EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
OF PILOT NETWORK SERVICES, INC.
A DELAWARE CORPORATION,
AND
PILOT NETWORK SERVICES, INC.
A CALIFORNIA CORPORATION
This Agreement and Plan of Merger dated as of July___, 1998 (the
"Agreement") is between Pilot Network Services, Inc. a California corporation
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("Pilot-California"), and Pilot Network Services, Inc., a Delaware corporation
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("Pilot-Delaware"). Pilot-Delaware and Pilot-California are sometimes referred
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to in this Agreement as the "Constituent Corporations."
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RECITALS
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A. Pilot-Delaware is a corporation duly organized and existing under the
laws of the State of Delaware and has an authorized capital of 50,832,810
shares, 40,000,000 of which are designated "Common Stock," $0.001 par value, and
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10,832,810 shares of Preferred Stock, of which 1,400,000 shares have been
designated Series A Preferred Stock, 1,913,424 shares have been designated
Series B Preferred Stock, 1,210,068 shares have been designated Series C
Preferred Stock, 1,686,200 have been designated Series D Preferred Stock,
783,118 shares have been designated Series E Preferred Stock, and 1,840,000
shares have been designated Series F Preferred Stock (collectively the
"Preferred Stock"). As of July ____, 1998, 100 shares of Pilot-Delaware Common
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Stock were issued and outstanding, all of which are held by Pilot-California,
and no shares of Preferred Stock were issued and outstanding.
B. Pilot-California is a corporation duly organized and existing under
the laws of the State of California and has an authorized capital of 30,000,000
shares, 20,000,000 of which are designated "Common Stock," $0.001 par value,
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10,000,000 of which are designated "Preferred Stock," $0.001 par value, of which
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700,000 shares have been designated Series A Preferred Stock, 956,712 shares
have been designated Series B Preferred Stock, 605,034 shares have been
designated Series C Preferred Stock, 843,100 shares have been designated Series
D Preferred Stock, 391,559 shares have been designated Series E Preferred Stock,
and 920,000 shares have been designated Series F Preferred Stock (collectively
the "Preferred Stock"). 1,025,268 shares of Common Stock, 700,000 shares of
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Series A Preferred Stock, 830,822 shares of Series B Preferred Stock, 605,034
shares of Series C Preferred Stock, 744,100 shares of Series D Preferred Stock,
391,559 shares of Series E Preferred Stock and 610,000 shares of Series F
Preferred Stock are issued and outstanding.
C. The Board of Directors of Pilot-California has determined that, for
the purpose of effecting the reincorporation of Pilot-California in the State of
Delaware, it is advisable and in the best interests of Pilot-California that
Pilot-California merge with and into Pilot-Delaware upon the terms and
conditions provided in this Agreement.
D. The respective Boards of Directors of Pilot-Delaware and Pilot-
California have approved this Agreement and have directed that this Agreement be
submitted to a vote of their respective stockholders and executed by the
undersigned officers.
AGREEMENT
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In consideration of the mutual agreements and covenants set forth herein,
Pilot-Delaware and Pilot-California hereby agree, subject to the terms and
conditions hereinafter set forth, as follows:
1. MERGER.
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1.1 MERGER. In accordance with the provisions of this Agreement, the
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Delaware General Corporation Law and the California General Corporation Law,
Pilot-California shall be merged with and into Pilot-Delaware (the "Merger"),
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the separate existence of Pilot-California shall cease and Pilot Network
Services, Inc. -Delaware shall be, and is sometimes referred to below as, the
"Surviving Corporation," and the name of the Surviving Corporation shall be
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Pilot Network Services, Inc.
1.2 FILING AND EFFECTIVENESS. The Merger shall become effective upon
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completion of the following actions:
(a) Adoption and approval of this Agreement and the Merger by
the stockholders of each Constituent Corporation in accordance with the
applicable requirements of the Delaware General Corporation Law and the
California General Corporation Law;
(b) The satisfaction or waiver of all of the conditions
precedent to the consummation of the Merger as specified in this Agreement; and
(c) The filing with the Secretary of State of Delaware of an
executed Certificate of Merger or an executed counterpart of this Agreement
meeting the requirements of the Delaware General Corporation Law.
