any of its
subsidiaries in connection with the execution and delivery of this Agreement by
Parent and Merger Sub or the consummation by Parent and Merger Sub of the
transactions contemplated hereby, except for (i) the filing of the Certificate
of Merger as provided in Section 1.2, (ii) the filing with the SEC and NASD of
the Registration Statement, (iii) any filings as may be required under
applicable state securities laws and the securities laws of any foreign country,
(iv) such filings as may be required under HSR, (v) the filing with the Nasdaq
National Market of a Notification Form for Listing of Additional Shares with
respect to the shares of Parent Common Stock issuable upon conversion of the
Company Common Stock in the Merger and upon exercise of the options under the
Company Stock Option Plans assumed by Parent, (vi) the filing of a registration
statement on Form S-8 with the SEC, or other applicable form covering the shares
of Parent Common Stock issuable pursuant to outstanding options under the
Company
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Stock Option Plans assumed by Parent, and (vii) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not have a Material Adverse Effect on Parent and would not prevent
or materially alter or delay any of the transactions contemplated by this
Agreement.
3.4 SEC DOCUMENTS; FINANCIAL STATEMENTS. Parent has made
available to Company each statement, report, registration statement (with the
prospectus in the form filed pursuant to Rule 424(b) of the Securities Act),
definitive proxy statement, and other filing filed with the SEC by Parent since
July 25, 1998, and, prior to the Effective Time, Parent will have furnished
Company with true and complete copies of any additional documents filed with the
SEC by Parent prior to the Effective Time (collectively, the "Parent SEC
Documents"). In addition, Parent has made available to Company all exhibits to
the Parent SEC Documents filed prior to the date hereof, and will promptly make
available to Company all exhibits to any additional Parent SEC Documents filed
prior to the Effective Time. All documents required to be filed as exhibits to
the Company SEC Documents have been so filed, and all material contracts so
filed as exhibits are in full force and effect, except those which have expired
in accordance with their terms, and neither Parent nor any of its subsidiaries
is in default thereunder. As of their respective filing dates, the Parent SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the Securities Act, and none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading,
except to the extent corrected by a subsequently filed Parent SEC Document. The
financial statements of Parent, including the notes thereto, included in the
Parent SEC Documents (the "Parent Financial Statements") were complete and
correct in all material respects as of their respective dates, complied as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto as of their
respective dates, and have been prepared in accordance with GAAP applied on a
basis consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q
of the SEC). The Parent Financial Statements fairly present the consolidated
financial condition and operating results of Parent and its subsidiaries at the
dates and during the periods indicated therein (subject, in the case of
unaudited statements, to normal, recurring year-end adjustments).
3.5 ABSENCE OF UNDISCLOSED LIABILITIES. Parent has no
material obligations or liabilities of any nature (matured or unmatured, fixed
or contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet or in the related Notes to Consolidated Financial Statements
included in Parent's Quarterly Report on Form 10-Q for the period ended January
23, 1999 (the "Parent Balance Sheet"), (ii) those disclosed in Parent SEC
documents filed subsequent to such Quarterly Report on Form 10-Q for the period
ended January 23, 1999 and (iii) those incurred in the ordinary course of
business since the date of the Parent Balance Sheet and not reasonably likely to
have a Material Adverse Effect on Parent.
3.6 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 Parent
or
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any of its subsidiaries, threatened against Parent 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 the ability of
Parent to consummate the transactions contemplated by this Agreement. There is
no judgment, decree or order against Parent or any of its subsidiaries or, to
the knowledge of Parent or any of its subsidiaries, any of their respective
directors or officers (in their capacities as such) that could prevent, enjoin,
alter or materially delay any of the transactions contemplated by this
Agreement, or that could reasonably be expected to have a material adverse
effect on the ability of Parent to consummate the transactions contemplated by
this Agreement.
3.7 BROKER'S AND FINDERS' FEES. Except for payment
obligations to Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, Parent has
not incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or investment bankers' fees or
any similar charges in connection with this Agreement or any transaction
contemplated hereby.
3.8 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS.
The information supplied by Parent and Merger Sub for inclusion in the
Registration Statement shall not, at the time the Registration Statement
(including any amendments or supplements thereto) is declared effective by the
SEC, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The information
supplied by Parent for inclusion in the Proxy Statement shall not, on the date
the Proxy Statement is first mailed to Company's stockholders, at the time of
the Company Stockholders Meeting and at the Effective Time, contain any
statement which, at such time, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which it is made, not
false or misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholders Meeting which has become false or
misleading. If at any time prior to the Effective Time any event or information
should be discovered by Parent or Merger Sub which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy Statement,
Parent or Merger Sub will promptly inform Company. Notwithstanding the
foregoing, Parent and Merger Sub make no representation, warranty or covenant
with respect to any information supplied by Company which is contained in any of
the foregoing documents.
3.9 NO SHAREHOLDER VOTE REQUIRED. No vote of the
shareholders of Parent is necessary to approve this Agreement and the
transactions contemplated hereby.
3.10 BOARD APPROVAL. The Board of Directors of Parent has
unanimously (i) approved this Agreement and the Merger and (ii) determined that
the Merger is advisable and in the best interests of the shareholders of Parent.
3.11 ACCOUNTING AND TAX MATTERS. As of the date hereof,
neither Parent nor, to Parent's knowledge, any of its Affiliates has taken or
agreed to take any action, nor does Parent have knowledge of any fact or
circumstance, that would prevent Parent from accounting
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for the business combination to be effected by the Merger as a pooling of
interests or prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS OF COMPANY. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, Company agrees (except to
the extent consented to in writing by Parent), to carry on its and its
subsidiaries' business in the ordinary course in substantially the same manner
as heretofore conducted, to pay and to cause its subsidiaries to pay debts and
Taxes when due subject to good faith disputes over such debts or taxes, to pay
or perform other obligations when due, and to use all reasonable efforts
consistent with past practice and policies to preserve intact its and its
subsidiaries' present business organizations, use commercially reasonable
efforts consistent with past practice to keep available the services of its and
its subsidiaries' present officers and key employees and use commercially
reasonable efforts consistent with past practice to preserve its and its
subsidiaries' relationships with customers, suppliers, distributors, licensors,
licensees, and others having business dealings with it or its subsidiaries, to
the end that its and its subsidiaries' goodwill and ongoing businesses shall be
unimpaired at the Effective Time. Company agrees to promptly notify Parent of
any material event or occurrence not in the ordinary course of its or its
subsidiaries' business, and of any event which could have a Material Adverse
Effect.
4.2 RESTRICTIONS ON CONDUCT OF BUSINESS OF COMPANY.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, except as
expressly contemplated by this Agreement, Company shall not do, cause or permit
any of the following, or allow, cause or permit any of its subsidiaries to do,
cause or permit any of the following, without the prior written consent of
Parent:
(a) CHARTER DOCUMENTS. Cause or permit any
amendments to its Certificate of Incorporation or Bylaws;
(b) DIVIDENDS; CHANGES IN CAPITAL STOCK. Declare
or pay any dividends on or make any other distributions (whether in cash, stock
or property) in respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase of shares
in connection with any termination of service to it or its subsidiaries;
(c) STOCK OPTION PLANS, ETC. Take any action to
accelerate, amend or change the period of exercisability or vesting of options
or other rights granted under its stock
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plans (other than as permitted by clause (e) below) or authorize cash payments
in exchange for any options or other rights granted under any of such plans.
