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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
CISCO SYSTEMS, INC.,
OSPREY ACQUISITION CORPORATION
AND
AIRONET WIRELESS COMMUNICATIONS, INC.
NOVEMBER 8, 1999
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TABLE OF CONTENTS
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ARTICLE I THE MERGER....................................... A-5
1.1 The Merger....................................... A-5
1.2 Closing; Effective Time.......................... A-6
1.3 Effect of the Merger............................. A-6
1.4 Certificate of Incorporation; Bylaws............. A-6
1.5 Directors and Officers........................... A-6
1.6 Effect on Capital Stock.......................... A-6
1.7 Surrender of Certificates........................ A-7
1.8 No Further Ownership Rights in Company Common
Stock................................................. A-9
1.9 Lost, Stolen or Destroyed Certificates........... A-9
1.10 Tax Consequences................................. A-9
1.11 Withholding Rights............................... A-9
1.12 Taking of Necessary Action; Further Action....... A-9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY....... A-9
2.1 Organization, Standing and Power................. A-10
2.2 Capital Structure................................ A-10
2.3 Authority........................................ A-11
2.4 SEC Documents; Financial Statements.............. A-12
2.5 Absence of Certain Changes....................... A-13
2.6 Absence of Undisclosed Liabilities............... A-13
2.7 Litigation....................................... A-13
2.8 Restrictions on Business Activities.............. A-13
2.9 Governmental Authorization....................... A-14
2.10 Title to Property................................ A-14
2.11 Intellectual Property............................ A-14
2.12 Environmental Matters............................ A-16
2.13 Taxes............................................ A-16
2.14 Employee Benefit Plans........................... A-17
2.15 Certain Agreements Affected by the Merger........ A-19
2.16 Employee Matters................................. A-20
2.17 Interested Party Transactions.................... A-20
2.18 Insurance........................................ A-20
2.19 Compliance With Laws............................. A-21
2.20 Minute Books..................................... A-21
2.21 Complete Copies of Materials..................... A-21
2.22 Brokers' and Finders' Fees....................... A-21
2.23 Registration Statement; Proxy
Statement/Prospectus.................................. A-21
2.24 Opinion of Financial Advisor..................... A-21
2.25 Vote Required.................................... A-22
2.26 Board Approval................................... A-22
2.27 Stockholder Agreement; Irrevocable Proxies....... A-22
2.28 Section 203 of the DGCL Not Applicable........... A-22
2.29 Inventory........................................ A-22
2.30 Accounts Receivable.............................. A-22
2.31 Customers and Suppliers.......................... A-22
2.32 Rights Plan...................................... A-23
2.33 Export Control Laws.............................. A-23
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2.34 Year 2000............................................. A-23
2.35 Representations Complete......................... A-23
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB................................................ A-24
3.1 Organization, Standing and Power................. A-24
3.2 Capital Structure................................ A-24
3.3 Authority........................................ A-24
3.4 SEC Documents; Financial Statements.............. A-25
3.5 Absence of Undisclosed Liabilities............... A-25
3.6 Litigation....................................... A-26
3.7 Broker's and Finders' Fees....................... A-26
3.8 Registration Statement; Proxy
Statement/Prospectus.................................. A-26
3.9 Board Approval................................... A-26
3.10 Representations Complete......................... A-26
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME............. A-27
4.1 Conduct of Business of Company................... A-27
4.2 Restrictions on Conduct of Business of Company... A-27
4.3 No Solicitation.................................. A-29
ARTICLE V ADDITIONAL AGREEMENTS............................ A-30
5.1 Proxy Statement/Prospectus; Registration
Statement............................................. A-30
5.2 Meeting of Stockholders.......................... A-31
5.3 Access to Information............................ A-31
5.4 Confidentiality.................................. A-32
5.5 Public Disclosure................................ A-32
5.6 Consents; Cooperation............................ A-32
5.7 Legal Requirements............................... A-33
5.8 Blue Sky Laws.................................... A-33
5.9 Employee Benefit Plans........................... A-33
5.10 Forms S-3 and S-8................................ A-34
5.11 Option Agreement................................. A-35
5.12 Listing of Additional Shares..................... A-35
5.13 Nasdaq Quotation................................. A-35
5.14 Employees........................................ A-35
5.15 Amendment of Stock Option Plan................... A-35
5.16 Company Rights Agreement......................... A-35
5.17 Indemnification.................................. A-35
5.18 Tax Treatment.................................... A-36
5.19 Stockholder Litigation........................... A-36
5.20 Best Efforts and Further Assurances.............. A-36
ARTICLE VI CONDITIONS TO THE MERGER........................ A-37
6.1 Conditions to Obligations of Each Party to Effect
the Merger............................................ A-37
6.2 Additional Conditions to Obligations of
Company............................................... A-37
6.3 Additional Conditions to the Obligations of
Parent and Merger Sub................................. A-38
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.............. A-39
7.1 Termination...................................... A-39
7.2 Effect of Termination............................ A-40
7.3 Expenses and Termination Fees.................... A-40
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7.4 Amendment............................................. A-42
7.5 Extension; Waiver................................ A-42
ARTICLE VIII GENERAL PROVISIONS............................ A-42
8.1 Non-Survival at Effective Time................... A-42
8.2 Notices.......................................... A-43
8.3 Interpretation................................... A-44
8.4 Counterparts..................................... A-44
8.5 Entire Agreement; Nonassignability; Parties in
Interest.............................................. A-44
8.6 Severability..................................... A-44
8.7 Remedies Cumulative.............................. A-44
8.8 Governing Law.................................... A-44
8.9 Rules of Construction............................ A-45
SCHEDULES
COMPANY DISCLOSURE SCHEDULE
Schedule 2.0 -- Revenue Levels
Schedule 2.10 -- Company Real Property
Schedule 2.11 -- Company Intellectual Property
Schedule 2.13 -- Tax Sharing and Allocation Agreements and Other Tax Matters
Schedule 2.14 -- Company Employee Plans
Schedule 2.27 -- Signatories to Stockholder Agreement
Schedule 5.9(a) -- Outstanding Options
Schedule 5.9(d) -- Disqualified Persons
Schedule 5.10(a) -- S-8 Eligible Optionees
Schedule 5.10(b) -- S-3 Eligible Optionees
Schedule 5.14 -- List of Employees
PARENT DISCLOSURE SCHEDULE
EXHIBITS
Exhibit A -- Option Agreement
Exhibit B -- Stockholder Agreement
Exhibit C -- Certificate of Merger
Exhibit D -- Employment and Non-Competition Agreement
Exhibit E -- FIRPTA Notice
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the "Agreement") is
made and entered into as of November 8, 1999, by and among Cisco Systems, Inc.,
a California corporation ("Parent"), Osprey Acquisition Corporation, a Delaware
corporation ("Merger Sub") and wholly owned subsidiary of Parent, and Aironet
Wireless Communications, Inc., a Delaware corporation ("Company").
RECITALS:
A. The Boards of Directors of Company, Parent and Merger Sub believe it is
in the best interests of their respective companies and the stockholders of
their respective companies that Company and Merger Sub combine into a single
company through the statutory merger of Merger Sub with and into Company (the
"Merger") and, in furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, the outstanding shares of
Company Common Stock, $0.01 par value ("Company Common Stock"), shall be
converted into shares of Parent Common Stock, $0.001 par value ("Parent Common
Stock"), at the rate set forth herein.
C. Company, Parent and Merger Sub desire to make certain representations
and warranties and other agreements in connection with the Merger.
D. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), and to cause the Merger to qualify as a
reorganization under the provisions of Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Code.
E. Concurrently with the execution of this Agreement and as an inducement
to Parent and Merger Sub to enter into this Agreement, (a) Company and Parent
have entered into a stock option agreement dated the date hereof in the form
attached hereto as Exhibit A (the "Option Agreement") providing for the purchase
by Parent of newly-issued shares of Company's Common Stock, and (b) certain
stockholders of Company have on the date hereof entered into a stockholder
agreement in the form attached hereto as Exhibit B (the "Stockholder Agreement")
to, among other things, vote the shares of Company's Common Stock owned by such
persons to approve the Merger and against any competing proposals.
AGREEMENT:
NOW, THEREFORE, in consideration of the covenants and representations set
forth herein, and for other good and valuable consideration, the parties agree
as follows:
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."
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1.2 Closing; Effective Time. The closing of the transactions contemplated
hereby (the "Closing") shall take place as soon as practicable after the
satisfaction or waiver of each of the conditions set forth in Article VI hereof
or at such other time as the parties hereto agree (the "Closing Date"). The
Closing shall take place at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, Two
Embarcadero Place, 0000 Xxxx Xxxx, Xxxx Xxxx, XX 00000, or at such other
location as the parties hereto agree. In connection with the Closing, the
parties hereto shall cause the Merger to be consummated by filing the
Certificate of Merger with the Secretary of State of the State of Delaware, in
accordance with the relevant provisions of Delaware Law (the time of such filing
being the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of Delaware Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of Company and Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Company and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of Merger Sub,
as in effect immediately prior to the Effective Time, shall be the Certificate
of Incorporation of the Surviving Corporation until thereafter amended as
provided by Delaware Law and such Certificate of Incorporation; provided,
however, that immediately after the Effective Time the Certificate of
Incorporation of the Surviving Corporation shall be amended so as to read in its
entirety like the Certificate of Incorporation of Merger Sub with Article I of
the Certificate of Incorporation amended to read as follows: "The name of the
corporation is Aironet Wireless Communications, Inc."
(b) The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended; provided, however, that immediately after the Effective Time
the Bylaws of the Surviving Corporation shall be amended so as to read in their
entirety like the Bylaws of Merger Sub.
1.5 Directors and Officers. At the Effective Time, the directors of the
Surviving Corporation shall be those persons who were the directors of Merger
Sub. The officers of the Surviving Corporation shall be the initial officers of
Merger Sub, until their respective successors are duly elected or appointed and
qualified.
1.6 Effect on Capital Stock. By virtue of the Merger and without any
action on the part of Merger Sub, Company or the holders of any of the following
securities:
(a) Conversion of Company Common Stock. At the Effective Time, each
share of Company Common Stock issued and outstanding immediately prior to
the Effective Time together with the corresponding Right (as defined in the
Rights Agreement dated as of June 25, 1999 (the "Company Rights Agreement")
between Company and Xxxxxx Savings Bank (other than any shares of Company
Common Stock to be canceled pursuant to Section 1.6(b)) will be canceled
and extinguished and be converted automatically into the right to receive
0.63734 shares of Parent Common Stock (the "Exchange Ratio"). All
references in this Agreement to Parent Common Stock to be issued pursuant
to the Merger shall be deemed to include the corresponding rights ("Parent
Rights") to purchase shares of Parent Series A Junior Participating
Preferred Stock, no par value, pursuant to the Parent Rights Agreement
dated as of June 10, 1998 between Parent and Bank Boston, N.A., except
where the context otherwise requires.
(b) Cancellation of Company Common Stock Owned by Parent or
Company. At the Effective Time, all shares of Company Common Stock that are
owned by Company as treasury stock and
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each share of Company Common Stock owned by Parent or any direct or
indirect wholly owned subsidiary of Parent or of Company immediately prior
to the Effective Time shall be canceled and extinguished without any
conversion thereof.
(c) Company Stock Option Plans. At the Effective Time, the Company's
1999 Stock Option Plan for Non-Employee Directors, Amended and Restated
1996 Stock Option Plan, as amended (including all prior versions thereof),
and 1999 Omnibus Stock Incentive Plan (collectively, the "Company Stock
Option Plans") and all options to purchase Company Common Stock then
outstanding under the Company Stock Option Plans shall be assumed by Parent
in accordance with Section 5.9.
(d) Capital Stock of Merger Sub. At the Effective Time, each share of
common stock, $0.001 par value, of Merger Sub ("Merger Sub Common Stock")
issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation, and the
Surviving Corporation shall be a wholly-owned subsidiary of Parent. Each
stock certificate of Merger Sub evidencing ownership of any such shares
shall continue to evidence ownership of such shares of capital stock of the
Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse split,
stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Common Stock),
reorganization, recapitalization or other like change with respect to
Parent Common Stock or Company Common Stock occurring after the date hereof
and prior to the Effective Time and of any increase in the number of shares
of Company Common Stock outstanding after the date hereof (treating as
outstanding as of the date hereof, up to 461,904 shares of Common Stock
issuable upon exercise of outstanding warrants, up to 1,972,533 shares of
Common Stock issuable upon exercise of outstanding options and up to 75,000
shares of Common Stock issuable upon exercise of options issued between the
date hereof and the Effective Date) relative to such number as derived from
Section 2.2 hereof, so as to provide holders of Company Common Stock and
Parent the same economic effect as contemplated by this Agreement prior to
such stock split, reverse split, stock dividend, reorganization,
recapitalization, like change or increase.
(f) Fractional Shares. No fraction of a share of Parent Common Stock
will be issued, but in lieu thereof each holder of shares of Company Common
Stock who would otherwise be entitled to a fraction of a share of Parent
Common Stock (after aggregating all fractional shares of Parent Common
Stock to be received by such holder) shall receive from Parent an amount of
cash (rounded to the nearest whole cent) equal to the product of (i) such
fraction, multiplied by (ii) the average closing price of a share of Parent
Common Stock as quoted on the NASDAQ National Market for the ten (10)
trading days ending on the last full trading day prior to the Effective
Time.
1.7 Surrender of Certificates.
(a) Exchange Agent. Parent's transfer agent shall act as exchange agent
(the "Exchange Agent") in the Merger.