The date and time when the Merger becomes effective is referred to in this
Agreement as the "Effective Date of the Merger."
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1.3 EFFECT OF THE MERGER. Upon the Effective Date of the Merger, the
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separate existence of Pilot-California shall cease and Pilot-Delaware, as the
Surviving Corporation, (a) shall continue to possess all of its assets, rights,
powers and property as constituted immediately prior to the Effective Date of
the Merger, (b) shall be subject to all actions previously taken by its and
Pilot-California's Board of Directors, (c) shall succeed, without other
transfer, to all of the assets, rights, powers and property of Pilot-California
in the manner more fully set forth in Section 259 of the Delaware General
Corporation Law, (d) shall continue to be subject to all of the debts,
liabilities and obligations of Pilot-Delaware as constituted immediately prior
to the Effective Date of the Merger, and (e) shall succeed, without other
transfer, to all of the debts, liabilities and obligations of Pilot-California
in the same
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manner as if Pilot-Delaware had itself incurred them, all as more fully provided
under the applicable provisions of the Delaware General Corporation Law and the
California General Corporation Law.
2. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
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2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
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Pilot-Delaware as in effect immediately prior to the Effective Date of the
Merger shall continue in full force and effect as the Certificate of
Incorporation of the Surviving Corporation until duly amended in accordance with
the provisions thereof and applicable law.
2.2 BYLAWS. The Bylaws of Pilot-Delaware as in effect immediately prior
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to the Effective Date of the Merger shall continue in full force and effect as
the Bylaws of the Surviving Corporation until duly amended in accordance with
the provisions thereof and applicable law.
2.3 DIRECTORS AND OFFICERS. The directors and officers of Pilot-Delaware
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immediately prior to the Effective Date of the Merger shall be the directors and
officers of the Surviving Corporation until their successors shall have been
duly elected and qualified or as otherwise provided by law, the Certificate of
Incorporation of the Surviving Corporation or the Bylaws of the Surviving
Corporation.
3. MANNER OF CONVERSION OF STOCK
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3.1 PILOT NETWORK SERVICES, INC. -CALIFORNIA COMMON STOCK. Upon the
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Effective Date of the Merger, each one share of Pilot-California Common Stock
issued and outstanding immediately prior thereto shall, by virtue of the Merger
and without any action by the Constituent Corporations, the holder of such share
or any other person, be converted into and exchanged for two fully paid and
nonassessable share of Common Stock, $0.001 par value, of the Surviving
Corporation.
3.2 PILOT NETWORK SERVICES, INC. -CALIFORNIA PREFERRED STOCK. Upon the
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Effective Date of the Merger, each share of Pilot-California Series A, B, C, D,
E and F Preferred Stock, issued and outstanding immediately prior thereto, which
shares are convertible into such number of shares of Pilot-California Common
Stock as set forth in the Pilot-California Articles of Incorporation, as
amended, shall, by virtue of the Merger and without any action by the
Constituent Corporations, the holder of such shares or any other person, be
converted into and exchanged for two fully paid and non-assessable shares of
Series A, B, C, D, E and F Preferred Stock of the Surviving Corporation, $0.001
par value, respectively, having such rights, preferences and privileges as set
forth in the Certification of Incorporation of the Surviving Corporation.
3.3 PILOT NETWORK SERVICES, INC. -CALIFORNIA OPTIONS, STOCK PURCHASE
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RIGHTS AND CONVERTIBLE SECURITIES.
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(a) Upon the Effective Date of the Merger, the Surviving Corporation
shall assume the obligations of Pilot-California under Pilot-California's 1994
Stock Plan, 1998 Stock Option Plan, 1998 Employee Stock Purchase Plan and 1998
Directors' Stock Option Plan and all other employee benefit plans of Pilot-
California. Each outstanding and unexercised option, other right to purchase, or
security convertible into, Pilot-California Common Stock or Preferred Stock (a
"Right") shall become, subject to the provisions in paragraph (c) hereof, an
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option, right to purchase, or a security convertible into the Surviving
Corporation's Common Stock or Preferred Stock, respectively, on the basis of two
shares of the Surviving Corporation's Common Stock or Preferred Stock, as the
case may be, for each one share of Pilot-California Common Stock or Preferred
Stock, issuable pursuant to any such Right, on the same terms and conditions and
at an exercise price per share appropriately adjusted to reflect the exchange
ratio applicable to the shares issuable upon exercise of any such Pilot-
California Right at the Effective Date of the Merger.