(d) MATERIAL CONTRACTS. Enter into any contract
or commitment, or violate, amend or otherwise modify or waive any of the terms
of any of its contracts, other than in the ordinary course of business
consistent with past practice and in no event shall such contract, commitment,
amendment, modification or waiver involve the payment by Company or any of its
subsidiaries of more than $200,000 to a licensor thereunder;
(e) ISSUANCE OF SECURITIES. Issue, deliver or
sell or authorize or propose the issuance, delivery or sale of, or purchase or
propose the purchase of, any shares of its capital stock or securities
convertible into, or subscriptions, rights, warrants or options to acquire, or
other agreements or commitments of any character obligating it to issue any such
shares or other convertible securities, other than the issuance of shares of its
Common Stock pursuant to the exercise of stock options, warrants or other rights
therefor outstanding as of the date of this Agreement; provided, however, that
Company may, in the ordinary course of business consistent with past practice,
grant options for the purchase of Company Common Stock at an exercise price
equal to the fair market value of the Company Common Stock on the grant date
under the Company Option Plans (not to exceed an aggregate of 600,000 options to
purchase shares of Company Common Stock in the aggregate or an aggregate of
300,000 options to purchase Company Common Stock in any three month period).
(f) INTELLECTUAL PROPERTY. Transfer to any
person or entity any rights to its Intellectual Property other than the transfer
of non-exclusive rights to its Intellectual Property in the ordinary course of
business consistent with past practice;
(g) EXCLUSIVE RIGHTS. Enter into or amend any
agreements pursuant to which any other party is granted exclusive marketing or
other exclusive rights of any type or scope with respect to any of its products
or technology;
(h) DISPOSITIONS. Sell, lease, license or
otherwise dispose of or encumber any of its properties or assets which are
material, individually or in the aggregate, to its and its subsidiaries'
business, taken as a whole, except in the ordinary course of business consistent
with past practice;
(i) INDEBTEDNESS. Incur any indebtedness for
borrowed money or guarantee any such indebtedness or issue or sell any debt
securities or guarantee any debt securities of others, except in the ordinary
course of business consistent with past practice;
(j) LEASES. Enter into any operating lease in
excess of $250,000;
(k) PAYMENT OF OBLIGATIONS. Pay, discharge or
satisfy in an amount in excess of $250,000 in any one case, any claim, liability
or obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise) arising other than in the ordinary course of business, other than the
payment, discharge or satisfaction of liabilities reflected or reserved against
in the Company Financial Statements;
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(l) CAPITAL EXPENDITURES. Make any capital
expenditures, capital additions or capital improvements except in the ordinary
course of business and consistent with past practice that do not exceed $250,000
individually or $2,000,000 in the aggregate;
(m) INSURANCE. Materially reduce the amount of
any material insurance coverage provided by existing insurance policies;
(n) TERMINATION OR WAIVER. Terminate or waive
any right of substantial value, other than in the ordinary course of business;
(o) EMPLOYEE BENEFIT PLANS; NEW HIRES; PAY
INCREASES. Adopt or amend any employee benefit or stock purchase or option plan,
or hire any new director level or officer level employee, pay any special bonus
or special remuneration to any employee or director, or increase the salaries or
wage rates of its employees other than, with respect to non-officer employees
and those officers set forth on Schedule 4.2(o), in the ordinary course of
business consistent with past practice;
(P) SEVERANCE ARRANGEMENTS. Grant any severance
or termination pay (i) to any director or officer or (ii) to any other employee
except payments made pursuant to written agreements outstanding on the date
hereof other than, with respect to non-officer employees and those officers set
forth on SCHEDULE 4.2(O), in the ordinary course of business consistent with
past practice.
(q) LAWSUITS. Commence a lawsuit other than
(i) for the routine collection of bills, (ii) in such cases where it in good
faith determines that failure to commence suit would result in the material
impairment of a valuable aspect of its business, provided that it consults with
Parent prior to the filing of such a suit, or (iii) for a breach of this
Agreement or any Exhibits hereto;
(r) ACQUISITIONS. Acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to its and its subsidiaries' business, taken as a whole, or
acquire or agree to acquire any equity securities of any corporation,
partnership, association or business organization;
(s) TAXES. Other than in the ordinary course of
business, make or change any material election in respect of Taxes, adopt or
change any accounting method in respect of Taxes, file any material Tax Return
or any amendment to a material Tax Return, enter into any closing agreement,
settle any claim or assessment in respect of Taxes, or consent to any extension
or waiver of the limitation period applicable to any claim or assessment in
respect of Taxes;
(t) NOTICES. Company shall give all notices and
other information required to be given to the employees of Company, any
collective bargaining unit representing any group of employees of Company, and
any applicable government authority under the WARN Act, the National Labor
Relations Act, the Internal Revenue Code, the Consolidated
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Omnibus Budget Reconciliation Act, and other applicable law in connection with
the transactions provided for in this Agreement;
(u) REVALUATION. Revalue any of its assets,
including without limitation writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course of business;
(v) ACCOUNTING POLICIES AND PROCEDURES. Make any
change to its accounting methods, principles, policies, procedures or practices,
except as may be required by GAAP, Regulation S-X promulgated by the SEC or
applicable statutory accounting principles;
(w) YEAR 2000 COMPLIANCE. Fail to carry forward
in all material respects Company's Year 2000 assessment and compliance program,
as made available to Parent by Company; or
(x) OTHER. Take or agree in writing or otherwise
to take, any of the actions described in Sections 4.2(a) through (w) above, or
any action for the primary purpose of making any of its representations or
warranties contained in this Agreement untrue or incorrect in any material
respect.
4.3 NO SOLICITATION. From and after the date hereof until
the earlier of the Effective Time or the termination of this Agreement in
accordance with Article VII, Company and its subsidiaries and the officers,
directors, representatives, employees, agents and advisors of Company and its
subsidiaries (collectively, Company's "Representatives") will not, directly or
indirectly, (i) take any action to solicit, initiate, encourage or agree to any
Takeover Proposal (as defined in Section 7.3(f)) or (ii) subject to the terms of
the immediately following sentence, engage in negotiations with, or disclose any
nonpublic information relating to Company or any of it subsidiaries to, or
afford access to the properties, books or records of Company or any of its
subsidiaries to, any person that has advised Company that it may be considering
making, or that has made, Takeover Proposal; PROVIDED, nothing herein shall
prohibit Company's Board of Directors from complying with Rules 14d-9 and 14e-2
promulgated under the Exchange Act and, PROVIDED, FURTHER, that nothing
contained in this Agreement shall prevent the Board of Directors from referring
any third party to this Section 4.3 or providing any third party with a copy of
this Section 4.3. Notwithstanding the immediately preceding sentence, if an
unsolicited written Takeover Proposal shall be received by the Board of
Directors of Company, then, to the extent the Board of Directors of Company
believes in good faith (after receiving advice from its financial advisor to
such effect) that such Takeover Proposal would, if consummated, result in a
transaction more favorable to Company's stockholders from a financial point of
view than the transaction contemplated by this Agreement (any such more
favorable Takeover Proposal being referred to in this Agreement as a "Superior
Proposal") and the Board of Directors of Company determines in good faith (after
receiving advice to such effect from outside legal counsel) that the failure to
do so would be inconsistent with the Board of Directors of Company's fiduciary
duties to Company's stockholders under applicable law, Company and its
Representatives may furnish in connection therewith information to the party
making such Superior Proposal and engage in negotiations with such party, and,
subject to the provisions hereof, endorse, recommend, approve and/or agree to
such Superior Proposal, and such actions shall not be considered a breach of
this Section 4.3 or any other provisions of this Agreement, PROVIDED that
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in each such event Company notifies Parent of such determination by the Company
Board of Directors and provides Parent with a true and complete copy of the
Superior Proposal received from such third party, and provides Parent with all
documents containing or referring to non-public information of Company that are
supplied to such third party; PROVIDED, FURTHER, that Company provides such
non-public information pursuant to a non-disclosure agreement at least as
restrictive on such third party as the Confidentiality Agreement is on Parent
(as defined in Section 5.4); and PROVIDED, FURTHER, that Company may only agree
to a Superior Proposal hereunder if the agreement related to such Superior
Proposal terminates upon the satisfaction of the condition set forth in Section
6.1(a) hereof. Company may only and may only permit any of its Representatives
to, endorse, recommend, approve and/or agree to any Superior Proposal and
withdraw its recommendation of the Merger in connection with such an endorsement
if Company has provided Parent at least three (3) days prior notice thereof.