(b) Parent to Provide Common Stock and Cash. Promptly after the Effective
Time, Parent shall make available to the Exchange Agent for exchange in
accordance with this Article I, through such reasonable procedures as Parent may
adopt, (i) the shares of Parent Common Stock issuable pursuant to Section 1.6(a)
in exchange for shares of Company Common Stock outstanding immediately prior to
the Effective Time (provided that delivery of any shares that are subject to
vesting or other restrictions shall
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be in book entry form until such vesting or other restrictions lapse) and (ii)
cash in an amount sufficient to permit payment of cash in lieu of fractional
shares pursuant to Section 1.6(f).
(c) Exchange Procedures. Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each holder of record of a certificate
or certificates (the "Certificates") which immediately prior to the Effective
Time represented outstanding shares of Company Common Stock, whose shares were
converted into the right to receive shares of Parent Common Stock (and cash in
lieu of fractional shares) pursuant to Section 1.6, (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon receipt of the Certificates by the
Exchange Agent, and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates (or book entries in
the case of shares that are subject to vesting or other restrictions)
representing shares of Parent Common Stock (and cash in lieu of fractional
shares). Upon surrender of a Certificate for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by Parent, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate (or book entry in the case of
shares that are subject to vesting or other restrictions) representing the
number of whole shares of Parent Common Stock and payment in lieu of fractional
shares which such holder has the right to receive pursuant to Section 1.6, and
the Certificate so surrendered shall forthwith be canceled. Until so
surrendered, each outstanding Certificate that, prior to the Effective Time,
represented shares of Company Common Stock will be deemed from and after the
Effective Time, for all corporate purposes, other than the payment of dividends,
to evidence the ownership of the number of full shares of Parent Common Stock
into which such shares of Company Common Stock shall have been so converted and
the right to receive an amount in cash in lieu of the issuance of any fractional
shares in accordance with Section 1.6.
(d) Distributions With Respect to Unexchanged Shares. No dividends or other
distributions with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby until the
holder of record of such Certificate shall surrender such Certificate. Subject
to applicable law, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of
Parent Common Stock issued in exchange therefor, without interest, at the time
of such surrender, the amount of any such dividends or other distributions with
a record date after the Effective Time theretofore payable (but for the
provisions of this Section 1.7(d)) with respect to such shares of Parent Common
Stock.
(e) Transfers of Ownership. If any certificate for shares of Parent Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the Certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Parent or any agent designated by it any transfer or
other taxes required by reason of the issuance of a certificate for shares of
Parent Common Stock in any name other than that of the registered holder of the
Certificate surrendered, or established to the satisfaction of Parent or any
agent designated by it that such tax has been paid or is not payable.
(f) No Liability. Notwithstanding anything to the contrary in this Section
1.7, none of the Exchange Agent, the Surviving Corporation, Parent or any party
hereto shall be liable to any person for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
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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 claim that may be made against Parent, the Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
1.10 Tax Consequences. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of Section 368 of
the Code.
1.11 Withholding Rights. Parent and the Surviving Corporation shall be
entitled to deduct and withhold from the number of shares of Parent Common Stock
otherwise deliverable under this Agreement, and from any other payments made
pursuant to this Agreement, such amounts as Parent and the Surviving Corporation
are required to deduct and withhold with respect to such delivery and payment
under the Code or any provision of state, local, provincial or foreign tax law.
To the extent that amounts are so withheld, such withheld amounts shall be
treated for all purposes of this Agreement as having been delivered and paid to
the holder of shares of Company Common Stock in respect of which such deduction
and withholding was made by Parent and the Surviving Corporation.
1.12 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Company and Merger Sub, the officers and directors of Company
and Merger Sub are fully authorized in the name of their respective corporations
or otherwise to take, and will take, all such lawful and necessary action, so
long as such action is not inconsistent with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
In this Agreement, any reference to any event, change, condition or effect
being "material" with respect to any person means any material event, change,
condition or effect related to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of such person and its subsidiaries, taken
as a whole. In this Agreement, any reference to a "Material Adverse Effect" with
respect to any person means any event, change or effect that is materially
adverse to the condition (financial or otherwise), properties, assets,
liabilities, business, operations or results of operations of such person and
its subsidiaries, taken as a whole, provided, however, that a "Material Adverse
Effect" with respect to Company shall not include the following (collectively,
"Non-Controllable Events"): (i) general changes in the telecommunications
industry or
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economic conditions that affect Company and its subsidiaries, taken as a whole,
substantially proportionately relative to the Parent and its subsidiaries, taken
as a whole or (ii) a decline in the revenues or earnings of Company following
the date of this Agreement which is attributable to a delay of, reduction in or
cancellation or change in the purchase orders by customers of Company arising as
a result of the execution or announcement of this Agreement (provided that
revenues do not decline below the levels set forth in Schedule 2.0). A decline
of revenues below such levels shall be deemed to be a Material Adverse Effect on
Company.
In this Agreement, any reference to a party's "knowledge" means such
party's actual knowledge after reasonable inquiry of officers, directors and
other employees of such party charged with senior administrative or operational
responsibility for such matters.
Except as disclosed in that section of the document of even date herewith
delivered by Company to Parent prior to the execution and delivery of this
Agreement (the "Company Disclosure Schedule") corresponding to the Section of
this Agreement to which any of the following representations and warranties
specifically relate or as disclosed in another section of the Company Disclosure
Schedule if it is reasonably apparent on the face of the disclosure that it is
applicable to another Section of this Agreement, Company represents and warrants
to Parent and Merger Sub as follows:
2.1 Organization, Standing and Power. Each of Company and its subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. Each of Company and its subsidiaries
has the corporate power to own its properties and to carry on its business as
now being conducted and as presently proposed to be conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the failure to be so qualified and in good standing would have a Material
Adverse Effect on Company. Company has delivered to Parent a true and correct
copy of the Amended and Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), and Second Amended and Restated Bylaws, as
amended, or other charter documents, as applicable, of Company and each of its
subsidiaries, each as amended to date. Neither Company nor any of its
subsidiaries is in violation of any of the provisions of its respective charters
or bylaws. Company is the owner of all outstanding shares of capital stock of
each of its subsidiaries and all such shares are duly authorized, validly
issued, fully paid and nonassessable. All of the outstanding shares of capital
stock of each such subsidiary are owned by Company free and clear of all liens,
charges, claims or encumbrances or rights of others. There are no outstanding
subscriptions, options, warrants, puts, calls, rights, exchangeable or
convertible securities or other commitments or agreements of any character
relating to the issued or unissued capital stock or other securities of any such
subsidiary, or otherwise obligating Company or any such subsidiary to issue,
transfer, sell, purchase, redeem or otherwise acquire any such securities.
Except as disclosed in the Company SEC Documents (as defined in Section 2.4),
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity.
2.2 Capital Structure. The authorized capital stock of Company consists of
60,000,000 shares of Common Stock, $0.01 par value, and 500,000 shares of
Preferred Stock, $0.01 par value, of which there were issued and outstanding as
of the close of business on November 3, 1999, 14,202,910 shares of Common Stock
and no shares of Preferred Stock. There are no other outstanding shares of
capital stock or voting securities and no outstanding commitments to issue any
shares of capital stock or voting securities after November 3, 1999 other than
pursuant to the Option Agreement, the exercise of options outstanding as of such
date under the Company Stock Option Plans or pursuant to the Company Employee
Stock Purchase Plan (the "Company ESPP"). All outstanding shares of Company
Common Stock are duly authorized, validly issued, fully paid and non-assessable
and are free of any liens or
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encumbrances other than any liens or encumbrances created by or imposed upon the
holders thereof, and are not subject to preemptive rights or rights of first
refusal created by statute, the Certificate of Incorporation or Bylaws of
Company or any agreement to which Company is a party or by which it is bound. As
of the close of business on November 3, 1999, Company has reserved (i) 4,238,817
shares of Common Stock for issuance to employees, consultants and directors
pursuant to the Company Stock Option Plans, of which 349,301 shares have been
issued pursuant to option exercises or direct stock purchases, 1,972,533 shares
are subject to outstanding, unexercised options, no shares are subject to
outstanding stock purchase rights, and 1,346,983 shares are available for
issuance thereunder and (ii) 500,000 shares of Common Stock for issuance to
employees pursuant to the Company ESPP, of which no shares have been issued.
Since November 3, 1999, Company has not (i) issued or granted additional options
under the Company Stock Option Plans, or (ii) accepted enrollments in the
Company ESPP. Except for (i) the rights created pursuant to this Agreement, the
Option Agreement, the Company Stock Option Plans, the Company Rights Agreement
and the Company ESPP and (ii) the Company's rights to repurchase any unvested
shares under the Company Stock Option Plans, there are no other options,
warrants, calls, rights, commitments or agreements of any character to which
Company is a party or by which it is bound obligating Company to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased
or redeemed, any shares of capital stock of Company or obligating Company to
grant, extend, accelerate the vesting of, change the price of, or otherwise
amend or enter into any such option, warrant, call, right, commitment or
agreement. There are no contracts, commitments or agreements relating to voting,
purchase or sale of Company's capital stock (i) between or among Company and any
of its stockholders and (ii) to the best of Company's knowledge, between or
among any of Company's stockholders. The terms of the Company Stock Option Plans
permit the assumption or substitution of options to purchase Parent Common Stock
as provided in this Agreement, without the consent or approval of the holders of
such securities, stockholders, or otherwise. The current "Purchase Period" (as
defined in the Company ESPP) commenced under the Company ESPP on November 12,
1999, and will end on the earlier of the day immediately prior to the Effective
Time and December 31, 1999, and except for the purchase rights granted on such
commencement date to participants in the current Purchase Period, there are no
other purchase rights or options outstanding under the Company ESPP. True and
complete copies of all agreements and instruments relating to or issued under
the Company Stock Option Plans or Company ESPP have been made available to
Parent and such agreements and instruments have not been amended, modified or
supplemented, and there are no agreements to amend, modify or supplement such
agreements or instruments in any case from the form made available to Parent.
The shares of Company Common Stock issued under the Amended and Restated 1996
Stock Option Plan, as amended and under all prior versions thereof, have not
been registered under the Securities Act and were issued in transactions which
qualified for exemptions under, either Section 4(2) of, or Rule 701 under, the
Securities Act for stock issuances under compensatory benefit plans.
2.3 Authority. Company has all requisite corporate power and authority to
enter into this Agreement and the Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Company, subject only to the approval of the
Merger by Company's stockholders as contemplated by Section 6.1(a). Each of this
Agreement and the Option Agreement has been duly executed and delivered by
Company and constitutes the valid and binding obligation of Company enforceable
against Company in accordance with its terms, except as enforceability may be
limited by bankruptcy and other laws affecting the rights and remedies of
creditors generally and general principles of equity. The execution and delivery
of this Agreement and the Option Agreement by Company does not, and the
consummation of the transactions contemplated hereby will not, conflict
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with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any benefit under (i) any provision of
the Certificate of Incorporation or Bylaws of Company or any of its
subsidiaries, as amended, or (ii) any material mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Company or any of its subsidiaries or any of their properties or
assets. No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity") is
required by or with respect to Company or any of its subsidiaries in connection
with the execution and delivery of this Agreement, the Option Agreement, or the
consummation of the transactions contemplated hereby and thereby, except for (i)
the filing of the Certificate of Merger as provided in Section 1.2; (ii) the
filing with the Securities and Exchange Commission (the "SEC") and the National
Association of Securities Dealers, Inc. (the "NASD") of the Proxy Statement (as
defined in Section 2.23) relating to the Company Stockholders Meeting (as
defined in Section 2.23); (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state securities laws and the securities laws of any foreign country;
(iv) such filings as may be required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended ("HSR"); (v) the filing of a Form S-4
Registration Statement with the SEC in accordance with the Securities Act of
1933, as amended; (vi) the filing of a Current Report on Form 8-K with the SEC;
and (vii) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material Adverse
Effect on Company and would not prevent, or materially alter or delay any of the
transactions contemplated by this Agreement or the Option Agreement.
2.4 SEC Documents; Financial Statements. Company has made available to
Parent a true and complete copy of each statement, report, registration
statement (with the prospectus in the form filed pursuant to Rule 424(b) of the
Securities Act of 1933, as amended (the "Securities Act")), definitive proxy
statement and other filings made with the SEC by Company since May 1, 1999, and,
prior to the Effective Time, Company will have furnished Parent with true and
complete copies of any additional documents filed with the SEC by Company prior
to the Effective Time (collectively, the "Company SEC Documents"). In addition,
Company has made available to Parent all exhibits to the Company SEC Documents
filed prior to the date hereof, and will promptly make available to Parent all
exhibits to any additional Company SEC Documents filed prior to the Effective
Time. All documents required to be filed as exhibits to the Company SEC
Documents have been so filed, and all material contracts so filed as exhibits
are in full force and effect, except those which have expired in accordance with
their terms, and neither Company nor any of its subsidiaries is in material
default thereunder. As of their respective filing dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
Securities Act, and none of the Company SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected by a subsequently filed Company SEC Document. The financial statements
of Company, including the notes thereto, included in the Company SEC Documents
(the "Company Financial Statements") were complete and correct in all material
respects as of their respective dates, complied as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto as of their respective dates,
and have been prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a basis consistent throughout the
periods indicated and consistent with each other (except as may be indicated in
the notes thereto or, in the case of unaudited statements included in Quarterly
Reports on Form 10-Q, as permitted by Form 10-Q of the SEC). The Company
Financial Statements fairly present the consolidated
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financial condition and operating results of Company and its subsidiaries at the
dates and during the periods indicated therein (subject, in the case of
unaudited statements, to normal, recurring year-end adjustments). There has been
no change in Company accounting policies since June 30, 1999, except as
described in the notes to the Company Financial Statements.