(b) A number of shares of the Surviving Corporation's Common Stock
and Preferred Stock shall be reserved for issuance upon the exercise or
conversion of Rights equal to two times the number of shares of Pilot-California
Common Stock and Preferred Stock so reserved immediately prior to the Effective
Date of the Merger.
3.4 PILOT NETWORK SERVICES, INC. -DELAWARE COMMON STOCK. Upon the
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Effective Date of the Merger, each share of Common Stock, $0.001 par value, of
Pilot Network Services, Inc.-Delaware issued and outstanding immediately prior
thereto shall, by virtue of the Merger and without any action by Pilot-Delaware,
the holder of such shares or any other person, be canceled and returned to the
status of authorized but unissued shares.
3.5 EXCHANGE OF CERTIFICATES. After the Effective Date of the Merger,
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each holder of an outstanding certificate representing shares of Pilot-
California Common Stock or Preferred Stock may be asked to surrender the same
for cancellation to an exchange agent, whose name will be delivered to holders
prior to any requested exchange (the "Exchange Agent"), and each such holder
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shall be entitled to receive in exchange therefor a certificate or certificates
representing the number of shares of the appropriate class and series of the
Surviving Corporation's capital stock into which the surrendered shares were
converted as herein provided. Until so surrendered, each outstanding
certificate theretofore representing shares of Pilot-California capital stock
shall be deemed for all purposes to represent the number of whole shares of the
appropriate class and series of the Surviving Corporation's capital stock into
which such shares of Pilot-California capital stock were converted in the
Merger.
The registered owner on the books and records of the Surviving Corporation
or the Exchange Agent of any such outstanding certificate shall, until such
certificate shall have been surrendered for transfer or conversion or otherwise
accounted for to the Surviving Corporation or the Exchange Agent, have and be
entitled to exercise any voting and other rights with respect to and to receive
dividends and other distributions upon the shares of capital stock of the
Surviving Corporation represented by such outstanding certificate as provided
above.
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Each certificate representing capital stock of the Surviving Corporation so
issued in the Merger shall bear the same legends, if any, with respect to the
restrictions on transferability as the certificates of Pilot-California so
converted and given in exchange therefor, unless otherwise determined by the
Board of Directors of the Surviving Corporation in compliance with applicable
laws.
If any certificate for shares of Surviving Corporation's stock is to be
issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of issuance thereof
that the certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer, that such transfer otherwise be proper and comply with
applicable securities laws and that the person requesting such transfer pay to
the Exchange Agent any transfer or other taxes payable by reason of the issuance
of such new certificate in a name other than that of the registered holder of
the certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not payable.
4. GENERAL
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4.1 COVENANTS OF PILOT NETWORK SERVICES, INC. -DELAWARE. Pilot-Delaware
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covenants and agrees that it will, on or before the Effective Date of the
Merger:
(a) Qualify to do business as a foreign corporation in the State of
California and irrevocably appoint an agent for service of process as required
under the provisions of Section 2105 of the California General Corporation Law.
(b) File any and all documents with the California Franchise Tax
Board necessary for the assumption by Pilot-Delaware of all of the franchise tax
liabilities of Pilot-California; and
(c) Take such other actions as may be required by the California
General Corporation Law.
4.2 FURTHER ASSURANCES. From time to time, as and when required by Pilot-
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Delaware or by its successors or assigns, there shall be executed and delivered
on behalf of Pilot-California such deeds and other instruments, and there shall
be taken or caused to be taken by it such further and other actions, as shall be
appropriate or necessary in order to vest or perfect in or conform of record or
otherwise by Pilot-Delaware the title to and possession of all the property,
interests, assets, rights, privileges, immunities, powers, franchises and
authority of Pilot-California and otherwise to carry out the purposes of this
Agreement, and the officers and directors of Pilot-Delaware are fully authorized
in the name and on behalf of Pilot-California or otherwise to take any and all
such action and to execute and deliver any and all such deeds and other
instruments.