Company will promptly (and in any event within 24 hours) notify Parent after
receipt of any Takeover Proposal or any notice that any person is considering
making a Takeover Proposal or any request for non-public information relating to
Company or any of its subsidiaries or for access to the properties, books or
records of Company or any of its subsidiaries by any person that has advised
Company that it may be considering making, or that has made, a Takeover
Proposal, or whose efforts to formulate a Takeover Proposal would be assisted
thereby (such notice to include the identity of such person or persons), and
will keep Parent fully informed of the status and details of any such Takeover
Proposal notice, request or any correspondence or communications related thereto
and shall provide Parent with a true and complete copy of such Takeover Proposal
notice or request or correspondence or communications related thereto, if it is
in writing, or a complete written summary thereof, if it is not in writing.
Company shall immediately cease and cause to be terminated all existing
discussions or negotiations with any persons conducted heretofore with respect
to a Takeover Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.
As promptly as practicable after the execution of this Agreement, Company and
Parent shall prepare, and Company shall file with the SEC, preliminary proxy
materials relating to the approval of the Merger and the transactions
contemplated hereby by the stockholders of Company. As promptly as practicable
following receipt of SEC comments thereon, Company shall file with the SEC
definitive proxy materials and Parent shall file with the SEC a Registration
Statement on Form S-4 (or such other or successor form as shall be appropriate),
in each case which complies in form with applicable SEC requirements and shall
use all reasonable efforts to cause the Registration Statement to become
effective as soon thereafter as practicable. Company will notify Parent promptly
of the receipt of any comments from the SEC or its staff and of any request by
the SEC or its staff or any other government officials for amendments or
supplements to the Proxy Statement or any other filing or for additional
information and will supply Parent with copies of all correspondence between
Company or any of its representatives, on the one hand, and the SEC, or its
staff or any other government officials, on the other hand, with respect to the
Proxy Statement or other filing. Whenever any event occurs that is required to
be set forth in an amendment or supplement to the Proxy Statement or any other
filing, Company shall
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promptly inform Parent of such occurrence and cooperate in filing with the SEC
or its staff or any other government officials, and/or mailing to shareholders
of Company, such amendment or supplement. The Proxy Statement shall include the
recommendation of the Board of Directors of Company in favor of the Merger;
provided that such recommendation may not be included, or may be withdrawn or
modified if previously included, if (i) a Superior Proposal has been made and
Company and Company's Board of Directors withdraw such recommendation in
compliance with, and otherwise have complied in all respects with, Section 4.3
or (ii) Company's Board of Directors determines in good faith (after receiving
advice to such effect from outside legal counsel) that including, or failing to
withdraw or modify, such recommendation would be inconsistent with the fiduciary
duties of Company's Board of Directors to Company's stockholders under
applicable law.
5.2 MEETING OF STOCKHOLDERS. Company shall promptly after
the date hereof take all action necessary in accordance with Delaware Law and
its Certificate of Incorporation and Bylaws to convene the Company Stockholders
Meeting within 40 days of the Registration Statement being declared effective by
the SEC. Company shall consult with Parent regarding the date of the Company
Stockholders Meeting. Subject to Section 5.1, Company shall use commercially
reasonable efforts to solicit from stockholders of Company proxies in favor of
the Merger and shall take all other commercially reasonable action necessary or
advisable to secure the vote or consent of stockholders required to effect the
Merger.
5.3 ACCESS TO INFORMATION.
(a) Upon reasonable notice, Company shall afford
Parent and its accountants, counsel and other representatives, reasonable access
during normal business hours during the period prior to the Effective Time to
(i) all of Company's and its subsidiaries' properties, books, contracts,
commitments and records, and (ii) all other information concerning the business,
properties and personnel of Company and its subsidiaries as Parent may
reasonably request. Company agrees to provide to Parent and its accountants,
counsel and other representatives copies of internal financial statements
promptly upon request. Parent shall treat all such information as confidential
pursuant to the terms of the Confidentiality Agreement.
(b) Subject to compliance with applicable law,
from the date hereof until the Effective Time, each of Parent and Company shall
confer on a regular and frequent basis with one or more representatives of the
other party to report operational matters of materiality and the general status
of ongoing operations.
(c) No information or knowledge obtained in any
investigation pursuant to this Section 5.3 shall affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
5.4 CONFIDENTIALITY. The parties acknowledge that each of
Parent and Company have previously executed a non-disclosure agreement dated
November 11, 1998 (the "Confidentiality Agreement"), which Confidentiality
Agreement shall continue in full force and effect in accordance with its terms.
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5.5 PUBLIC DISCLOSURE. Unless otherwise permitted by this
Agreement, Parent and Company shall consult with each other before issuing any
press release or otherwise making any public statement or making any other
public (or non-confidential) disclosure (whether or not in response to an
inquiry) regarding the terms of this Agreement and the transactions contemplated
hereby, and neither shall issue any such press release or make any such
statement or disclosure without the prior approval of the other (which approval
shall not be unreasonably withheld), except as may be required by law or by
obligations pursuant to any listing agreement with any national securities
exchange or with the NASD, in which case the party proposing to issue such press
release or make such public statement or disclosure shall use commercially
reasonable efforts to consult with the other party before issuing such press
release or making such public statement or disclosure.
5.6 CONSENTS; COOPERATION.
(a) Each of Parent and Company shall promptly
apply for or otherwise seek, and use its commercially reasonable efforts to
obtain, all consents and approvals required to be obtained by it for the
consummation of the Merger, including those required under HSR, and shall use
its commercially reasonable efforts to obtain all necessary consents, waivers
and approvals under any of its material contracts in connection with the Merger
for the assignment thereof or otherwise. The parties hereto will consult and
cooperate with one another, and consider in good faith the views of one another,
in connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to HSR or any other
federal or state antitrust or fair trade law.
(b) Each of Parent and Company shall use all
commercially reasonable efforts to resolve such objections, if any, as may be
asserted by any Governmental Entity with respect to the transactions
contemplated by this Agreement under HSR, the Xxxxxxx Act, as amended, the
Xxxxxxx Act, as amended, the Federal Trade Commission Act, as amended, and any
other Federal, state or foreign statutes, rules, regulations, orders or decrees
that are designed to prohibit, restrict or regulate actions having the purpose
or effect of monopolization or restraint of trade (collectively, "Antitrust
Laws"). In connection therewith, if any administrative or judicial action or
proceeding is instituted (or threatened to be instituted) challenging any
transaction contemplated by this Agreement as violative of any Antitrust Law,
each of Parent and Company shall cooperate and use all commercially reasonable
efforts vigorously to contest and resist any such action or proceeding and to
have vacated, lifted, reversed, or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent (each an "Order"),
that is in effect and that prohibits, prevents, or restricts consummation of the
Merger or any such other transactions, unless by mutual agreement Parent and
Company decide that litigation is not in their respective best interests.
Notwithstanding the provisions of the immediately preceding sentence, it is
expressly understood and agreed that neither Parent nor Company shall have any
obligation to litigate or contest any administrative or judicial action or
proceeding or any Order beyond the earlier of (i) the Final Date or (ii) the
date of a ruling preliminarily enjoining the Merger issued by a court of
competent jurisdiction. Each of Parent and Company shall use all reasonable
efforts to take such action as may be required to cause the expiration of the
notice periods under the HSR or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of this Agreement.