2.5 Absence of Certain Changes. Since June 30, 1999 (the "Company Balance
Sheet Date"), Company has conducted its business in the ordinary course
consistent with past practice and there has not occurred: (i) any change, event
or condition (whether or not covered by insurance) that has resulted in, or
might reasonably be expected to result in, a Material Adverse Effect to Company;
(ii) any acquisition, sale or transfer of any material asset of Company or any
of its subsidiaries other than in the ordinary course of business and consistent
with past practice; (iii) any change in accounting methods or practices
(including any change in depreciation or amortization policies or rates) by
Company or any revaluation by Company of any of its or any of its subsidiaries'
assets; (iv) any declaration, setting aside, or payment of a dividend or other
distribution with respect to the shares of Company, or any direct or indirect
redemption, purchase or other acquisition by Company of any of its shares of
capital stock; (v) any material contract entered into by Company or any of its
subsidiaries, other than in the ordinary course of business and as provided to
Parent, or any material amendment or termination of, or default under, any
material contract to which Company or any of its subsidiaries is a party or by
which it is bound; (vi) any amendment or change to the Certificate of
Incorporation or Bylaws or, except as contemplated by Section 2.32 hereof,
Rights Agreement of Company; or (vii) any increase in or modification of the
compensation or benefits payable, or to become payable, by Company to any of its
directors or employees, other than pursuant to scheduled annual performance
reviews, provided that any resulting modifications are in the ordinary course of
business and consistent with Company's past practices. Company has not agreed
since June 30, 1999 to do any of the things described in the preceding clauses
(i) through (vii) and is not currently involved in any negotiations to do any of
the things described in the preceding clauses (i) through (vii) (other than
negotiations with Parent and its representatives regarding the transactions
contemplated by this Agreement).
2.6 Absence of Undisclosed Liabilities. Company has no material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet included in Company's Quarterly Report on Form 10-Q for the period
ended June 30, 1999 (the "Company Balance Sheet"), (ii) those incurred in the
ordinary course of business and not required to be set forth in the Company's
Balance Sheet under GAAP, (iii) those incurred in the ordinary course of
business since the Company Balance Sheet Date and not reasonably likely to have
a Material Adverse Effect on Company; and (iv) those incurred in connection with
the execution of this Agreement.
2.7 Litigation. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of Company or any of its
subsidiaries, threatened against Company or any of its subsidiaries or any of
their respective properties or any of their respective officers or directors (in
their capacities as such) that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on Company. There is no
judgment, decree or order against Company or any of its subsidiaries, or, to the
knowledge of Company and its subsidiaries, any of their respective directors or
officers (in their capacities as such), that would prevent, enjoin, alter or
materially delay any of the transactions contemplated by this Agreement, or that
would reasonably be expected to have a Material Adverse Effect on Company.
2.8 Restrictions on Business Activities. There is no agreement, judgment,
injunction, order or decree binding upon Company or any of its subsidiaries
which has or reasonably would be expected to
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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 would not
reasonably be expected to have a Material Adverse Effect on Company.
2.10 Title to Property. Company and its subsidiaries have good and valid
title to all of their respective properties, interests in properties and assets,
real and personal, reflected in the Company Balance Sheet or acquired after the
Company Balance Sheet Date (except properties, interests in properties and
assets sold or otherwise disposed of since the Company Balance Sheet Date in the
ordinary course of business), or in the case of leased properties and assets,
valid leasehold interests in, free and clear of all mortgages, liens, pledges,
charges or encumbrances of any kind or character, except (i) the lien of current
taxes not yet due and payable, (ii) such imperfections of title, liens and
easements as do not and will not materially detract from or interfere with the
use of the properties subject thereto or affected thereby, or otherwise
materially impair business operations involving such properties, (iii) liens
securing debt which is reflected on the Company Balance Sheet, and (iv) liens
that in the aggregate would not have a Material Adverse Effect on Company. The
plants, property and equipment of Company and its subsidiaries that are used in
the operations of their businesses are in good operating condition and repair,
except when the failure to do so would not have a Material Adverse Effect. All
properties used in the operations of Company and its subsidiaries are reflected
in the Company Balance Sheet to the extent generally accepted accounting
principles require the same to be reflected. Schedule 2.10 identifies each
parcel of real property owned or leased by Company or any of its subsidiaries.
No lease relating to a foreign parcel contains any extraordinary payment
obligation.
2.11 Intellectual Property.
(a) Company and its subsidiaries own, or are licensed or otherwise possess
legally enforceable and unencumbered rights to use all patents, trademarks,
trade names, service marks, domain names, database rights, copyrights, and any
applications therefor, maskworks, net lists, schematics, technology, know-how,
trade secrets, inventory, ideas, algorithms, processes, computer software
programs or applications (in both source code, except in circumstances where
Company only possesses a license to the object code form, and object code form),
and tangible or intangible proprietary information or material ("Intellectual
Property") that are used in the business of Company and its subsidiaries.
Company owns and possesses source code for all software owned by Company and
owns or has valid licenses and possesses source code for all products owned,
distributed and presently supported by Company. Company has not (i) licensed any
of its Intellectual Property in source code form to any party or (ii) entered
into any exclusive agreements relating to its Intellectual Property. No
royalties or other continuing payment obligations are due in respect of Third
Party Intellectual Property Rights.
(b) Schedule 2.11 lists (i) all patents and patent applications and all
registered trademarks, trade names and service marks, registered copyrights, and
maskworks included in the Intellectual Property, including the jurisdictions in
which each such Intellectual Property right has been issued or registered or in
which any application for such issuance and registration has been filed, (ii)
all licenses, sublicenses and other agreements as to which Company is a party
and pursuant to which any person is authorized to
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use any Intellectual Property (except for non-material licenses entered into by
Company in the ordinary course of business), and (iii) all licenses, sublicenses
and other agreements as to which Company is a party and pursuant to which
Company is authorized to use any third party patents, trademarks or copyrights,
including software ("Third Party Intellectual Property Rights") which are
incorporated in, are, or form a part of any Company product, other than
commercially available, off-the-shelf software.
(c) There is no unauthorized use, disclosure, infringement or
misappropriation of any Intellectual Property rights of Company or any of its
subsidiaries, or any Intellectual Property right of any third party to the
extent licensed by or through Company or any of its subsidiaries, by any third
party, including any employee or former employee of Company or any of its
subsidiaries. Neither Company nor any of its subsidiaries has entered into any
agreement to indemnify any other person against any charge of infringement of
any Intellectual Property, other than indemnification provisions contained in
purchase orders, license agreements and distribution and other customer
agreements arising in the ordinary course of business.
(d) Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Intellectual Property or Third Party Intellectual Property Rights.
(e) All patents, trademarks, service marks and copyrights held by Company
are valid and subsisting. Company (i) has not been sued in any suit, action or
proceeding (or received any notice or, to Company's knowledge, threat) which
involves a claim of infringement of any patents, trademarks, service marks,
copyrights or violation of any trade secret or other proprietary right of any
third party and (ii) has not brought any action, suit or proceeding for
infringement of Intellectual Property or breach of any license or agreement
involving Intellectual Property against any third party. The manufacture,
marketing, licensing or sale of Company's products does not infringe any patent,
trademark, service xxxx, copyright, trade secret or other proprietary right of
any third party.
(f) Company has secured valid written assignments from all consultants and
employees who contributed to the creation or development of Intellectual
Property of the rights to such contributions that Company does not already own
by operation of law.
(g) Company has taken all reasonably necessary steps to protect and
preserve the confidentiality of all Intellectual Property not otherwise
protected by patents or patent applications or copyright ("Confidential
Information"). All use, disclosure or appropriation of Confidential Information
owned by Company by or to a third party has been pursuant to the terms of a
written agreement between Company and such third party. All use, disclosure or
appropriation of Confidential Information not owned by Company has been pursuant
to the terms of a written agreement between Company and the owner of such
Confidential Information, or is otherwise lawful.
(h) There are no actions that must be taken by Company or any subsidiary
within sixty (60) days of the Closing Date that, if not taken, will result in
the loss of any Intellectual Property, including the payment of any
registration, maintenance or renewal fees or the filing of any responses to the
U.S. Patent and Trademark Office actions, documents, applications or
certificates for the purposes of obtaining, maintaining, perfecting or
preserving or renewing any Intellectual Property.
(i) Company has not received any opinion of counsel that any third party
patents apply to the Company's products.
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2.12 Environmental Matters.
(a) The following terms shall be defined as follows:
(i) "Environmental and Safety Laws" shall mean any federal, state or
local laws, ordinances, codes, regulations, rules, policies and orders that
are intended to assure the protection of the environment, or that classify,
regulate, call for the remediation of, require reporting with respect to,
or list or define air, water, groundwater, solid waste, hazardous or toxic
substances, materials, wastes, pollutants or contaminants, or which are
intended to assure the safety of employees, workers or other persons,
including the public.
(ii) "Hazardous Materials" shall mean any toxic or hazardous
substance, material or waste or any pollutant or contaminant, or infectious
or radioactive substance or material, including without limitation, those
substances, materials and wastes defined in or regulated under any
Environmental and Safety Laws.
(iii) "Property" shall mean all real property leased or owned by
Company or its subsidiaries either currently or in the past.
(iv) "Facilities" shall mean all buildings and improvements on the
Property of Company or its subsidiaries.
(b) Company represents and warrants that, except in all cases as, in the
aggregate, would not have a Material Adverse Effect on Company, as follows: (i)
no methylene chloride or asbestos is contained in or has been used at or
released from the Facilities; (ii) all Hazardous Materials and wastes have been
disposed of in accordance with all Environmental and Safety Laws; (iii) Company
and its subsidiaries have received no notice (verbal or written) of any
noncompliance of the Facilities or its past or present operations with
Environmental and Safety Laws; (iv) no notices, administrative actions or suits
are pending or, to Company's knowledge, threatened relating to a violation of
any Environmental and Safety Laws; (v) to Company's knowledge, neither Company
nor its subsidiaries are a potentially responsible party under the federal
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA),
or state analog statute, arising out of events occurring prior to the Closing
Date; (vi) there have not been in the past, and are not now, any Hazardous
Materials on, under or migrating to or from the Facilities or Property; (vii)
there have not been in the past, and are not now, any underground tanks or
underground improvements at, on or under the Property including without
limitation, treatment or storage tanks, sumps, or water, gas or oil xxxxx;
(viii) there are no polychlorinated biphenyls (PCBs) deposited, stored, disposed
of or located on the Property or Facilities or any equipment on the Property
containing PCBs at levels in excess of 50 parts per million; (ix) there is no
formaldehyde on the Property or in the Facilities, nor any insulating material
containing urea formaldehyde in the Facilities; (x) the Facilities and Company's
and its subsidiaries uses and activities therein have at all times complied with
all Environmental and Safety Laws; and (xi) Company and its subsidiaries have
all the permits and licenses required to be issued and are in full compliance
with the terms and conditions of those permits.
2.13 Taxes. Company and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax (as defined below) purposes of
which Company or any of its subsidiaries is or has been a member, have properly
completed and timely filed all Tax Returns required to be filed by them and have
paid all Taxes shown thereon to be due. Company has provided adequate accruals
in accordance with GAAP in the Company Balance Sheet for any Taxes of the
Company and its subsidiaries that have not been paid with respect to periods
through June 30, 1999. The Company has no material liability for unpaid Taxes
accruing after June 30, 1999 other than Taxes arising in the ordinary course of
its business subsequent to June 30, 1999. There is (i) no material claim for
Taxes that
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is a lien against the property of Company or any of its subsidiaries or is being
asserted against Company or any of its subsidiaries other than liens for Taxes
not yet due and payable; (ii) no audit of any Tax Return of Company or any of
its subsidiaries that is being conducted by a Tax authority; (iii) no extension
of the statute of limitations on the assessment of any Taxes that has been
granted by Company or any of its subsidiaries and that is currently in effect;
and (iv) no agreement, contract or arrangement to which Company or any of its
subsidiaries is a party that may result in the payment of any amount that would
not be deductible by reason of Sections 280G, 162 or 404 of the Code. Neither
Company nor any of its subsidiaries has been or will be required to include any
material adjustment in Taxable income for any Tax period (or portion thereof)
pursuant to Section 481 or 263A of the Code or any comparable provision under
state or foreign Tax laws as a result of transactions, events or accounting
methods employed prior to the Merger. Neither Company nor any of its
subsidiaries has filed or will file any consent to have the provisions of
paragraph 341(f)(2) of the Code (or comparable provisions of any state Tax laws)
apply to Company or any of its subsidiaries. All Tax sharing or Tax allocation
agreements to which Company or any of its subsidiaries is a party are listed on
Schedule 2.13 together with any liability of Company or its subsidiaries to
another party under any such agreement which is either currently owing or which
would result from assertions currently being made by Tax Authorities from audits
or proceedings in progress. Neither Company nor any of its subsidiaries has
filed any disclosures under Section 6662 or comparable provisions of state,
local or foreign law to prevent the imposition of penalties with respect to any
Tax reporting position taken on any Tax Return. Except as set forth on Schedule
2.13, neither Company nor any of its subsidiaries has ever been a member of a
consolidated, combined or unitary group of which Company was not the ultimate
parent corporation. Company and each of its subsidiaries have in their
possession receipts for any Taxes paid to foreign Tax authorities. For purposes
of this Agreement, the following terms have the following meanings: "Tax" (and,
with correlative meaning, "Taxes" and "Taxable") means (i) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Entity (a "Tax authority") responsible for the imposition of any
such tax (domestic or foreign); (ii) any liability for the payment of any
amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period; and
(iii) any liability for the payment of any amounts of the type described in (i)
or (ii) as a result of being a transferee of or successor to any person or as a
result of any express or implied obligation to indemnify any other person,
including pursuant to any Tax sharing or Tax allocation agreement. As used
herein, "Tax Return" shall mean any return, statement, report or form
(including, without limitation estimated Tax returns and reports, withholding
Tax returns and reports and information reports and returns) required to be
filed with respect to Taxes. Neither Company nor any of its subsidiaries has
ever been a United States real property holding corporation within the meaning
of Section 897 of the Code.