4.3 ABANDONMENT. At any time before the Effective Date of the Merger,
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this Agreement may be terminated and the Merger may be abandoned for any reason
whatsoever by the Board of Directors of either Pilot-California or Pilot-
Delaware, or both, notwithstanding the
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approval of this Agreement by the shareholders of Pilot-California or by the
sole stockholder of Pilot-Delaware, or by both.
4.4 AMENDMENT. The Boards of Directors of the Constituent Corporations
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may amend this Agreement at any time prior to the filing of this Agreement (or
certificate in lieu thereof) with the Secretary of State of the State of
Delaware, provided that an amendment made subsequent to the adoption of this
Agreement by the stockholders of either Constituent Corporation shall not: (a)
alter or change the amount or kind of shares, securities, cash, property and/or
rights to be received in exchange for or on conversion of all or any of the
shares of any class or series thereof of such Constituent Corporation, (b) alter
or change any term of the Certificate of Incorporation of the Surviving
Corporation to be effected by the Merger, or (c) alter or change any of the
terms and conditions of this Agreement if such alteration or change would
adversely affect the holders of any class of shares or series of capital stock
of such Constituent Corporation.
4.5 REGISTERED OFFICE. The registered office of the Surviving Corporation
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in the State of Delaware is located at The Xxxxxxxx-Xxxx Corporation System,
Inc., 1013 Centre Road, in the City of Xxxxxxxxxx, Xxxxxxxx 00000, County of New
Castle, and The Xxxxxxxx-Xxxx Corporation System is the registered agent of the
Surviving Corporation at such address.
4.6 FIRPTA NOTIFICATION.
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(a) On the Effective Date of the Merger, Pilot-California shall
deliver to Pilot-Delaware, as agent for the shareholders of Pilot-California, a
properly executed statement (the "Statement") in substantially the form attached
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hereto as Exhibit A. Pilot-Delaware shall retain the Statement for a period of
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not less than seven years and shall, upon request, provide a copy thereof to any
person that was a shareholder of Pilot-California immediately prior to the
Merger. In consequence of the approval of the Merger by the shareholders of
Pilot-California, (i) such shareholders shall be considered to have requested
that the Statement be delivered to Pilot-Delaware as their agent and (ii) Pilot-
Delaware shall be considered to have received a copy of the Statement at the
request of the Pilot-California shareholders for purposes of satisfying Pilot-
Delaware's obligations under Treasury Regulation Section 1.1445-2(c)(3).
(b) Pilot-California shall deliver to the Internal Revenue Service a
notice regarding the Statement in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2).
4.7 AGREEMENT. Executed copies of this Agreement will be on file at the
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principal place of business of the Surviving Corporation at 0000 Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx, XX 00000 and copies thereof will be furnished to any
stockholder of either Constituent Corporation, upon request and without cost.
4.8 GOVERNING LAW; JURISDICTION. This Agreement and all acts and
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transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of California, without giving effect to principles of conflicts of
law. Each of the parties to this Agreement consents to the exclusive
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jurisdiction and venue of the courts of the state and federal courts of Alameda
County, California.
4.9 COUNTERPARTS. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
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The undersigned authorized representatives of the Constituent Corporation
have executed and acknowledged this Agreement as of the date first set forth
above.
Pilot Network Services, Inc., a Delaware
corporation
___________________________________
M. Xxxxxxxx Xxxxxxx,
President and Chief Executive Officer
Pilot Network Services, Inc., a California
corporation
___________________________________
M. Xxxxxxxx Xxxxxxx,
President and Chief Executive Officer
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EXHIBIT A -- FORM OF FIRPTA CERTIFICATE
July ____, 1998
Assistant Commissioner (International)
Director, Office of Compliance
OP:I:C:E:666
000 X'Xxxxxx Xxxxx Xxxxx, X.X.
COMSAT Building
Washington, D.C. 20024
NOTICE TO THE INTERNAL REVENUE SERVICE OF PILOT NETWORK SERVICES, INC.
UNITED STATES REAL PROPERTY HOLDING CORPORATION STATUS UNDER TREASURY
REGULATION 1.897-2(H)(2)
Dear Sir:
1. This Notice is being filed by Pilot Network Services, Inc., ("Target")
pursuant to section 1.897-2(h)(2) of the Treasury Regulations promulgated under
the Internal Revenue Code of 1986, as amended (the "Code").