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(c) Notwithstanding anything to the contrary in
Section 5.6(a) or (b), (i) neither Parent nor any of it subsidiaries shall be
required to divest any of their respective businesses, product lines or assets,
or to take or agree to take any other action or agree to any limitation that
could reasonably be expected to have a Material Adverse Effect on Parent or the
Surviving Corporation after the Effective Time or (ii) neither Company nor its
subsidiaries shall be required to divest any of their respective businesses,
product lines or assets, or to take or agree to take any other action or agree
to any limitation that could reasonably be expected to have a Material Adverse
Effect on Company.
5.7 AFFILIATES. (a) SCHEDULE 5.7 sets forth those persons
who may be deemed "Affiliates" of Company within the meaning of Rule 145
promulgated under the Securities Act ("Rule 145") or applicable requirements
related to pooling of interests accounting treatment. Company shall provide
Parent such information and documents as Parent shall reasonably request for
purposes of reviewing such list. Parent shall be entitled to place appropriate
legends on the certificates evidencing any Parent Common Stock to be received by
such Affiliates pursuant to the terms of this Agreement and to issue appropriate
stock transfer instructions to the transfer agent for Parent Common Stock.
(b) Company shall use commercially reasonable
efforts, on behalf of Parent and pursuant to the request of Parent, to cause
each Company stockholder named on SCHEDULE 5.7 and each other person who may be
deemed to be an Affiliate of Company after the date of this Agreement to execute
and deliver to Parent an Affiliate Agreement in the form of EXHIBIT D-1 attached
hereto.
(c) Parent shall use commercially reasonable
efforts to cause each person who may be deemed to be an Affiliate of Parent to
execute and deliver to Company an Affiliate Agreement in the form of EXHIBIT D-2
attached hereto.
5.8 LEGAL REQUIREMENTS. Each of Parent, Merger Sub and
Company will, and will cause their respective subsidiaries to, take all
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on them with respect to the consummation of the
transactions contemplated by this Agreement and will promptly cooperate with and
furnish information to any party hereto necessary in connection with any such
requirements imposed upon such other party in connection with the consummation
of the transactions contemplated by this Agreement and will take all reasonable
actions necessary to obtain (and will cooperate with the other parties hereto in
obtaining) any consent, approval, order or authorization of, or any
registration, declaration or filing with, any Governmental Entity or other
person, required to be obtained or made in connection with the taking of any
action contemplated by this Agreement.
5.9 BLUE SKY LAWS. Parent shall take such steps as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable to the issuance of the Parent Common Stock in connection
with the Merger. Company shall use commercially reasonable efforts to assist
Parent as may be necessary to comply with the securities and blue sky laws of
all jurisdictions which are applicable in connection with the issuance of Parent
Common Stock in connection with the Merger.
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5.10 EMPLOYEE BENEFIT PLANS.
(a) At the Effective Time, the Company Stock
Option Plans and each outstanding option to purchase shares of Company Common
Stock under the Company Stock Option Plans, whether vested or unvested, will be
assumed by Parent. SCHEDULE 5.10A hereto sets forth a true and complete list as
of the date hereof of all holders of outstanding options under the Company Stock
Option Plans, including the number of shares of Company capital stock subject to
each such option, the exercise or vesting schedule, the exercise price per share
and the term of each such option. On the Closing Date, Company shall deliver to
Parent an updated SCHEDULE 5.10A hereto current as of such date. Each such
option so assumed by Parent under this Agreement shall continue to have, and be
subject to, the same terms and conditions set forth in the Company Stock Option
Plans and the applicable stock option agreements, including but not limited to
the performance criteria as described in SCHEDULE 5.10A, immediately prior to
the Effective Time, except that (i) such option will be exercisable for that
number of whole shares of Parent Common Stock equal to the product of the number
of shares of Company Common Stock that were issuable upon exercise of such
option immediately prior to the Effective Time multiplied by the Exchange Ratio
and rounded down to the nearest whole number of shares of Parent Common Stock,
and (ii) the per share exercise price for the shares of Parent Common Stock
issuable upon exercise of such assumed option will be equal to the quotient
determined by dividing the exercise price per share of Company Common Stock at
which such option was exercisable immediately prior to the Effective Time by the
Exchange Ratio, rounded up to the nearest whole cent. It is the intention of the
parties that the options so assumed by Parent qualify, to the maximum extent
permissible 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 20 business days after the
Effective Time, Parent will issue to each person who, immediately prior to the
Effective Time was a holder of an outstanding option under the Company Stock
Option Plans a document in form and substance satisfactory to Company evidencing
the foregoing assumption of such option by Parent.
(b) All outstanding rights of Company which it
may hold immediately prior to the Effective Time to repurchase unvested shares
of Company Common Stock (the "Repurchase Options") shall continue in effect
following the Merger and shall continue to be exercisable by Company upon the
same terms and conditions in effect immediately prior to the Effective Time,
except that the shares purchasable pursuant to the Repurchase Options and the
purchase price per shall be adjusted to reflect the Exchange Ratio.
(c) Purchase rights under the Company ESPP, and
participation by Company employees in the Parent 1989 Employee Stock Purchase
Plan, as amended (the "Parent ESPP"), shall be subject to the following:
(i) Parent shall assume all purchase
rights outstanding under the Company ESPP as of the Effective Time. Each
purchase right so assumed by Parent shall continue to have, and be subject to,
the same terms and conditions set forth in the Company ESPP and the documents
governing such purchase rights immediately prior to the Effective Time, except
that (A) the purchase price of shares of Parent Common Stock and the number of
shares of Parent Common Stock to be issued upon the exercise of such purchase
rights shall be adjusted in accordance with the Exchange Ratio and (B) the
offering period for purchase rights
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outstanding under the Company ESPP as of the Effective Time shall end and the
company ESPP shall be terminated immediately prior to the next offering period
under the Parent ESPP that begins after the Effective Time.
(ii) Company employees who meet the
eligibility requirements for participation in the Parent ESPP shall be eligible
to participate in the Parent ESPP starting with the first offering period of the
Parent ESPP that begins after the Effective Time.
(d) Except as otherwise provided herein, the
employees of the Company (the "Company Employees") shall continue to participate
in the Company Employee Plans in effect as of the Effective Time; PROVIDED,
HOWEVER, that within a reasonable period (not to exceed one year after the
Effective Time) the Company Employees shall cease to participate in the Company
Employee Plans and shall be eligible to participate in the "employee welfare
benefit plans," (within the meaning of Section 3(1) and Section 3(2) of ERISA,
respectively) and other benefit arrangements of Parent ("Parent Employee Plans")
to the same extent as similarly situated employees of Parent. For purposes of
any length of service requirements, waiting periods, vesting periods or
differential benefits based on length of service in any such Parent Employee
Plan (other than the Parent ESPP and Parent's stock option plans) for which a
Company Employee may be eligible after the Effective Time, Parent shall ensure
that service by such Company Employee with the Company shall be deemed to have
been service with Parent. The Company Employees shall be given credit for
amounts paid under a corresponding Company Employee Plan during the same period
for purposes of applying deductibles, copayments and out-of-pocket maximums as
though such amounts had been paid in accordance with the terms and conditions of
the Parent Employee Plan. For purposes of any Parent Employee Plan that is a
group health plan subject to ERISA, neither Company Employees nor their
dependents shall be excluded from coverage on account of any pre-existing
condition.
(e) Parent shall assume and honor the
obligations of the Company and its subsidiaries under all employment, severance,
consulting and other compensation contracts, arrangements, commitments or
understandings that it has to Xxxxx Xxxxx as of the Closing Date. Parent hereby
acknowledges that the Merger will constitute a "Change in Control" for purposes
of all the Company Employee Plans.