2.14 Employee Benefit Plans.
(a) Schedule 2.14 lists, with respect to Company, any subsidiary of Company
and any trade or business (whether or not incorporated) which is treated as a
single employer with Company (an "ERISA Affiliate") within the meaning of
Section 414(b), (c), (m) or (o) of the Code, (i) all material employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")); (ii) each loan to a non-officer employee in
excess of $50,000, loans to officers and directors and any stock option, stock
purchase, phantom stock, stock appreciation right, supplemental retirement,
severance, sabbatical, medical, dental, vision care, disability, employee
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relocation, cafeteria benefit (Code section 125) or dependent care (Code Section
129), life insurance or accident insurance plans, programs or arrangements;
(iii) all bonus, pension, profit sharing, savings, deferred compensation or
incentive plans, programs or arrangements; (iv) other fringe or employee benefit
plans, programs or arrangements that apply to senior management of Company and
that do not generally apply to all employees; and (v) any current or former
employment or executive compensation or severance agreements, written or
otherwise, as to which unsatisfied obligations of Company of greater than
$50,000 remain for the benefit of, or relating to, any present or former
employee, consultant or director of Company (together, the "Company Employee
Plans").
(b) Company has furnished to Parent a copy of each of the Company Employee
Plans and related plan documents (including trust documents, insurance policies
or contracts, employee booklets, summary plan descriptions and other authorizing
documents, and any material employee communications relating thereto) and has,
with respect to each Company Employee Plan which is subject to ERISA reporting
requirements, provided copies of the Form 5500 reports filed for the last three
plan years. Any Company Employee Plan intended to be qualified under Section
401(a) of the Code has either obtained from the Internal Revenue Service a
favorable determination letter as to its qualified status under the Code,
including all amendments to the Code effected by the Tax Reform Act of 1986 and
subsequent legislation other than the Uruguay Round Agreements Act of 1994, the
Uniformed Services Employment and Reemployment Rights Act of 1994, the Small
Business Job Protection Act of 1996, and the Taxpayer Relief Act of 1997, or has
applied to the Internal Revenue Service for such a determination letter prior to
the expiration of the requisite period under applicable Treasury Regulations or
Internal Revenue Service pronouncements in which to apply for such determination
letter and to make any amendments necessary to obtain a favorable determination.
Company has also furnished Parent with the most recent Internal Revenue Service
determination letter issued with respect to each such Company Employee Plan, and
nothing has occurred since the issuance of each such letter which would
reasonably be expected to cause the loss of the tax-qualified status of any
Company Employee Plan subject to Code Section 401(a). Company has also furnished
Parent with all registration statements and prospectuses prepared in connection
with each Company Employee Plan.
(c)(i) None of the Company Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person, except as required by
applicable law; (ii) there has been no "prohibited transaction," as such term is
defined in Section 406 of ERISA and Section 4975 of the Code, with respect to
any Company Employee Plan, which would reasonably be expected to have, in the
aggregate, a Material Adverse Effect on Company; (iii) each Company Employee
Plan has been administered in accordance with its terms and in compliance with
the requirements prescribed by any and all statutes, rules and regulations
(including ERISA and the Code), except as would not have, in the aggregate, a
Material Adverse Effect on Company, and Company and each subsidiary or ERISA
Affiliate have performed in all material respects all obligations required to be
performed by them under, are not in default in any material respect under or
violation of, and have no knowledge of any material default or violation by any
other party to, any of the Company Employee Plans; (iv) neither Company nor any
subsidiary or ERISA Affiliate is subject to any material liability or material
penalty under Sections 4976 through 4980 of the Code or Title I of ERISA with
respect to any of the Company Employee Plans; (v) all material contributions
required to be made by Company or any subsidiary or ERISA Affiliate to any
Company Employee Plan have been made on or before their due dates and a
reasonable amount has been accrued for contributions to each Company Employee
Plan for the current plan years; (vi) with respect to each Company Employee
Plan, no "reportable event" within the meaning of Section 4043 of ERISA
(excluding any such event for which the thirty (30) day notice requirement has
been waived under the regulations to Section 4043 of ERISA) nor any event
described in Section 4062, 4063 or 4041 or ERISA has occurred; (vii) no Company
Employee Plan is covered by, and neither Company nor any
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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 where the
failure to do so would not have a Material Adverse Effect. No suit,
administrative proceeding, action or other litigation has been brought, or to
the knowledge of Company is threatened, against or with respect to any such
Company Employee Plan, including any audit or inquiry by the IRS or United
States Department of Labor. No payment or benefit which will or may be made by
Company to any employee will be characterized as an "excess parachute payment"
within the meaning of Section 280G(b)(1) of the Code.
(d) With respect to each Company Employee Plan, Company and each of its
United States subsidiaries have complied except to the extent that such failure
to comply would not, individually or in the aggregate, have a Material Adverse
Effect on Company, with (i) the applicable health care continuation and notice
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") and the regulations (including proposed regulations) thereunder, (ii)
the applicable requirements of the Family Medical and Leave Act of 1993 and the
regulations thereunder, and (iii) the applicable requirements of the Health
Insurance Portability and Accountability Act of 1996 and the regulations
(including proposed regulations) thereunder.
(e) The consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee or other service provider of
Company, any Company subsidiary or any other ERISA Affiliate to severance
benefits or any other payment, except as expressly provided in this Agreement,
or (ii) accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or service provider.
(f) There has been no amendment to, written interpretation or announcement
(whether or not written) by Company, any Company subsidiary or other ERISA
Affiliate relating to, or change in participation or coverage under, any Company
Employee Plan which would materially increase the expense of maintaining such
Plan above the level of expense incurred with respect to that Plan for the most
recent fiscal year included in Company's financial statements.
(g) Company does not currently maintain, sponsor, participate in or
contribute to, nor has it ever maintained, established, sponsored, participated
in, or contributed to, any pension plan (within the meaning of Section 3(2) of
ERISA) which is subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of
ERISA or Section 412 of the Code.
(h) Neither Company nor any Company subsidiary or other ERISA Affiliate is
a party to, or has made any contribution to or otherwise incurred any obligation
under, any "multiemployer plan" as defined in Section 3(37) of ERISA.
2.15 Certain Agreements Affected by the Merger. Neither the execution and
delivery of this Agreement nor the consummation of the transaction contemplated
hereby will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute, bonus or otherwise) becoming due to
any director or employee of Company or any of its subsidiaries,
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(ii) materially increase any benefits otherwise payable by Company or (iii)
result in the acceleration of the time of payment or vesting of any such
benefits.
2.16 Employee Matters. Company and each of its subsidiaries are in
compliance in all respects with all currently applicable laws and regulations
respecting employment, discrimination in employment, terms and conditions of
employment, wages, hours and occupational safety and health and employment
practices, and is not engaged in any unfair labor practice, except where the
failure to be in compliance or the engagement in such unfair labor practices
would not have a Material Adverse Effect on Company. Company has in all material
respects withheld all amounts required by law or by agreement to be withheld
from the wages, salaries, and other payments to employees; and is not liable for
any material arrears of wages or any material taxes or any material penalty for
failure to comply with any of the foregoing. Company is not liable for any
material payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for employees (other than
routine payments to be made in the normal course of business and consistent with
past practice). There are no pending claims against Company or any of its
subsidiaries for any material amounts under any workers compensation plan or
policy or for long term disability. Neither Company nor any of its subsidiaries
has any obligations under COBRA with respect to any former employees or
qualifying beneficiaries thereunder, except for obligations that are not
material in amount. There are no controversies pending or, to the knowledge of
Company or any of its subsidiaries, threatened, between Company or any of its
subsidiaries and any of their respective employees, which controversies have or
would reasonably be expected to result in an action, suit, proceeding, claim,
arbitration or investigation before any agency, court or tribunal, foreign or
domestic. Neither Company nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract nor does Company
nor any of its subsidiaries know of any activities or proceedings of any labor
union to organize any such employees. To Company's knowledge, no employees of
Company or any of its subsidiaries are in violation of any term of any
employment contract, patent disclosure agreement, noncompetition agreement, or
any restrictive covenant to a former employer relating to the right of any such
employee to be employed by Company because of the nature of the business
conducted or presently proposed to be conducted by Company or any of its
subsidiaries or to the use of trade secrets or proprietary information of
others. No employees of Company or any of its subsidiaries have given notice to
Company, nor is Company otherwise aware, that any such employee intends to
terminate his or her employment with Company or any subsidiary.
2.17 Interested Party Transactions. Except as disclosed in the Company SEC
Documents, neither Company nor any of its subsidiaries is indebted to any
director or officer of Company or any of its subsidiaries (except for amounts
due as normal salaries and bonuses and in reimbursement of ordinary expenses),
and no such person is indebted to Company or any of its subsidiaries, and there
are no other transactions of the type required to be disclosed pursuant to Items
402 and 404 of Regulation S-K under the Securities Act and the Exchange Act.
2.18 Insurance. Company and each of its subsidiaries have policies of
insurance and bonds of the type and in amounts customarily carried by persons
conducting businesses or owning assets similar to those of Company and its
subsidiaries. There is no material claim pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies and bonds have been paid and Company and its subsidiaries are
otherwise in compliance in all material respects with the terms of such policies
and bonds. Company has no knowledge of any threatened termination of, or
material premium increase with respect to, any of such policies.
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2.19 Compliance With Laws. Each of Company and its subsidiaries has
complied with, are not in violation of, and have not received any notices of
violation with respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for such violations or failures to comply as
would not be reasonably expected to have a Material Adverse Effect on Company.
2.20 Minute Books. The minute books of Company and its subsidiaries made
available to Parent contain a complete and accurate summary of all meetings of
directors and stockholders or actions by written consent since the time of
incorporation of Company and the respective subsidiaries through the date of
this Agreement, and reflect all transactions referred to in such minutes
accurately in all material respects.
2.21 Complete Copies of Materials. Company has delivered or made available
true and complete copies of each document that has been requested by Parent or
its counsel in connection with their legal and accounting review of Company and
its subsidiaries.
2.22 Brokers' and Finders' Fees. Except for payment obligations to Xxxx
Xxxxxxxx Xxxxxxx set forth in an engagement letter, a copy of which has been
provided to Parent, Company has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or investment bankers' fees or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
2.23 Registration Statement; Proxy Statement/Prospectus. The information
supplied by Company for inclusion in the registration statement on Form S-4 (or
such other or successor form as shall be appropriate) pursuant to which the
shares of Parent Common Stock to be issued in the Merger will be registered with
the SEC (the "Registration Statement") shall not at the time the Registration
Statement (including any amendments or supplements thereto) is declared
effective by the SEC contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The information supplied by Company for inclusion in the
proxy statement/prospectus to be sent to the stockholders of Company in
connection with the meeting of Company's stockholders to consider the Merger
(the "Company Stockholders Meeting") (such proxy statement/prospectus as amended
or supplemented is referred to herein as the "Proxy Statement") shall not, on
the date the Proxy Statement is first mailed to Company's stockholders, at the
time of the Company Stockholders Meeting and at the Effective Time, contain any
statement which, at such time, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not false or misleading; or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Company Stockholders Meeting which has become
false or misleading. If at any time prior to the Effective Time any event or
information should be discovered by Company which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy Statement,
Company shall promptly inform Parent and Merger Sub. Notwithstanding the
foregoing, Company makes no representation, warranty or covenant with respect to
any information supplied by Parent or Merger Sub or any other third party which
is contained in any of the foregoing documents.
2.24 Opinion of Financial Advisor. Company has been advised in writing by
its financial advisor, Xxxx Xxxxxxxx Xxxxxxx, that in such advisor's opinion, as
of the date hereof, the consideration to be received by the stockholders of
Company is fair, from a financial point of view, to the stockholders of Company.
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2.25 Vote Required. The affirmative vote of the holders of at least
seventy-five percent (75%) of the shares of Company Common Stock outstanding on
the record date set for the Company Stockholders Meeting is the only vote of the
holders of any of Company's capital stock necessary to approve this Agreement
and the transactions contemplated hereby.
2.26 Board Approval. The Board of Directors of Company has (i) approved
this Agreement and the Merger, (ii) determined that the Merger is advisable and
in the best interests of the stockholders of Company and is on terms that are
fair to such stockholders and (iii) recommended that the stockholders of Company
approve this Agreement and consummation of the Merger.
2.27 Stockholder Agreement; Irrevocable Proxies. All of the persons listed
on Schedule 2.27 have agreed in writing to vote for approval of the Merger
pursuant to a Stockholder Agreement, and pursuant to an Irrevocable Proxy
attached thereto as Exhibit A.
2.28 Section 203 of the DGCL Not Applicable. The Board of Directors of
Company has taken all actions so that the restrictions contained in Section 203
of the Delaware Law applicable to a "business combination" (as defined in
Section 203) will not apply to the execution, delivery or performance of this
Agreement or the Option Agreement or the consummation of the Merger or the other
transactions contemplated by this Agreement or by the Option Agreement. No other
state takeover statute is applicable to the Merger, the Merger Agreement, the
Option Agreement or the transactions contemplated hereby and thereby.