2. The undersigned, on behalf of Target hereby declares that stock of
Target is not a United States real property interest within the meaning of
section 897 of the Code because Target is not and has not been a United States
real property holding corporation as that term is defined in section 897(c)(2)
of the Code during the applicable period specified in section 897(c)(1)(A)
(ii) of the Code.
3. Target's United States taxpayer identifying number is: [_________]
4. Target's address is:
0000 Xxxxxx Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
5. In connection with the acquisition of Target by Pilot Network
Services, Inc. ("Acquiror"), the undersigned provided the attached statement to
Acquiror declaring that an interest in Target is not a United States real
property interest. The statement was voluntarily provided in response to a
request from the transferee, Acquiror under Regulation 1. 1445-2(c)(3)(i).
Acquiror's United States taxpayer identifying number is:[____________]
Acquiror's address is:
[________________
________________
________________]
6. No supplemental statements pursuant to Treasury Regulations section
1.897-2(h)(5) are required to be filed herewith.
7. Under penalties of perjury the undersigned declares that she has
examined this certification, and the attachment hereto, and to the best of his
knowledge and belief they are true, correct and complete. The undersigned
further declares that she is a responsible officer and that she has authority to
sign this document on behalf of Target.
A copy of the statement provided pursuant to Treasury Regulation
(S)(S)1.897-2(h)(2) and 1.1445-2(c)(3)(i) is attached.
_________________________________
M. Xxxxxxxx Xxxxxxx, President
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PILOT NETWORK SERVICES, INC.
A California Corporation
OFFICERS' CERTIFICATE OF APPROVAL OF THE MERGER
M. Xxxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx certify that:
1. They are the President and Chief Executive Officer and the Secretary,
respectively, of Pilot Network Services, Inc. a corporation organized under the
laws of the State of California.
2. The corporation has authorized two classes of stock, designated
"Common Stock" and "Preferred Stock," respectively.
3. There were _______ shares of Common Stock and _______ shares of
Preferred Stock outstanding as of the record date (the "Record Date") and
entitled to vote by written consent of the shareholders whereby the Agreement
and Plan of Merger attached hereto (the "Merger Agreement") was approved.
4. The principal terms of the Merger Agreement were approved by the Board
of Directors and by the vote of a number of shares of each class and series of
stock which equaled or exceeded the vote required.
5. The percentage vote required was more than 50% of the outstanding
shares of Common Stock and more than 50% of the outstanding shares of Preferred
Stock, voting as a single class.
M. Xxxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx further declare under penalty of
perjury under the laws of the States of California and Delaware that each has
read the foregoing certificate and knows the contents thereof and that the same
is true and correct of his/ her own knowledge.
Executed in ____________________, California on July____, 1998.
_______________________________________
M. Xxxxxxxx Xxxxxxx, President and
Chief Executive Officer
_______________________________________
Xxxxxxx Xxxxxxx, Secretary
PILOT NETWORK SERVICES, INC.
A Delaware Corporation
OFFICERS' CERTIFICATE OF APPROVAL OF MERGER
M. Xxxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx certify that:
1. They are the President and Chief Executive Officer and the Secretary,
respectively, of Pilot Network Services, Inc., a corporation organized under the
laws of the State of Delaware.
2. The corporation has authorized two classes of stock, designated
"Common Stock" and "Preferred Stock," respectively.
3. There are 100 shares of Common Stock outstanding and entitled to vote
on the Agreement and Plan of Merger attached hereto (the "Merger Agreement").
There are no shares of Preferred Stock outstanding.
4. The principal terms of the Merger Agreement were approved by the Board
of Directors and by the vote of a number of shares of each class and series of
stock which equaled or exceeded the vote required.
5. The percentage vote required was more than 50% of the votes entitled
to be cast by holders of outstanding shares of Common Stock.
M. Xxxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx further declare under penalty of
perjury under the laws of the States of Delaware and California that each has
read the foregoing certificate and knows the contents thereof and that the same
is true and correct of each's own knowledge.
Executed in ________________________, California on July ___, 1998.
_______________________________________
M. Xxxxxxxx Xxxxxxx, President and
Chief Executive Officer
_______________________________________
Xxxxxxx Xxxxxxx, Secretary