(f) Within five (5) business days following the
date of this Agreement, Company shall set forth on Schedule 5.10(f) a list of
all persons who the Company reasonably believes are, with respect to the Company
and as of the date of this Agreement, "disqualified individuals" (within the
meaning of Section 280G of the Code and the regulations promulgated thereunder).
For this purpose, Company shall assume that the fair market value of Company
Common Stock is $60.50 per share. Within a reasonable period of time after the
last business day of each month after the date of this Agreement (other than
April, 1999) and on or about the date five business days prior to the expected
Closing Date, the Company shall revise Schedule 5.10(f) to reflect the most
recently available closing price of Company Common Stock as of the last business
day of such month and to reflect any additional information which the Company
reasonably believes would impact the determination of persons who are, with
respect to the Company and as of the each such date, "disqualified individuals"
(within the meaning of Section 280G of the Code and the regulations promulgated
thereunder).
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5.11 FORM S-8. Parent agrees to file as promptly as
practicable, and in no event later than thirty (30) days, after the Closing, a
registration statement on Form S-8 covering the shares of Parent Common Stock
issuable pursuant to outstanding options under the Company Stock Option Plans
assumed by Parent. Company shall cooperate with and assist Parent in the
preparation of such registration statement.
5.12 OPTION AGREEMENT. Company agrees to fully perform its
obligations under the Option Agreement.
5.13 LISTING OF ADDITIONAL SHARES. Prior to the Effective
Time, Parent shall file with the Nasdaq National Market a Notification Form for
Listing of Additional Shares with respect to the shares referred to in Section
6.1(f).
5.14 NASDAQ QUOTATION. Company and Parent agree to
continue the quotation of Company Common Stock and Parent Common Stock,
respectively, on the Nasdaq Stock Market during the term of the Agreement so
that appraisal rights will not be available to stockholders of Company under
Section 262 of the Delaware Law.
5.15 EMPLOYEES. Company shall use commercially reasonable
efforts to cause each of the individuals set forth on Part A and Part B of
SCHEDULE 5.15 to deliver to Parent an executed Employment Agreement in the form
of EXHIBIT E-1 and EXHIBIT E-2, respectively.
5.16 INDEMNIFICATION.
(a) From and after the Effective Time, Parent
will cause the Surviving Corporation to fulfill and honor in all respects the
obligations of Company pursuant to the indemnification provisions of Company's
Restated Certificate of Incorporation and Amended and Restated Bylaws and/or any
indemnification agreement with Company officers and directors to which Company
is a party, in each case in effect on the date hereof; PROVIDED that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law. Without limitation of the foregoing, in the event any
person so indemnified (an "Indemnified Party") is or becomes involved in any
capacity in any claim, action, suit, proceeding or investigation in connection
with any Indemnified Liability (as defined below), including, without
limitation, any matter relating to this Agreement or the transactions
contemplated hereby, occurring on or prior to the Effective Time, Parent shall,
or shall cause the Surviving Corporation to, pay as incurred such Indemnified
Party's reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith to the fullest
extent permitted by the Delaware Law upon receipt of any undertaking
contemplated by Section 145(e) of the Delaware Law. Any Indemnified Party
wishing to claim indemnification under this Section 5.16, upon learning of any
such claim, action, suit, proceeding or investigation, shall promptly notify
Parent and the Surviving Corporation (but the failure so to notify Parent or
Surviving Corporation shall not relieve it from any liability which it may have
under this Section 5.16 except to the extent such failure prejudices such
party), and shall deliver to Parent and the Surviving Corporation the
undertaking contemplated by Section 145(e) of the Delaware Law.
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(b) For a period of five years after the
Effective Date, Parent shall, and will cause Surviving Corporation to, to the
fullest extent permitted under applicable law and under the Surviving
Corporation's and Parent's, as the case may be, Articles of Incorporation and
By-Laws, indemnify and hold harmless, each present and former director and
officer of Company or any of its subsidiaries against (i) any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement of or in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, or whether formal or informal, based in whole
or in part on or arising in whole or in part out of, the fact that such person
is or was a director or officer, employee, fiduciary or agent of the Company or
any of its subsidiaries, whether pertaining to any matter, action or omission
existing or occurring at or prior to the Effective Date and whether asserted or
claimed prior to, or at or after, the Effective Time ("Indemnified Liabilities")
and (ii) all Indemnified Liabilities based in whole or in part on, or arising in
whole or in part out of, or pertaining to this Agreement or the transactions
contemplated hereby, in each case to the full extent a corporation is permitted
by law to indemnify its own directors, officers and employees.
(c) For five years after the Effective Time,
Parent will either (i) at all times maintain at least $50,000,000 in cash,
marketable securities or unrestricted lines of credit (or any combination
thereof) to be available to indemnify the Indemnified Parties in accordance with
Section 5.16(a) above or (ii) cause the Surviving Corporation to provide
officers' and directors' liability insurance in respect of acts or omissions
occurring on or prior to the Effective Time covering each such person currently
covered by Company's officers' and directors' liability insurance policy on
terms substantially similar to those of such policy in effect on the date
hereof, provided that in satisfying its obligation under this Section, Parent
shall not be obligated to cause the Surviving Corporation to pay premiums in
excess of 150% of the amount per annum Company paid in its last full fiscal
year, which amount Company represents was $8,700, and if the Surviving
Corporation is unable to obtain the insurance required by this Section 5.16, it
shall obtain as much comparable insurance as possible for an annual premium
equal to such maximum amount.
(d) To the extent there is any claim, action,
suit, proceeding or investigation (whether arising before or after the Effective
Time) against an Indemnified Party that arises out of or pertains to any action
or omission in his or her capacity as director, officer, employee, fiduciary or
agent of Company, or resulting from his or her status as a director, officer,
employee, fiduciary or agent of Company, occurring prior to the Effective Time,
or arises out of or pertains to the transactions contemplated by this Agreement
(whether arising before or after the Effective Time), in each case for which
such Indemnified Party is indemnified under this Section 5.16, such Indemnified
Party shall be entitled to be represented by counsel, which counsel shall be
counsel of Parent (provided that if use of counsel of Parent would be expected
under applicable standards of professional conduct to give rise to a conflict
between the position of the Indemnified Person and of Parent, the Indemnified
Party shall be entitled instead to be represented by counsel selected by the
Indemnified Party and reasonably acceptable to Parent) and following the
Effective Time the Surviving Corporation and Parent shall pay the reasonable
fees and expenses of such counsel, promptly after statements therefor are
received and the Surviving Corporation and Parent will cooperate in the defense
of any such matter; and PROVIDED, HOWEVER, that neither the Surviving
Corporation nor Parent shall be liable for any settlement effected without its
written consent (which consent shall not be unreasonably
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withheld). The Indemnified Parties as a group may retain only one law firm (in
addition to local counsel) to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the position of any two or more Indemnified
Parties or such a conflict could reasonably be expected to arise.
(e) The provisions of this Section 5.16 are
intended to be for the benefit of, and shall be enforceable by, each Indemnified
Party, his or her heirs and representatives and may not be amended, altered or
repealed without the prior written consent of the affected Indemnified Party.
5.17 POOLING ACCOUNTING. Parent and Company shall each use
best efforts to cause the business combination to be effected by the Merger to
be accounted for as a pooling of interests under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations. Each of Parent and
Company shall use its best efforts to cause its "Affiliates" (as defined in
Section 5.7) not to take any action that would adversely affect the ability of
Parent to account for the business combination to be effected by the merger as a
pooling of interest.
5.18 TAX TREATMENT. The parties each intend that the
Merger will qualify as a reorganization within the meaning of Section 368(a) of
the Code and shall use best efforts to cause the Merger to so qualify.
5.19 STOCKHOLDER LITIGATION. Unless and until Company has
withdrawn its recommendation of the Merger in compliance with Section 5.1 of
this Agreement, Company shall give Parent the opportunity to participate at its
own expense in the defense of any stockholder litigation against Company and/or
its directors relating to the transactions contemplated by this Agreement and
the Option Agreement.