2.29 Inventory. The inventories of Company disclosed in the Company SEC
Documents as of June 30, 1999 and in any subsequently filed Company SEC
Documents are stated consistently with the audited financial statements of
Company and consist of items of a quantity usable or salable in the ordinary
course of business. Since June 30, 1999, Company has continued to replenish
inventories in a normal and customary manner consistent with past practices.
Company has not received written or oral notice that it will experience in the
foreseeable future any difficulty in obtaining, in the desired quantity and
quality and at a reasonable price and upon reasonable terms and conditions, the
raw materials, supplies or component products required for the manufacture,
assembly or production of its products. The values at which inventories are
carried reflect the inventory valuation policy of Company, which is consistent
with its past practice and in accordance with GAAP applied on a consistent
basis. Since June 30, 1999 due provision was made on the books of Company in the
ordinary course of business consistent with past practices to provide for all
slow-moving, obsolete, or unusable inventories to their estimated useful or
scrap values and such inventory reserves are adequate to provide for such slow-
moving, obsolete or unusable inventory and inventory shrinkage. As of June 30,
1999, Company had inventory of approximately $500,000 in the distribution
channel and had commitments to purchase inventory (other than purchases of
supplies in the ordinary course) in an amount of approximately $1,600,000.
2.30 Accounts Receivable. The accounts receivable disclosed in the Company
SEC Documents as of June 30, 1999, and, with respect to accounts receivable
created since such date, disclosed in any subsequently filed Company SEC
Documents, or as accrued on the books of Company in the ordinary course of
business consistent with past practices in accordance with GAAP since the last
filed Company SEC Documents, represent and will represent bona fide claims
against debtors for sales and other charges, are not subject to discount except
for normal cash and immaterial trade discount. The amount carried for doubtful
accounts and allowances disclosed in each of such Company SEC Document or
accrued on such books is sufficient to provide for any losses that may be
sustained on realization of the receivables.
2.31 Customers and Suppliers. None of Company's customers which
individually accounted for more than 5% of Company's gross revenues during the
12-month period preceding the date hereof has
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terminated any agreement with Company. As of the date hereof, no material
supplier of Company has indicated that it will stop, or decrease the rate of,
supplying materials, products or services to Company. Company has not knowingly
breached, so as to provide a benefit to Company that was not intended by the
parties, any agreement with, or engaged in any fraudulent conduct with respect
to, any customer or supplier of Company.
2.32 Rights Plan. Company has amended the Company Rights Agreement on
terms satisfactory to Parent to make the Rights inapplicable to the Merger
Agreement, the Option Agreement and all of the transactions contemplated hereby
or thereby; provided that the Rights shall remain applicable to all acquisitions
of capital stock of Company other than pursuant to this Agreement or the Option
Agreement or any of the transactions contemplated hereby or thereby. After such
amendment, Company will not thereafter amend the Rights Agreement so as to make
the Rights applicable to the Merger or so as to make the Rights inapplicable to
any acquisition of capital stock of Company other than pursuant to this
Agreement or the Option Agreement or any of the transactions contemplated hereby
or thereby.
2.33 Export Control Laws. Company has conducted its export transactions in
accordance with applicable provisions of United States export control laws and
regulations, including but not limited to the Export Administration Act and
implementing Export Administration Regulations, except for such violations which
would not have a Material Adverse Effect on Company. Without limiting the
foregoing, Company represents and warrants that:
(a) Company has obtained all export licenses and other approvals
required for its exports of products, software and technologies from the
United States;
(b) Company is in compliance with the terms of all applicable export
licenses or other approvals;
(c) There are no pending or threatened claims against Company with
respect to such export licenses or other approvals;
(d) There are no actions, conditions or circumstances pertaining to
Company's export transactions that may give rise to any future claims; and
(e) No consents or approvals for the transfer of export licenses to
Parent are required, or such consents and approvals can be obtained
expeditiously without material cost.
2.34 Year 2000. Company's current products and services are "Year 2000
Compliant," where "Year 2000 Compliant" means that such products and services
have been designed and tested so that, when used in accordance with their
associated documentation, they are capable of accurately processing, providing
and/or receiving (i) date-related data from, into and between the Twentieth
(20th) and Twenty-First (21st) centuries, or (ii) date-related data in
connection with any valid date in the Twentieth (20th) and Twenty-First (21st)
centuries; provided that all other products and services used in combination in
any way with Company's current products and services properly exchange
date-related data with them. The information technology systems and
non-information technology systems used by Company in its internal operations
will function properly beyond 1999. Neither Company nor any of its subsidiaries
has made any representations or warranties relating to the ability of any
product or service of Company or its subsidiaries to be Year 2000 Compliant.
Company has made inquiries to its key third-party vendors and providers as to
the status of their Year 2000 efforts, and has not uncovered any problems that
would aversely affect the operation of the products or that could disrupt or
harm the day-to-day functioning of the business or operations of Company.
2.35 Representations Complete. None of the representations or warranties
made by Company herein or in any Schedule hereto, including the Company
Disclosure Schedule, or certificate furnished
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by Company pursuant to this Agreement, or the Company SEC Documents, when all
such documents are read together in their entirety, contains or will contain at
the Effective Time any untrue statement of a material fact, or omits or will
omit at the Effective Time to state any material fact necessary in order to make
the statements contained herein or therein, in the light of the circumstances
under which made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in that section of the document of even date herewith
delivered by Parent to Company prior to the execution and delivery of this
Agreement (the "Parent Disclosure Schedule") corresponding to the Section of
this Agreement to which any of the following representations and warranties
specifically relate or as disclosed in another section of the Parent Disclosure
Schedule if it is reasonably apparent on the face of the disclosure that it is
applicable to another Section of this Agreement, Parent represents and warrants
to Company as follows:
3.1 Organization, Standing and Power. Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization. Each of Parent and Merger Sub has the
corporate power to own its properties and to carry on its business as now being
conducted and as proposed to be conducted and is duly qualified to do business
and is in good standing in each jurisdiction in which the failure to be so
qualified and in good standing would have a Material Adverse Effect on Parent.
Neither Parent nor Merger Sub is in violation of any of the provisions of its
Articles of Incorporation or Bylaws or equivalent organizational documents.
3.2 Capital Structure. The authorized capital stock of Parent consists of
5,400,000,000 shares of Common Stock, $0.001 par value, and 5,000,000 shares of
Preferred Stock, no par value, of which there were issued and outstanding as of
the close of business on October 21, 1999, 3,294,811,181 shares of Common Stock
and no shares of Preferred Stock. The Board of Directors of Parent has
authorized, subject to shareholder approval, an increase in the authorized
shares of Common Stock to 10,000,000,000. The authorized capital stock of Merger
Sub consists of 1,000 shares of Common Stock, $0.001 par value, all of which are
issued and outstanding and are held by Parent. The shares of Parent Common Stock
to be issued pursuant to the Merger will be duly authorized, validly issued,
fully paid, and non-assessable, free of any liens or encumbrances imposed by
Parent or Merger Sub.
3.3 Authority. Parent and Merger Sub have all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Parent and Merger 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
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required by or with respect to Parent or any of its subsidiaries in connection
with the execution and delivery of this Agreement by Parent and Merger Sub or
the consummation by Parent and Merger Sub of the transactions contemplated
hereby, except for (i) the filing of the Certificate of Merger as provided in
Section 1.2; (ii) the filing with the SEC and NASD of the Registration
Statement; (iii) the filing of a Form 8-K with the SEC and NASD within 15 days
after the Closing Date; (iv) any filings as may be required under applicable
state securities laws and the securities laws of any foreign country; (v) such
filings as may be required under HSR; (vi) the filing with the Nasdaq National
Market of a Notification Form for Listing of Additional Shares with respect to
the shares of Parent Common Stock issuable upon conversion of the Company Common
Stock in the Merger and upon exercise of the options under the Company Stock
Option Plans assumed by Parent; (vii) the filing of a registration statement on
Form S-8 with the SEC, or other applicable form covering the shares of Parent
Common Stock issuable pursuant to outstanding options under the Company Stock
Option Plans assumed by Parent; and (viii) such other consents, authorizations,
filings, approvals and registrations which, if not obtained or made, would not
have a Material Adverse Effect on Parent and would not prevent or materially
alter or delay any of the transactions contemplated by this Agreement.
3.4 SEC Documents; Financial Statements. Parent has made available to
Company each statement, report, registration statement (with the prospectus in
the form filed pursuant to Rule 424(b) of the Securities Act), definitive proxy
statement, and other filings filed with the SEC by Parent since July 31, 1999,
and, prior to the Effective Time, Parent will have furnished or made available
to Company true and complete copies of any additional documents filed with the
SEC by Parent prior to the Effective Time (collectively, the "Parent SEC
Documents"). In addition, Parent has made available to Company all exhibits to
the Parent SEC Documents filed prior to the date hereof, and will promptly make
available to Company all exhibits to any additional Parent SEC Documents filed
prior to the Effective Time. All documents required to be filed as exhibits to
the Company SEC Documents have been so filed, and all material contracts so
filed as exhibits are in full force and effect, except those which have expired
in accordance with their terms, and neither Parent nor any of its subsidiaries
is in default thereunder. As of their respective filing dates, the Parent SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the Securities Act, and none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading,
except to the extent corrected by a subsequently filed Parent SEC Document. The
financial statements of Parent, including the notes thereto, included in the
Parent SEC Documents (the "Parent Financial Statements") were complete and
correct in all material respects as of their respective dates, complied as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto as of their
respective dates, and have been prepared in accordance with GAAP applied on a
basis consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q
of the SEC). The Parent Financial Statements fairly present the consolidated
financial condition and operating results of Parent and its subsidiaries at the
dates and during the periods indicated therein (subject, in the case of
unaudited statements, to normal, recurring year-end adjustments).
3.5 Absence of Undisclosed Liabilities. Parent has no material obligations
or liabilities of any nature (matured or unmatured, fixed or contingent) other
than (i) those set forth or adequately provided for in the Balance Sheet or in
the related Notes to Consolidated Financial Statements included in Parent's
Annual Report on Form 10-K for the year ended July 31, 1999 (the "Parent Balance
Sheet"), (ii) those disclosed in Parent SEC documents filed subsequent to such
Annual Report on Form 10-K for
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the year ended July 31, 1999, (iii) those incurred in the ordinary course of
business and not required to be set forth in the Parent Balance Sheet under
GAAP, and (iv) those incurred in the ordinary course of business since the
Parent Balance Sheet Date and consistent with past practice.
3.6 Litigation. There is no litigation pending against Parent or any of
its subsidiaries or, to the knowledge of Parent, threatened against Parent or
any of its subsidiaries that would prevent, enjoin, alter or materially delay
any of the transactions contemplated by this Agreement, or that would have a
Material Adverse Effect on the ability of Parent to consummate the transactions
contemplated by this Agreement. There is no judgment, decree or order against
Parent or any of its subsidiaries, or, to the knowledge of Parent, any of their
respective directors or officers (in their capacities as such), that would
prevent, enjoin, alter or materially delay any of the transactions contemplated
by this Agreement, or that would have a Material Adverse Effect on the ability
of Parent to consummate the transactions contemplated by this Agreement.
3.7 Broker's and Finders' Fees. Parent has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
3.8 Registration Statement; Proxy Statement/Prospectus. The information
supplied by Parent and Merger Sub for inclusion in the Registration Statement
shall not, at the time the Registration Statement (including any amendments or
supplements thereto) is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The information supplied by Parent for inclusion
in the Proxy Statement shall not, on the date the Proxy Statement is first
mailed to Company's stockholders, at the time of the Company Stockholders
Meeting and at the Effective Time, contain any statement which, at such time, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which it is made, not false or misleading; or omit to state
any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Company
Stockholders Meeting which has become false or misleading. If at any time prior
to the Effective Time any event or information should be discovered by Parent or
Merger Sub which should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement, Parent or Merger Sub will
promptly inform Company. Notwithstanding the foregoing, Parent and Merger Sub
make no representation, warranty or covenant with respect to any information
supplied by Company or any third party which is contained in any of the
foregoing documents.
3.9 Board Approval. The Boards of Directors of Parent and Merger Sub have
(i) approved this Agreement and the Merger, (ii) determined that the Merger is
advisable and in the best interests of their respective stockholders and is on
terms that are fair to such stockholders and (iii) recommended that the
stockholder of Merger Sub approve this Agreement and the consummation of the
Merger.
3.10 Representations Complete. None of the representations or warranties
made by Parent or Merger Sub herein or in any Schedule hereto, including the
Parent Disclosure Schedule, or certificate furnished by Parent or Merger Sub
pursuant to this Agreement, or the Parent SEC Documents, when all such documents
are read together in their entirety, contains or will contain at the Effective
Time any untrue statement of a material fact, or omits or will omit at the
Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
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ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business of Company. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Company agrees (except to the extent expressly
contemplated by this Agreement or as consented to in writing by Parent), to
carry on its and its subsidiaries' business in the ordinary course in
substantially the same manner as heretofore conducted, to pay and to cause its
subsidiaries to pay debts and Taxes when due subject to good faith disputes over
such debts or taxes, to pay or perform other obligations when due, and to use
all reasonable efforts consistent with past practice and policies to preserve
intact its and its subsidiaries' present business organizations, use its
reasonable best efforts consistent with past practice to keep available the
services of its and its subsidiaries' present officers and key employees and use
its reasonable best efforts consistent with past practice to preserve its and
its subsidiaries' relationships with customers, suppliers, distributors,
licensors, licensees, and others having business dealings with it or its
subsidiaries, to the end that its and its subsidiaries' goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Company agrees to promptly
notify Parent of any material event or occurrence not in the ordinary course of
its or its subsidiaries' business, and of any event which would have a Material
Adverse Effect on Company.
4.2 Restrictions on Conduct of Business of Company. During the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, except as expressly contemplated by
this Agreement, Company shall not do, cause or permit any of the following, or
allow, cause or permit any of its subsidiaries to do, cause or permit any of the
following, without the prior written consent of Parent:
(a) Charter Documents. Cause or permit any amendments to its
Certificate of Incorporation, Bylaws or the Company Rights Agreement;
(b) Dividends; Changes in Capital Stock. Declare or pay any dividends
on or make any other distributions (whether in cash, stock or property) in
respect of any of its capital stock, or split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or repurchase or otherwise acquire, directly or indirectly,
any shares of its capital stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase of
shares in connection with any termination of service to it or its
subsidiaries;
(c) Stock Option Plans, Etc. Take any action to accelerate, amend or
change the period of exercisability or vesting of options or other rights
granted under its stock plans (except for the action required pursuant to
Section 5.15) or authorize cash payments in exchange for any options or
other rights granted under any of such plans.
(d) Material Contracts. Except as set forth on Schedule 4.2, enter
into any contract or commitment, or violate, amend or otherwise modify or
waive any of the terms of any of its contracts, other than (i) in the
ordinary course of business consistent with past practice and in no event
shall such contract, commitment, amendment, modification or waiver (other
than those relating to sales of products or purchases of supplies in the
ordinary course) involve the payment by Company or its subsidiaries in
excess of $300,000 and (ii) amendments to warrants to acquire Company
Common Stock outstanding on the date hereof, which amendments are
acceptable to Parent, in order to permit cashless exercise;
(e) Issuance of Securities. Issue, deliver or sell or authorize or
propose the issuance, delivery or sale of, or purchase or propose the
purchase of, any shares of its capital stock or securities
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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 under the Company Stock Option Plans (not to exceed an
aggregate of 75,000 options to purchase shares of Company Common Stock and
provided that all of such options are assumable by Parent and that none of
such options provide for acceleration of vesting upon the Merger);
provided, however, that Company may file on Form S-8 a registration
statement covering its Amended and Restated 1996 Stock Option Plan, as
amended;
(f) Intellectual Property. Transfer or license to any person or entity
any rights to its Intellectual Property other than the license of
non-exclusive rights to its Intellectual Property in the ordinary course of
business consistent with past practice;
(g) Exclusive Rights. Except as set forth on Schedule 4.2, enter into
or amend any agreements pursuant to which any other party is granted
exclusive marketing or other exclusive rights of any type or scope with
respect to any of its products or technology;
(h) Dispositions. Sell, lease, license or otherwise dispose of or
encumber any of its properties or assets which are material, individually
or in the aggregate, to its and its subsidiaries' business, taken as a
whole, except in the ordinary course of business consistent with past
practice;
(i) Indebtedness. Incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(j) Leases. Enter into any operating lease in excess of $100,000;
(k) Payment of Obligations. Pay, discharge or satisfy in an amount in
excess of $100,000 in any one case, any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise)
arising other than in the ordinary course of business, other than the
payment, discharge or satisfaction of liabilities reflected or reserved
against in the Company Financial Statements;
(l) Capital Expenditures. Make any capital expenditures, capital
additions or capital improvements except in the ordinary course of business
and consistent with past practice that do not exceed $100,000 individually
or $500,000 in the aggregate;
(m) Insurance. Materially reduce the amount of any material insurance
coverage provided by existing insurance policies;
(n) Termination or Waiver. Terminate or waive any right of substantial
value;
(o) Employee Benefit Plans; New Hires; Pay Increases. Adopt or amend
any employee benefit or stock purchase or option plan or hire any new
director level or officer level employee, pay any special bonus or special
remuneration to any employee or director, or increase the salaries or wage
rates of its employees other than pursuant to scheduled annual performance
reviews, provided that any resulting modifications are in the ordinary
course of business and consistent with Company's past practices and
provided that the Company may enter into employment agreements with two
employees as described in Schedule 2.1 of the Company Disclosure Schedules
in the form provided in writing to Parent, provided that the options
granted pursuant to such agreements are granted at the fair market value of
Company Common Stock at the time of grant.
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(p) Severance Arrangements. Grant any severance or termination pay (i)
to any director or officer, except the payment of a bonus to Company's
Chief Executive Officer as described in Schedule 2.5 of the Company
Disclosure Schedule, or (ii) to any other employee except payments made
pursuant to standard written agreements outstanding on the date hereof;
(q) Lawsuits. Commence a lawsuit other than (i) for the routine
collection of bills, (ii) in such cases where it in good faith determines
that failure to commence suit would result in the material impairment of a
valuable aspect of its business, provided that it consults with Parent
prior to the filing of such a suit, or (iii) for a breach of this
Agreement;
(r) Acquisitions. Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to its and its subsidiaries' business,
taken as a whole, or acquire or agree to acquire any equity securities of
any corporation, partnership, association or business organization;
(s) Taxes. Other than in the ordinary course of business, make or
change any material election in respect of Taxes, adopt or change any
accounting method in respect of Taxes, file any material Tax Return or any
amendment to a material Tax Return, enter into any closing agreement,
settle any claim or assessment in respect of Taxes, or consent to any
extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes, excluding any actions (other than
amendments or modifications), including any payment required to be made,
pursuant to that certain Tax Indemnification Agreement dated March 31, 1998
between Company and Telxon Corporation;
(t) Notices. Company shall give all notices and other information
required by applicable law to be given to the employees of Company, any
collective bargaining unit representing any group of employees of Company,
and any applicable government authority under the WARN Act, the National
Labor Relations Act, the Internal Revenue Code, the Consolidated Omnibus
Budget Reconciliation Act, and other applicable law in connection with the
transactions provided for in this Agreement;
(u) Revaluation. Revalue any of its assets, including without
limitation writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business;
(v) Accounting Policies and Procedures. Make any change to its
accounting methods, principles, policies, procedures or practices, except
as may be required by GAAP, Regulation S-X promulgated by the SEC or
applicable statutory accounting principles;
(w) Year 2000 Compliance. Fail to carry forward in all material
respects Company's Year 2000 assessment and compliance programs, as made
available to Parent by Company; or
(x) Other. Take or agree in writing or otherwise to take, any of the
actions described in Sections 4.2(a) through (w) above, or any action which
would make any of its representations or warranties contained in this
Agreement untrue or incorrect or prevent it from performing or cause it not
to perform its covenants hereunder.
4.3 No Solicitation. Company and its subsidiaries and the officers,
directors, employees or other agents of Company and its subsidiaries
(collectively, "Company Representatives") will not, directly or indirectly, (i)
take any action to solicit, initiate or encourage or agree to any Takeover
Proposal (as defined in Section 7.3(f)) or (ii) subject to the terms of the
immediately following sentence, engage in
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negotiations with, or disclose any nonpublic information relating to Company or
any of it subsidiaries to, or afford access to the properties, books or records
of Company or any of its subsidiaries to, any person that has advised Company
that it may be considering making, or that has made, a Takeover Proposal;
provided, nothing herein shall prohibit Company's Board of Directors from
complying with Rules 14d-9 and 14e-2 promulgated under the Exchange Act.
Notwithstanding the immediately preceding sentence, if an unsolicited written
Takeover Proposal shall be received by the Board of Directors of Company, then,
to the extent the Board of Directors of Company believes in good faith (after
written advice from its financial advisor) that such Takeover Proposal would, if
consummated, result in a transaction more favorable to Company's stockholders
from a financial point of view than the transaction contemplated by this
Agreement (any such more favorable Takeover Proposal being referred to in this
Agreement as a "Superior Proposal") and the Board of Directors of Company
determines in good faith after advice from outside legal counsel that it is
necessary for the Board of Directors of Company to comply with its fiduciary
duties to stockholders under applicable law, Company Representatives may furnish
in connection therewith information to the party making such Superior Proposal
and, subject to the provisions hereof, engage in negotiations with such party,
and such actions shall not be considered a breach of this Section 4.3 or any
other provisions of this Agreement; provided that in each such event Company
notifies Parent of such determination by the Company Board of Directors and
provides Parent with a true and complete copy of the Superior Proposal received
from such third party, and provides (or has provided) Parent with all documents
containing or referring to non-public information of Company that are supplied
to such third party; provided, however, that Company provides such non-public
information pursuant to a non-disclosure agreement at least as restrictive on
such third party as the Confidentiality Agreement is on Parent (as defined in
Section 5.4); and provided further that Company shall not, and shall not permit
any of its officers, directors, employees or other representatives to agree to
or endorse any Takeover Proposal or withdraw its recommendation of the Merger
unless Company has provided Parent at least five (5) days prior notice thereof.
Company will promptly (and in any event within 24 hours) notify Parent after
receipt of any Takeover Proposal or any notice that any person is considering
making a Takeover Proposal or any request for non-public information relating to
Company or any of its subsidiaries or for access to the properties, books or
records of Company or any of its subsidiaries by any person that has advised
Company that it may be considering making, or that has made, a Takeover
Proposal, or whose efforts to formulate a Takeover Proposal would be assisted
thereby (such notice to include the identity of such person or persons), and
will keep Parent fully informed of the status and details of any such Takeover
Proposal notice, request or correspondence or communications related thereto,
and shall provide Parent with a true and complete copy of such Takeover Proposal
notice or any amendment thereto, if it is in writing, or a complete written
summary thereof, if it is not in writing. Company shall immediately cease and
cause to be terminated all existing discussions or negotiations with any persons
conducted heretofore with respect to a Takeover Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement. As promptly as
practicable after the execution of this Agreement, Company and Parent shall
prepare, and Company shall file with the SEC, preliminary proxy materials
relating to the approval of the Merger and the transactions contemplated hereby
by the stockholders of Company. As promptly as practicable following receipt of
SEC comments thereon, Company shall file with the SEC definitive proxy materials
and Parent shall file with the SEC a Registration Statement on Form S-4 (or such
other or successor form as shall be appropriate), in each case which complies in
form with applicable SEC requirements and shall use all reasonable efforts to
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cause the Registration Statement to become effective as soon thereafter as
practicable. Company and Parent will notify each other promptly of the receipt
of any comments from the SEC or its staff and of any request by the SEC or its
staff or any other government officials for amendments or supplements to the
Proxy Statement or any other filing or for additional information and will
supply each other with copies of all correspondence between such party or any of
its representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Proxy Statement or
other filing. Whenever any event occurs that is required to be set forth in an
amendment or supplement to the Proxy Statement or any other filing, Company
shall promptly inform Parent of such occurrence and cooperate in filing with the
SEC or its staff or any other government officials, and/or mailing to
shareholders of Company, such amendment or supplement. The Proxy Statement shall
include the recommendation of the Board of Directors of Company in favor of the
Merger Agreement and the Merger.
5.2 Meeting of Stockholders. Company shall promptly after the date hereof
take all action necessary in accordance with Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Company Stockholders Meeting within 45
days of the Registration Statement being declared effective by the SEC. Company
shall consult with Parent regarding the date of the Company Stockholders Meeting
and use all reasonable efforts and shall not postpone or adjourn (other than for
the absence of a quorum) the Company Stockholders Meeting, subject to Section
5.1, without the consent of Parent. Company shall use its reasonable best
efforts to solicit from stockholders of Company proxies in favor of the Merger
and shall take all other action necessary or advisable to secure the vote or
consent of stockholders required to effect the Merger.
5.3 Access to Information.
(a) Company shall afford Parent and its accountants, counsel and other
representatives, reasonable access during normal business hours during the
period prior to the Effective Time to (i) all of Company's and its subsidiaries'
properties, books, contracts, commitments and records, and (ii) all other
information concerning the business, properties and personnel of Company and its
subsidiaries as Parent may reasonably request. Company agrees to provide to
Parent and its accountants, counsel and other representatives copies of internal
financial statements promptly upon request.
(b) Subject to compliance with applicable law, from the date hereof until
the Effective Time, each of Parent and Company shall confer on a regular and
frequent basis with one or more representatives of the other party to report
operational matters of materiality and the general status of ongoing operations.
(c) No information or knowledge obtained in any investigation pursuant to
this Section 5.3 shall affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate the Merger.
(d) Company shall provide Parent and its accountants, counsel and other
representatives reasonable access, during normal business hours during the
period prior to the Effective Time, to all of Company's and subsidiaries Tax
Returns and other records and workpapers relating to Taxes, and shall also
provide the following information upon the request of Parent or its
subsidiaries: (i) a schedule of the types of Tax Returns being filed by Company
and each of its subsidiaries in each taxing jurisdiction, (ii) a schedule of the
year of the commencement of the filing of each such type of Tax Return, (iii) a
schedule of all closed years with respect to each such type of Tax Return filed
in each jurisdiction, (iv) a schedule of all material Tax elections filed in
each jurisdiction by Company and each of its subsidiaries, (v) a schedule of any
deferred intercompany gain with respect to transactions to which Company or any
of its subsidiaries has been a party, and (vi) receipts for any Taxes paid to
foreign Tax authorities.
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5.4 Confidentiality. The parties acknowledge that each of Parent and
Company have previously executed a non-disclosure agreement, which agreement
shall continue in full force and effect in accordance with its terms.