5.20 COMMERCIALLY REASONABLE EFFORTS AND FURTHER
ASSURANCES. Each of the parties to this Agreement shall use its commercially
reasonable efforts to effectuate the transactions contemplated hereby and to
fulfill and cause to be fulfilled the conditions to closing under this
Agreement. Each party hereto, at the reasonable request of another party hereto,
shall execute and deliver such other instruments and do and perform such other
acts and things as may be necessary or desirable for effecting completely the
consummation of this Agreement and the transactions contemplated hereby.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to this Agreement to consummate
and effect this Agreement and the transactions contemplated hereby shall be
subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any of which may be waived, in writing, by agreement of
all the parties hereto:
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(a) STOCKHOLDER APPROVAL. This Agreement and the
Merger shall have been approved and adopted by the requisite vote of the
stockholders of Company under Delaware Law.
(b) REGISTRATION STATEMENT EFFECTIVE. The SEC
shall have declared the Registration Statement effective. No stop order
suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose, and no similar
proceeding in respect of the Proxy Statement, shall have been initiated or
threatened by the SEC; and all requests for additional information on the part
of the SEC shall have been complied with to the reasonable satisfaction of the
parties hereto.
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint or prohibition preventing the consummation of the Merger shall be in
effect, nor shall any proceeding brought by an administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger, which makes the consummation of the Merger
illegal. In the event an injunction or other order shall have been issued, each
party agrees to use its commercially reasonable efforts to have such injunction
or other order lifted.
(d) HSR WAITING PERIOD. The applicable waiting
period (and any extension thereof) applicable to the Merger under the HSR Act
shall have been terminated or expired.
(e) LISTING OF ADDITIONAL SHARES. The filing
with the Nasdaq National Market of a Notification Form for Listing of Additional
Shares with respect to the shares of Parent Common Stock issuable upon
conversion of the Company Common Stock in the Merger and upon exercise of the
options under the Company Stock Option Plans assumed by Parent shall have been
made.
(f) LETTER OF ACCOUNTANTS. Each of Parent and
Company shall have received letters, dated as of the Closing Date, in each case
addressed to Parent and Company, from PricewaterhouseCoopers LLP, independent
accountants to Parent and Company, stating in substance that pooling of interest
accounting is appropriate for the Merger under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY. The
obligations of Company to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, by Company:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) The representations and warranties of Parent and Merger Sub in this
Agreement shall be true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a reference
to materiality, Material Adverse Effect or words of similar import,
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which representations and warranties as so qualified shall be true in all
respects) both when made and on and as of the Effective Time as though such
representations and warranties were made on and as of such time (except for
those representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date) and where
the failure to be true and correct does not constitute a Material Adverse Effect
on Parent) and (ii) Parent and Merger Sub shall have performed and complied in
all material respects with all covenants, obligations and conditions of this
Agreement required to be performed and complied with by them as of the Effective
Time.
(b) CERTIFICATE OF PARENT. Company shall have
been provided with a certificate executed on behalf of Parent by its President
and its Chief Financial Officer certifying that the condition set forth in
Section 6.2(a) shall have been fulfilled.
(c) TAX OPINION. Company shall have received an
opinion dated the Effective Time from Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, counsel
to Company, in form and substance reasonably satisfactory to Company,
substantially to the effect that on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing on the Effective Time, the Merger will be treated for Federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Code. In rendering such opinion, Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP may require
and rely upon (and may incorporate by reference) representations and covenants,
including those contained in certificates of officers of Parent, Company, Merger
Sub and others. Company shall have received executed copies of the certificates
of officers and directors of Parent, Company and Merger Sub that may reasonably
be required by counsel in connection with the tax opinion referred to in this
Agreement.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT
AND MERGER SUB. The obligations of Parent and Merger Sub to consummate and
effect this Agreement and the transactions contemplated hereby shall be subject
to the satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by Parent:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) The representations and warranties of Company in this Agreement shall be
true and correct in all material respects (except for such representations and
warranties that are qualified by their terms by a reference to materiality,
Material Adverse Effect or words of similar import, which representations and
warranties as so qualified shall be true in all respects) both when made and on
and as of the Effective Time as though such representations and warranties were
made on and as of such time (except (x) for those representations and warranties
which address matters only as of a particular date (which shall remain true and
correct as of such date) and (y) where the failure to be true and correct does
not constitute a Material Adverse Effect on the Company) and (ii) Company shall
have performed and complied in all material respects with all covenants,
obligations and conditions of this Agreement required to be performed and
complied with by it as of the Effective Time.
(b) CERTIFICATE OF COMPANY. Parent shall have
been provided with a certificate executed on behalf of Company by its President
and Chief Financial Officer certifying that the condition set forth in Section
6.3(a) shall have been fulfilled.
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(c) 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 limiting or
restricting, or other legal or regulatory restraint provision materially
limiting or restricting, Parent's conduct or operation of the business of
Company and its subsidiaries, following the Merger shall be in effect, nor shall
any proceeding brought by an administrative agency or commission or other
Governmental Entity, domestic or foreign, seeking the foregoing be pending.
(d) EMPLOYMENT AND NON-COMPETITION AGREEMENTS/
WAIVERS. At least 75% of the employees of Company set forth on Part A of
SCHEDULE 5.15 and all of the employees of Company set forth on Part B of
SCHEDULE 5.15 shall have accepted employment with Parent and shall have entered
into an Employment and Non-Competition Agreement substantially in the form
attached hereto as EXHIBIT E.
(E) TAX OPINION. Parent shall have received an
opinion dated the Effective Time from Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel
to Parent and Merger Sub, in form and substance reasonably satisfactory to
Parent and Merger Sub, substantially to the effect that on the basis of facts,
representations and assumptions set forth in such opinion which are consistent
with the state of facts existing on the Effective Time, the Merger will be
treated for Federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code. In rendering such opinion, Xxxxxxx, Phleger &
Xxxxxxxx LLP may require and rely upon (and may incorporate by reference)
representations and covenants, including those contained in certificates of
officers of Parent, Company, Merger Sub and others. Parent shall have received
executed copies of the certificates of officers and directors of Parent, Company
and Merger Sub that may reasonably be required by counsel in connection with the
tax opinion referred to in this Agreement.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. At any time prior to the Effective Time,
whether before or after approval of the matters presented in connection with the
Merger by the stockholders of Company, this Agreement may be terminated:
(a) by mutual consent of Parent and Company;
(b) by either Parent or Company, if, without
fault of the terminating party, the Closing shall not have occurred on or before
September 30, 1999 or such later date as may be agreed upon in writing by the
parties hereto (the "Final Date"); PROVIDED, HOWEVER, that the Final Date shall
be extended to December 31, 1999 in the event that if the only reason the
Closing shall not have occurred by September 30, 1999 is the failure of the
conditions set forth in Section 6.1(b) and/or Section 6.1(d) (although such
extension shall not occur if the failure of such conditions has been caused or
resulted from one party's action or failure to act constituting a breach of this
Agreement and the other party does not consent to such extension); PROVIDED,
FURTHER, that the right to terminate this Agreement under this Section 7.1(b)
shall not be available
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to any party whose action or failure to act has been the cause of or resulted in
the failure of the Merger to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement;
(c) by Parent, if (i) Company shall breach any
of its representations, warranties or obligations hereunder to an extent that
would cause the condition set forth in Section 6.3(a) not to be satisfied and
such breach shall not have been cured within five business days of receipt by
Company of written notice of such breach from Parent, (ii) the Board of
Directors of Company shall have withdrawn or modified its recommendation of this
Agreement or the Merger in a manner adverse to Parent or shall have resolved to
do so, (iii) Company shall have failed to comply with Section 4.3, (iv) the
Board of Directors of Company shall have recommended, endorsed, accepted or
agreed to a Takeover Proposal or shall have resolved to do so, or (v) for any
reason Company fails to call the Company Stockholders Meeting by September 10,
1999 or, in the event the condition set forth in Section 6.1(b) shall not have
been satisfied by August 31, 1999 under circumstances in which it can be
reasonably expected that the Final Date will be extended pursuant to the proviso
set forth in Section 7.1(b), December 10, 1999;
(d) by Company, if Parent shall breach any of
its representations, warranties or obligations hereunder to an extent that would
cause the condition set forth in Section 6.2(a) not to be satisfied and such
breach shall not have been cured within five business days following receipt by
Parent of written notice of such breach from Company;
(e) by Parent if a Trigger Event (as defined in
Section 7.3(e)) or Takeover Proposal shall have occurred and the Board of
Directors of Company in connection with such Trigger Event or Takeover Proposal,
does not within six (6) business days (or, in the event of a tender offer or
exchange offer, ten (10) business days) of such occurrence (i) reconfirm its
approval and recommendation of this Agreement and the transactions contemplated
hereby and (ii) reject such Takeover Proposal or Trigger Event (in the case of a
Trigger Event involving a tender or exchange offer); or
(f) by either Parent or Company if (i) any
permanent injunction or other order of a court or other competent authority
preventing the consummation of the Merger shall have become final and
nonappealable or (ii) if any required approval of the stockholders of Company
shall not have been obtained by reason of the failure to obtain the required
vote upon a vote held at a duly held meeting of stockholders or at any
adjournment thereof.