5.5 Public Disclosure. Unless otherwise permitted by this Agreement,
Parent and Company shall consult with each other before issuing any press
release or otherwise making any public statement or making any other public (or
non-confidential) disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the transactions contemplated hereby,
and neither shall issue any such press release or make any such statement or
disclosure without the prior approval of the other (which approval shall not be
unreasonably withheld), except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange or with
the NASD, in which case the party proposing to issue such press release or make
such public statement or disclosure shall use commercially reasonable efforts to
consult with the other party before issuing such press release or making such
public statement or disclosure.
5.6 Consents; Cooperation.
(a) Each of Parent and Company shall promptly apply for or otherwise seek,
and use its reasonable best efforts to obtain, all consents and approvals
required to be obtained by it for the consummation of the Merger, including
those required under HSR. Company shall use its reasonable best efforts to
obtain all necessary consents, waivers and approvals under any of its material
contracts in connection with the Merger for the assignment thereof or otherwise.
The parties hereto will consult and cooperate with one another, and consider in
good faith the views of one another, in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments, opinions and proposals
made or submitted by or on behalf of any party hereto in connection with
proceedings under or relating to HSR or any other federal or state antitrust or
fair trade law.
(b) Each of Parent and Company shall use its reasonable best efforts to
resolve such objections, if any, as may be asserted by any Governmental Entity
with respect to the transactions contemplated by this Agreement under HSR, the
Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the Federal Trade
Commission Act, as amended, and any other Federal, state or foreign statutes,
rules, regulations, orders or decrees that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade (collectively, "Antitrust Laws"). In connection therewith, if any
administrative or judicial action or proceeding is instituted (or threatened to
be instituted) challenging any transaction contemplated by this Agreement as
violative of any Antitrust Law, each of Parent and Company shall cooperate and
use its reasonable best efforts vigorously to contest and resist any such action
or proceeding and to have vacated, lifted, reversed, or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or permanent
(each, an "Order"), that is in effect and that prohibits, prevents, or restricts
consummation of the Merger or any such other transactions, unless by mutual
agreement Parent and Company decide that litigation is not in their respective
best interests. Notwithstanding the provisions of the immediately preceding
sentence, it is expressly understood and agreed that neither Parent nor Company
shall have any obligation to litigate or contest any administrative or judicial
action or proceeding or any Order beyond the Final Date (as defined in Section
7.1(b)). Each of Parent and Company shall use its reasonable best efforts to
take such action as may be required to cause the expiration of the notice
periods under the HSR or other Antitrust Laws with respect to such transactions
as promptly as possible after the execution of this Agreement. Parent and
Company also agree to take any and all of the following actions to the extent
necessary to obtain the approval of any Governmental Entity with jurisdiction
over the enforcement of any applicable laws regarding the transactions
contemplated hereby: entering into negotiations; providing information required
by law or governmental regulation; and substantially complying with any second
request for
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information pursuant to the Antitrust Laws. Notwithstanding anything to the
contrary in this Section 5.6, neither Parent nor Company nor any of their
respective subsidiaries shall be required to take any action that would
reasonably be expected to substantially impair the overall benefits expected, as
of the date hereof, to be realized from the consummation of the transactions
contemplated hereby.
(c) Notwithstanding anything to the contrary in Section 5.6(a) or (b), (i)
neither Parent nor any of it subsidiaries shall be required to divest any of
their respective businesses, product lines or assets, or to take or agree to
take any other action or agree to any limitation that would reasonably be
expected to have a Material Adverse Effect on Parent or of Parent combined with
the Surviving Corporation after the Effective Time or (ii) neither Company nor
its subsidiaries shall be required to divest any of their respective businesses,
product lines or assets, or to take or agree to take any other action or agree
to any limitation that would reasonably be expected to have a Material Adverse
Effect on Company.
5.7 Legal Requirements. Each of Parent, Merger Sub and Company will, and
will cause their respective subsidiaries to, take all reasonable actions
necessary to comply promptly with all legal requirements which may be imposed on
them with respect to the consummation of the transactions contemplated by this
Agreement and will promptly cooperate with and furnish information to any party
hereto necessary in connection with any such requirements imposed upon such
other party in connection with the consummation of the transactions contemplated
by this Agreement and will take all reasonable actions necessary to obtain (and
will cooperate with the other parties hereto in obtaining) any consent,
approval, order or authorization of, or any registration, declaration or filing
with, any Governmental Entity or other person, required to be obtained or made
in connection with the taking of any action contemplated by this Agreement.
5.8 Blue Sky Laws. Parent shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of the Parent Common Stock in connection with the
Merger. Company shall use its reasonable best efforts to assist Parent as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable in connection with the issuance of Parent Common Stock in
connection with the Merger.
5.9 Employee Benefit Plans.
(a) At the Effective Time, the Company Stock Option Plans and each
outstanding option to purchase shares of Company Common Stock under the Company
Stock Option Plans, whether vested or unvested, will be assumed by Parent.
Company represents and warrants to Parent that Schedule 5.9(a) hereto sets forth
a true and complete list as of the date hereof of all holders of outstanding
options under the Company Stock Option Plans, including the number of shares of
Company capital stock subject to each such option, the exercise or vesting
schedule, the exercise price per share and the term of each such option. On the
Closing Date, Company shall deliver to Parent an updated Schedule 5.9(a) hereto
current as of such date. Each such option so assumed by Parent under this
Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the Company Stock Option Plans and the applicable stock
option agreements, immediately prior to the Effective Time, except that (i) such
option will be exercisable for that number of whole shares of Parent Common
Stock equal to the product of the number of shares of Company Common Stock that
were issuable upon exercise of such option immediately prior to the Effective
Time multiplied by the Exchange Ratio and rounded down to the nearest whole
number of shares of Parent Common Stock, and (ii) the per share exercise price
for the shares of Parent Common Stock issuable upon exercise of such assumed
option will be equal to the quotient determined by dividing the exercise price
per share of Company Common Stock at which such option was exercisable
immediately prior to the Effective Time by the Exchange Ratio, rounded up to the
nearest whole cent. At or prior to the Closing, Company shall take all actions
required to prevent the cancellation, termination or the accelerated vesting of
such options upon the
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closing of the Merger or the transactions contemplated hereby, and to allow such
options at the Effective Time to be converted into options to purchase Parent
Common Stock as described above, without requiring the consent of the optionees;
provided, however that vesting of outstanding options to purchase 100,000 shares
granted to non-employee directors may accelerate at the Effective Time. Company
has not granted any options under the Company Stock Option Plans intended to
qualify as "incentive stock options" as defined in Section 422 of the Code.
Within 30 business days after the Effective Time, Parent will issue to each
person who, immediately prior to the Effective Time was a holder of an
outstanding option under the Company Stock Option Plans a document in form and
substance reasonably satisfactory to Company evidencing the foregoing assumption
of such option by Parent.
(b) All outstanding rights of Company which it may hold immediately prior
to the Effective Time to repurchase unvested shares of Company Common Stock (the
"Repurchase Options") shall continue in effect following the Merger and shall
thereafter continue to be exercisable by Parent upon the same terms and
conditions in effect immediately prior to the Effective Time, except that the
shares purchasable pursuant to the Repurchase Options and the purchase price per
shall be adjusted to reflect the Exchange Ratio.
(c) Outstanding purchase rights under the Company ESPP shall be exercised
upon the earlier of (i) the next scheduled purchase date under the Company ESPP
or (ii) immediately prior to the Effective Time, and each participant in the
Company ESPP shall accordingly be issued shares of Company Common Stock at that
time which shall be converted into shares of Parent Common Stock in the Merger.
Company shall cause the Company ESPP to terminate with such exercise date, and
no purchase rights shall be subsequently granted or exercised under the Company
ESPP. Company employees who meet the eligibility requirements for participation
in the Parent Employee Stock Purchase Plan shall be eligible to begin payroll
deductions under that plan as of the start date of the first offering period
thereunder beginning after the Effective Time. (d) Within five (5) business days
following the date of this Agreement, Company shall set forth on Schedule 5.9(d)
a list of all persons who Company reasonably believes are, with respect to
Company and as of the date of this Agreement, "disqualified individuals" (within
the meaning of Section 280G of the Code and the regulations promulgated
thereunder). For this purpose, Company shall assume that the fair market value
of Company Common Stock is $41.00 per share. Within a reasonable period of time
after the last business day of each month after the date of this Agreement
(other than November, 1999) and on or about the date five business days prior to
the expected Closing Date, Company shall revise Schedule 5.9(d) to reflect the
most recently available closing price of Company Common Stock as of the last
business day of such month and to reflect any additional information which
Company reasonably believes would impact the determination of persons who are,
with respect to Company and as of the each such date, "disqualified individuals"
(within the meaning of Section 280G of the Code and the regulations promulgated
thereunder).
5.10 Forms S-3 and S-8. Parent agrees to file, no later than 30 business
days after the Closing (provided that Parent has received within 10 business
days after the Closing all option documentation it requires relating to the
outstanding options), (i) a registration statement on Form S-8 under the
Securities Act covering the shares of Parent Common Stock issuable pursuant to
outstanding options granted to individuals for which a Form S-8 registration
statement is available and listed on Schedule 5.10(a) hereto and (ii) a
registration statement on Form S-3 under the Securities Act covering the shares
of Parent Common Stock issuable pursuant to outstanding options granted to
entities or to individuals for which a Form S-8 registration statement is not
available, which Form S-3 shall remain current for one year from the Effective
Time, under the Company Stock Option Plans assumed by Parent or otherwise issued
in compensatory transactions to entities or to individuals not currently
providing
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services to Company as employees or consultants and listed on Schedule 5.10(b).
Company shall cooperate with and assist Parent in the preparation of such
registration statements.
5.11 Option Agreement. Company agrees to fully perform its obligations
under the Option Agreement.
5.12 Listing of Additional Shares. Prior to the Effective Time, Parent
shall file with the Nasdaq National Market a Notification Form for Listing of
Additional Shares with respect to the shares referred to in Section 6.1(f).
5.13 Nasdaq Quotation. Company and Parent agree to continue the quotation
of Company Common Stock and Parent Common Stock, respectively, on the Nasdaq
National Market during the term of the Agreement so that appraisal rights will
not be available to stockholders of Company under Section 262 of the Delaware
Law.
5.14 Employees. Company shall use its reasonable best efforts to cause
each of the individuals set forth on Schedule 5.14 to deliver to Parent an
executed Employment Agreement in the form of Exhibit D.
5.15 Action Under Stock Option Plan. The Board of Directors of Company
shall take all action necessary to prevent the cancellation, termination or
accelerated vesting of options under the Company Stock Option Plans (other than
the 100,000 shares granted to non-employee directors) upon the closing of the
Merger and to allow such options to be assumed by Parent as described in Section
5.9.
5.16 Company Rights Agreement. Company hereby agrees that it has taken and
will continue to take all necessary action to ensure that none of the
transactions contemplated by this Agreement, the Option Agreement or the
Stockholder Agreement will cause (i) Parent or any of its affiliates or
associates to become an Acquiring Person (as defined in the Company Rights
Agreement) for purposes of the Company Rights Agreement, or (ii) otherwise
affect in any way the Rights under the Company Rights Agreement, including by
causing such Rights to separate from the underlying shares or by giving such
holders the right to acquire securities of any party hereto.
5.17 Indemnification.
(a) After the Effective Time, Parent will cause the Surviving Corporation
to fulfill and honor in all respects the obligations of Company pursuant to the
indemnification provisions of Company's Certificate of Incorporation and Bylaws
or any indemnification agreement with Company officers and directors to which
Company is a party, in each case in effect on the date hereof; provided that
such indemnification shall be subject to any limitation imposed from time to
time under applicable law. Without limitation of the foregoing, in the event any
person so indemnified (an "Indemnified Party") is or becomes involved in any
capacity in any action, proceeding or investigation in connection with any
matter relating to this Agreement or the transactions contemplated hereby
occurring on or prior to the Effective Time, Parent shall, or shall cause the
Surviving Corporation to, pay as incurred such Indemnified Party's reasonable
legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith to the fullest extent permitted by
the Delaware Law upon receipt of any undertaking contemplated by Section 145(e)
of the Delaware Law. Any Indemnified Party wishing to claim indemnification
under this Section 5.17, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Parent and the Surviving
Corporation, and shall deliver to Parent and the Surviving Corporation the
undertaking contemplated by Section 145(e) of the Delaware Law.
(b) For four years after the Effective Time, Parent will either (i) at all
times maintain at least $50,000,000 in cash, marketable securities or
unrestricted lines of credit (or any combination thereof) to be available to
indemnify the Indemnified Parties in accordance with Section 5.17(a) above or
(ii) cause
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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 has been disclosed to
Parent, and if the Surviving Corporation is unable to obtain the insurance
required by this Section 5.17, it shall obtain as much comparable insurance as
possible for an annual premium equal to such maximum amount.
(c) To the extent there is any claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time) against an
Indemnified Party that arises out of or pertains to any action or omission in
his or her capacity as director, officer, employee, fiduciary or agent of
Company occurring prior to the Effective Time, or arises out of or pertains to
the transactions contemplated by this Agreement for a period of four years after
the Effective Time (whether arising before or after the Effective Time), in each
case for which such Indemnified Party is indemnified under this Section 5.17,
such Indemnified Party shall be entitled to be represented by counsel, which
counsel shall be counsel of Parent (provided that if use of counsel of Parent
would be expected under applicable standards of professional conduct to give
rise to a conflict between the position of the Indemnified Person and of Parent,
the Indemnified Party shall be entitled instead to be represented by counsel
selected by the Indemnified Party and reasonably acceptable to Parent) and
following the Effective Time the Surviving Corporation and Parent shall pay the
reasonable fees and expenses of such counsel, promptly after statements therefor
are received and the Surviving Corporation and Parent will cooperate in the
defense of any such matter; provided, however, that neither the Surviving
Corporation nor Parent shall be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld); and
provided, further, that, in the event that any claim or claims for
indemnification are asserted or made within such four year period, all rights to
indemnification in respect to any such claim or claims shall continue until the
disposition of any and all such claims. The Indemnified Parties as a group may
retain only one law firm (in addition to local counsel) to represent them with
respect to any single action unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the position
of any two or more Indemnified Parties.