7.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement as provided in Section 7.1, this Agreement shall forthwith become
void and there shall be no liability or obligation on the part of Parent, Merger
Sub or Company or their respective officers, directors, stockholders or
affiliates, except (i) 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 and (ii) nothing
herein shall relieve any party from liability for fraud or willful breach in
connection with this agreement or the transactions contemplated hereby.
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7.3 EXPENSES AND TERMINATION FEES.
(a) Subject to subsections (b), (c), (d) and (e)
of this Section 7.3, whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, the fees and expenses of its
advisers, accountants and legal counsel) shall be paid by the party incurring
such expense, except that expenses incurred in connection with printing the
Proxy Materials and the Registration Statement, registration and filing fees
incurred in connection with the Registration Statement, the Proxy Materials and
the listing of additional shares pursuant to Section 6.1(f) and fees, costs and
expenses associated with compliance with applicable state securities laws in
connection with the Merger shall be shared equally by Company and Parent.
(b) In the event that (i) Parent shall terminate
this Agreement pursuant to Section 7.1(e), (ii) Parent shall terminate this
Agreement pursuant to Section 7.1(c)(iii) as a result of the failure by Company
through its, or otherwise by, the officers, directors or advisors of the
Company, or any person authorized by such persons, to comply with the
requirements of Section 4.3, (iii) Parent shall terminate this Agreement
pursuant to Section 7.1(c)(iv) and at the time of such recommendation,
endorsement, acceptance or agreement under Section 7.1(c)(iv) there shall not
exist circumstances giving rise to a Material Adverse Effect on Parent, (iv)
Parent (or, in the case of Section 7.1(f)(ii), Company) shall terminate this
Agreement pursuant to Section 7.1(c)(ii) or 7.1(f)(ii) and, prior to such
withdrawal, modification or stockholder rejection, there shall have been (A) a
Trigger Event with respect to Company or (B) a Takeover Proposal with respect to
Company which at the time of such withdrawal, modification or stockholder
rejection shall not have been (x) rejected by Company or (y) withdrawn by the
third party and at the time of such withdrawal, modification or stockholder
rejection, there shall not exist circumstances giving rise to a Material Adverse
Effect on Parent, or (v) Parent (or, in the case of Section 7.1(b), Company)
shall terminate this Agreement pursuant to Section 7.1(b), 7.1(c)(i) or
7.1(c)(v), due primarily to any failure by Company 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 Company prior to
or on the Closing Date or any failure by Company's affiliates to take any
actions required to be taken hereby, and prior thereto there shall have been (A)
a Trigger Event with respect to Company or (B) a Takeover Proposal with respect
to Company which shall not have been (x) rejected by Company or (y) withdrawn by
the third party, then Company shall promptly pay to Parent the sum of $55
million (the "Termination Fee") pursuant to this Section 7.3(b) if Parent
terminates this Agreement pursuant to clauses (i), (ii), (iii), (iv) or (v)
above within five business days of the occurrence of the event giving Parent the
right to so terminate this Agreement.
(c) If no payment shall have been required
pursuant to Section 7.3(b), in the event that (i) Parent (or, in the case of
Section 7.1(b), Company) shall terminate this Agreement pursuant to Section
7.1(b) or Section 7.1(c)(v) under the circumstances described in Section
7.3(b)(v) (but replacing the word "or" between clauses (x) and (y) thereof with
the word "and"), (ii) Parent shall terminate this Agreement pursuant to Section
7.1(c)(i) under circumstances not described in Section 7.3(b)(iv), (iii) Parent
shall terminate this Agreement pursuant to Section 7.1(f)(ii) under
circumstances not described in Section 7.3(b)(iv) (other than the circumstance
that prior to the time of the meeting of Company's stockholders, (x) either (A)
no Takeover Proposal or Trigger Event with respect to Company shall have
occurred (whether or
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not rejected or withdrawn prior to such meeting) or (B) each Takeover Proposal
or Trigger Event occurring prior to such meeting shall have been rejected by
Company and withdrawn by the third party and after the latest to occur of such
rejections and/or withdrawals there shall have occurred circumstances giving
rise to a Material Adverse Effect on Parent and (y) there shall have been no
failure by Company to use commercially reasonable efforts to perform and comply
with all agreements and conditions required by this Agreement to be performed or
completed by Company prior to or on the Closing Date), (iv) Parent shall
terminate this Agreement pursuant to Section 7.1(c)(ii) under circumstances not
described in Section 7.3(b)(iv) and at the time of such withdrawal or
modification there shall not exist circumstances giving rise to a Material
Adverse Effect on Parent, or (v) this Agreement shall be terminated under the
circumstances described in Section 7.3(b) other than the requirement under
Section 7.3(b) that Parent terminate this Agreement within five business days of
the occurrence of the events described therein, the Company shall promptly
reimburse Parent for all of the out-of-pocket costs and expenses incurred by
Parent in connection with this Agreement and the transactions contemplated
hereby (including, without limitation, the fees and expenses of its advisors,
accountants and legal counsel); and, in the event (A) any Takeover Proposal is
consummated by or with any person that made a Takeover Proposal prior to
termination of this Agreement or that caused a Trigger Event prior to such
termination, or any affiliate of any such person, within nine months, or (B) any
other Takeover Proposal not described in clause (A) is consummated within twelve
months, of the later of (x) such termination of this Agreement and (y) the
payment of the above-described expenses, Company shall promptly pay to Parent
the additional sum equal to the Termination Fee (less the amount of Parent's
costs and expenses previously reimbursed by Company pursuant to this Section
7.3(c)).
(d) In the event that Company shall terminate
this Agreement pursuant to Section 7.1(d) Parent shall promptly reimburse
Company for all of the out-of-pocket costs and expenses incurred by Company in
connection with this Agreement and the transactions contemplated hereby
(including, without limitation, the fees and expenses of its advisors,
accountants and legal counsel).
(e) As used herein, a "Trigger Event" shall
occur if any Person (as that term is defined in Section 13(d) of the Exchange
Act and the regulations promulgated thereunder) acquires securities representing
20% or more, or commences a tender or exchange offer, open market purchase
program or other publicly announced initiative following the successful
consummation of which the offeror and its affiliate would beneficially own
securities representing 20% or more, of the voting power of Company; PROVIDED,
HOWEVER, a Trigger Event shall not be deemed to include the acquisition by any
Person of securities representing 20% or more of Company if such Person has
acquired such securities not with the purpose nor with the effect of changing or
influencing the control of Company, nor in connection with or as a participant
in any transaction having such purpose or effect, including without limitation
not in connection with such Person (i) making any public announcement with
respect to the voting of such shares at any meeting to consider any merger,
consolidation, sale of substantial assets or other business combination or
extraordinary transaction involving Company, (ii) making, or in any way
participating in, any "solicitation" of "proxies" (as such terms are defined or
used in Regulation 14A under the Exchange Act) to vote any voting securities of
Company (including, without limitation, any such solicitation subject to Rule
14a-11 under the Exchange Act) or seeking to advise or influence any Person with
respect to the voting of any voting securities of
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Company, directly or indirectly, relating to a merger or other business
combination involving Company or the sale or transfer of a significant portion
of assets (excluding the sale or disposition of assets in the ordinary course of
business) of Company, (iii) forming, joining or in any way participating in any
"group" within the meaning of Section 13(d)(3) of the Exchange Act with respect
to any voting securities of Company, directly or indirectly, relating to a
merger or other business combination involving Company or the sale or transfer
of a significant portion of assets (excluding the sale or disposition of assets
in the ordinary course of business) of Company, or (iv) otherwise acting, alone
or in concert with others, to seek control of Company or to seek to control or
influence the management or policies of Company.
(f) For purposes of this Agreement, "Takeover
Proposal" means any offer or proposal for a merger or other business combination
involving Company or any of its subsidiaries or the acquisition of 20% or more
of the outstanding shares of capital stock of Company, or a significant portion
of the assets of, Company or any of its subsidiaries, other than the Merger.
7.4 AMENDMENT. The boards of directors of the parties
hereto may cause this Agreement to be amended at any time by execution of an
instrument in writing signed on behalf of each of the parties hereto; provided
that an amendment made subsequent to adoption of the Agreement by the
stockholders of Company or Merger Sub shall not (i) alter or change the amount
or kind of consideration to be received on conversion of the Company Common
Stock, (ii) alter or change any term of the Certificate of Incorporation of the
Surviving Corporation to be effected by the Merger, or (iii) alter or change any
of the terms and conditions of the Agreement if such alteration or change would
materially adversely affect the holders of Company Common Stock or Merger Sub
Common Stock.
7.5 EXTENSION; WAIVER. At any time prior to the Effective
Time any party hereto may, to the extent legally allowed, (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties made
to such party contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL AT EFFECTIVE TIME. The representations,
warranties and agreements set forth in this Agreement shall terminate at the
Effective Time, except that the agreements set forth in Article I, Section 5.4
(Confidentiality), 5.11(S-8), 5.16 (Indemnification), 5.17 (Pooling Accounting),
5.18 (Tax Treatment), 5.20 (Commercially Reasonable Efforts and Further
Assurances), 7.3 (Expenses and Termination Fees), 7.4 (Amendment), and this
Article VIII shall survive the Effective Time.
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8.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or by commercial delivery service, or mailed by registered or certified mail
(return receipt requested) or sent via facsimile (with confirmation of receipt)
to the parties at the following address (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Cisco Systems, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000-0000
Attention: President
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxx Xxxx
Xxx Xxxxxxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
(b) if to Company, to:
GeoTel Communications Corporation
000 Xxxxxxxxxx Xxxxxx
Tower II, Floor 12
Lowell, MA 01851
Attention: President
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
High Street Tower
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
8.3 INTERPRETATION. When a reference is made in this
Agreement to Exhibits or Schedules, such reference shall be to an Exhibit or
Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available
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49
if requested by the party to whom such information is to be made available. 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 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; NONASSIGNABILITY; PARTIES IN
INTEREST. This Agreement and the documents and instruments and other agreements
specifically referred to herein or delivered pursuant hereto, including the
Exhibits, the Schedules, including the Company Disclosure Schedule and the
Parent Disclosure Schedule (a) constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, except for the Confidentiality Agreement, which shall
continue in full force and effect, and shall survive any termination of this
Agreement or the Closing, in accordance with its terms; (b) are not intended to
confer upon any other person any rights or remedies hereunder, except as set
forth in Sections 1.6(a)-(c) and (f), 1.7-1.9 and 5.16; and (c) shall not be
assigned by operation of law or otherwise except as otherwise specifically
provided.
8.6 SEVERABILITY. In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
8.7 REMEDIES CUMULATIVE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy.
8.8 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware other than
principles of conflicts of law. Each of the parties hereto irrevocably consents
to the exclusive jurisdiction of any court located within the State of Delaware
in connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon them in any
manner authorized by the laws of the State of Delaware for such persons and
waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction and such process.
8.9 RULES OF CONSTRUCTION. The parties hereto agree that
they have been represented by counsel during the negotiation, preparation and
execution of this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing
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that ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.
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IN WITNESS WHEREOF, Company, Parent and Merger Sub have caused
this Agreement to be executed and delivered by their respective officers
thereunto duly authorized, all as of the date first written above.
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------------------
Name: Xxxx X. Xxxxxxxx
-----------------------------------------
Title: President & CEO
----------------------------------------
CISCO SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------------------
Title: Chief Financial Officer
----------------------------------------
GERONIMO MERGER CORP.
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------------------
Name: Xxxxxx Xxxxxxxxx
-----------------------------------------
Title: Vice President
----------------------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
52
Agreement and Plan of Merger and Reorganization dated as of April 12, 1999 by
and among Cisco Systems, Inc., Geronimo Merger Corp. and GeoTel Communications
Corporation.
Exhibits Omitted in Accordance With
Item 601(b)(2) of Regulation S-K
--------------------------------
EXHIBITS
--------
Exhibit A Form of Stock Option Agreement dated as of April 12, 1999 by
and among Cisco Systems, Inc. and GeoTel Communications
Corporation
Exhibit B Form of Stockholder Agreement dated as of April 12, 1999 by
among Cisco Systems, Inc., Geronimo Merger Corp. and each of
Xxxxxxx X. Xxxxx, G. Xxxxx Xxxxxxx, Xxxxxxxxx X. d'Arbeloff,
Xxxx Xxxxx, Xxxx Xxxxxxxxx, Xxxxxxx X. Xxxxxxx, W. Xxxxxxx
Xxxxxxxxx, Xxxxxx X. Xxxxx, Xxxx XxXxxxx, Xxxx X. Xxxxxxxx,
Xxxxx X. Xxxxx and Xxxxxx Xxxxxx.
Exhibit C Form of Certificate of Merger.
Exhibit D-1 Form of Company Affiliate Agreement dated as of April 12,
1999 by and among Cisco System, Inc. and each of Xxxxxxx X.
Xxxxx, G. Xxxxx Xxxxxxx, Xxxxxxxxx X. d'Arbeloff, Xxxx
Xxxxx, Xxxx Xxxxxxxxx, Xxxxxxx X. Xxxxxxx, W. Xxxxxxx
Xxxxxxxxx, Xxxxxx X. Xxxxx, Xxxx XxXxxxx, Xxxx X. Xxxxxxxx,
Xxxxx X. Xxxxx and Xxxxxx Xxxxxx.
Exhibit D-2 Form of Parent Affiliate Agreement.
Exhibit E-1 Form of Employment and Non-Competition Agreement
Exhibit E-2 Form of Employment and Non-Competition Agreement
GeoTel Communications Corporation will furnish supplementally a copy of any
omitted exhibit to the Securities and Exchange Commission upon request, provided
however, that GeoTel Communications Corporation may request confidential
treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934 for any
exhibit so furnished.