(d) The provisions of this Section 5.17 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his or her heirs and
representatives.
5.18 Tax Treatment. The parties each intend that the Merger will qualify
as a reorganization within the meaning of Section 368(a) of the Code and shall
use best efforts to cause the Merger to so qualify.
5.19 Stockholder Litigation. Unless and until Company has withdrawn its
recommendation of the Merger, Company shall give Parent the opportunity to
participate at its own expense in the defense of any stockholder litigation
against Company and/or its directors relating to the transactions contemplated
by this Agreement and the Option Agreement.
5.20 Best Efforts and Further Assurances. Each of the parties to this
Agreement shall use its best efforts to effectuate the transactions contemplated
hereby and to fulfill and cause to be fulfilled the conditions to closing under
this Agreement. Each party hereto, at the reasonable request of another party
hereto, shall execute and deliver such other instruments and do and perform such
other acts and things as may be necessary or desirable for effecting completely
the consummation of this Agreement and the transactions contemplated hereby.
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ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to consummate and effect
this Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by agreement of all the
parties hereto:
(a) Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the stockholders of
Company under Delaware Law.
(b) Registration Statement Effective. The SEC shall have declared the
Registration Statement effective. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose, and no similar proceeding
in respect of the Proxy Statement, shall have been initiated or threatened
by the SEC; and all requests for additional information on the part of the
SEC shall have been complied with to the reasonable satisfaction of the
parties hereto.
(c) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger shall be in effect,
nor shall any proceeding brought by an administrative agency or commission
or other governmental authority or instrumentality, domestic or foreign,
seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced
or deemed applicable to the Merger, which makes the consummation of the
Merger illegal. In the event an injunction or other order shall have been
issued, each party agrees to use its reasonable best efforts to have such
injunction or other order lifted.
(d) Governmental Approvals. Parent, Company and Merger Sub and their
respective subsidiaries shall have timely obtained from each Governmental
Entity all approvals, waivers and consents, if any, necessary for
consummation of or in connection with the Merger and the several
transactions contemplated hereby, including such approvals, waivers and
consents as may be required under the Securities Act, under state Blue Sky
laws, and under HSR.
(e) Tax Opinion. Parent and Company shall have received substantially
similar written opinions of Xxxxxxx, Xxxxxxx and Xxxxxxxx LLP and Day,
Xxxxx & Xxxxxx LLP, respectively, in form and substance reasonably
satisfactory to them, dated on or about the date of Closing to the effect
that the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code, and such opinions shall not have been
withdrawn. In rendering such opinions, counsel shall be entitled to rely
upon, among other things, reasonable assumptions as well as representations
of Parent, Merger Sub and Company. In addition, Parent and Company shall
have received from such respective firms such tax opinions as may be
required by the SEC in connection with the filing of the Registration
Statement.
(f) Listing of Additional Shares. The filing with the Nasdaq National
Market of a Notification Form for Listing of Additional Shares with respect
to the shares of Parent Common Stock issuable upon conversion of the
Company Common Stock in the Merger and upon exercise of the options under
the Company Stock Option Plans assumed by Parent shall have been made.
6.2 Additional Conditions to Obligations of Company. The obligations of
Company to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the
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satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by Company:
(a) Representations, Warranties and Covenants. (i) The representations
and warranties of Parent and Merger Sub in this Agreement shall be true and
correct in all material respects (except for such representations and
warranties that are qualified by their terms by a reference to materiality
which representations and warranties as so qualified shall be true in all
respects) both when made and on and as of the Effective Time as though such
representations and warranties were made on and as of such time and (ii)
Parent and Merger Sub shall have performed and complied in all material
respects with all covenants, obligations and conditions of this Agreement
required to be performed and complied with by them as of the Effective
Time.
(b) Certificate of Parent. Company shall have been provided with a
certificate executed on behalf of Parent by an authorized officer
certifying that the condition set forth in Section 6.2(a) shall have been
fulfilled.
6.3 Additional Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate and effect this Agreement and
the transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, by Parent:
(a) Representations, Warranties and Covenants. (i) The representations
and warranties of Company in this Agreement shall be true and correct in
all material respects (except for such representations and warranties that
are qualified by their terms by a reference to materiality, which
representations and warranties as so qualified shall be true in all
respects) both when made and on and as of the Effective Time as though such
representations and warranties were made on and as of such time and (ii)
Company shall have performed and complied in all material respects with all
covenants, obligations and conditions of this Agreement required to be
performed and complied with by it as of the Effective Time.
(b) Certificate of Company. Parent shall have been provided with a
certificate executed on behalf of Company by its President and Chief
Financial Officer certifying that the condition set forth in Section 6.3(a)
shall have been fulfilled.
(c) Third Party Consents. Parent shall have been furnished with
evidence satisfactory to it of the consent or approval of those persons
whose consent or approval shall be required in connection with the Merger
under any material contract of Company or any of its subsidiaries or
otherwise, except where failure to obtain such consent would not have a
Material Adverse Effect on Company.
(d) Injunctions or Restraints on Conduct of Business. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint provision limiting or restricting Parent's conduct or operation
of the business of Company and its subsidiaries, following the Merger shall
be in effect, nor shall any proceeding brought by an administrative agency
or commission or other Governmental Entity, domestic or foreign, seeking
the foregoing be pending.
(e) No Material Adverse Changes. There shall not have occurred any
Material Adverse Effect on Company, or any change that has a Material
Adverse Effect on Company (other than Non-Controllable Events).
(f) FIRPTA Certificate. Company shall, prior to the Closing Date,
provide Parent with a properly executed FIRPTA Notification Letter,
substantially in the form of Exhibit E attached hereto, which states that
shares of capital stock of Company do not constitute "United States real
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property interests" under Section 897(c) of the Code, for purposes of
satisfying Parent's obligations under Treasury Regulation Section
1.1445-2(c)(3). In addition, simultaneously with delivery of such
Notification Letter, Company shall have provided to Parent, as agent for
Company, a form of notice to the Internal Revenue Service in accordance
with the requirements of Treasury Regulation Section 1.897-2(h)(2) and
substantially in the form of Exhibit E attached hereto along with written
authorization for Parent to deliver such notice form to the Internal
Revenue Service on behalf of Company upon the Closing of the Merger.
(g) Employment and Non-Competition Agreements. The employees of
Company set forth on Schedule 5.14 shall have accepted employment with
Parent and shall have entered into an Employment and Non-Competition
Agreement in the form attached hereto as Exhibit D.
(h) Action Under Stock Option Plans. The Board of Directors of Company
shall have taken all action necessary to prevent the cancellation,
termination or accelerated vesting of options under the Company Stock
Option Plans (other than the 100,000 options granted to non-employee
directors) upon the closing of the Merger and to allow such options to be
assumed by Parent as described in Section 5.9.
(i) Warrants. All outstanding warrants to acquire Company capital
stock shall have been exercised in accordance with their terms.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. At any time prior to the Effective Time, whether before
or after approval of the matters presented in connection with the Merger by the
stockholders of Company, this Agreement may be terminated:
(a) by mutual consent of Parent and Company;
(b) by either Parent or Company, if, without fault of the terminating
party, the Closing shall not have occurred on or before February 29, 2000
or such later date as may be agreed upon in writing by the parties hereto
(the "Final Date"); provided, however, that the Final Date shall be
extended to March 31, 2000 in the event that if the only reason the Closing
shall not have occurred by February 29, 2000 is the failure of the
conditions set forth in Section 6.1(b) and/or Section 6.1(d) (although such
extension shall not occur if the failure of such conditions has been caused
or resulted from one party's action or failure to act constituting a breach
of this Agreement and the other party does not consent to such extension);
and provided further that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any party whose action or failure
to act has been the cause of or resulted in the failure of the Merger to
occur on or before such date and such action or failure to act constitutes
a breach of this Agreement;
(c) by Parent, if (i) Company shall breach any of its representations,
warranties or obligations hereunder to an extent that would cause the
condition set forth in Section 6.3(a) not to be satisfied and such breach
shall not have been cured within ten (10) business days of receipt by
Company of written notice of such breach (and Parent shall not have
willfully breached any of its covenants hereunder, which breach is not
cured), (ii) the Board of Directors of Company shall have withdrawn or
modified its recommendation of this Agreement or the Merger in a manner
adverse to Parent or shall have resolved to do any of the foregoing, (iii)
Company shall have failed to comply with Section 4.3, (iv) the Board of
Directors of Company shall have recommended, endorsed, accepted or agreed
to a Takeover Proposal or shall have resolved to do so, or (v) for any
reason
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Company fails to call and hold the Company Stockholders Meeting by February
15, 2000 or in the event the condition set forth in Section 6.1(b) shall
not have been satisfied by February 15, 2000 under circumstances in which
it can be reasonably expected that the Final Date will be extended pursuant
to the proviso set forth in Section 7.1(b), March 15, 2000;
(d) by Company, if Parent shall breach any of its representations,
warranties or obligations hereunder to an extent that would cause the
condition set forth in Section 6.2(a) not to be satisfied and such breach
shall not have been cured within ten (10) business days following receipt
by Parent of written notice of such breach (and Company shall not have
willfully breached any of its covenants hereunder, which breach is not
cured);
(e) by Parent if a Trigger Event (as defined in Section 7.3(e)) or
Takeover Proposal shall have occurred and the Board of Directors of Company
in connection therewith, does not within ten (10) business days of such
occurrence (i) reconfirm its approval and recommendation of this Agreement
and the transactions contemplated hereby, and (ii) reject such Takeover
Proposal or Trigger Event (in the case of a Trigger Event involving a
tender or exchange offer); or
(f) by either Parent or Company if (i) any permanent injunction or
other order of a court or other competent authority preventing the
consummation of the Merger shall have become final and nonappealable or
(ii) any required approval of the stockholders of Company shall not have
been obtained by reason of the failure to obtain the required vote upon a
vote held at a duly held meeting of stockholders or at any adjournment
thereof (provided that the right to terminate this Agreement under this
subsection (ii) shall not be available to Company where the failure to
obtain such stockholder approval shall have been caused by the action or
failure to act of Company and such action or failure constitutes a breach
by Company of this Agreement).
7.2 Effect of Termination. In the event of termination of this Agreement
as provided in Section 7.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Parent, Merger Sub or Company
or their respective officers, directors, stockholders or affiliates, except to
the extent that such termination results from the breach by a party hereto of
any of its representations, warranties or covenants set forth in this Agreement;
provided that, the provisions of Section 5.4 (Confidentiality), Section 7.3
(Expenses and Termination Fees), this Section 7.2 and Article VIII shall remain
in full force and effect and survive any termination of this Agreement.
7.3 Expenses and Termination Fees.
(a) Subject to subsections (b), (c), (d) and (e) of this Section 7.3,
whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby
(including, without limitation, the fees and expenses of its advisers,
accountants and legal counsel) shall be paid by the party incurring such
expense, except that expenses incurred in connection with printing the Proxy
Materials and the Registration Statement, registration and filing fees incurred
in connection with the Registration Statement, the Proxy Materials and the
listing of additional shares pursuant to Section 6.1(f) and fees, costs and
expenses associated with compliance with applicable state securities laws in
connection with the Merger shall be shared equally by Company and Parent.
(b) In the event that (i) Parent shall terminate this Agreement pursuant to
Section 7.1(e); (ii) Parent shall terminate this Agreement pursuant to Section
7.1(c)(iii) as a result of the failure by Company, its stockholders who are
parties to the Stockholder Agreements, and each of their respective directors,
officers, employees, affiliates and controlling persons, or any person
authorized by such persons, to comply with the requirements of Section 4.3;
(iii) Parent shall terminate this Agreement pursuant to Section 7.1(c)(iv); (iv)
Parent (or in the case of Section 7.1(f)(ii), Company) shall terminate this
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Agreement pursuant to Section 7.1(c)(ii) or 7.1(f)(ii) and, prior to such
withdrawal, modification or stockholder rejection, there shall have been (A) a
Trigger Event with respect to Company or (B) a Takeover Proposal with respect to
Company which at the time of such withdrawal, modification or stockholder
rejection shall not have been rejected by Company; or (v) Parent (or in the case
of Section 7.1(b), Company) shall terminate this Agreement pursuant to Section
7.1(b), 7.1(c)(i) or 7.1(c)(v) due in whole or in part to any failure by Company
to use its reasonable best efforts to perform and comply with all agreements and
conditions required by this Agreement to be performed or complied with by
Company prior to or on the Closing Date or any failure by Company's affiliates
to take any actions required to be taken hereby, and prior thereto there shall
have been (A) a Trigger Event with respect to Company or (B) a Takeover Proposal
with respect to Company which shall not have been rejected by Company, then
Company shall promptly reimburse Parent for all of the out-of-pocket costs and
expenses incurred by Parent in connection with this Agreement and the
transactions contemplated hereby (including, without limitation, the fees and
expenses of its advisors, accountants and legal counsel), and, in addition to
any other remedies Parent may have, Company shall promptly pay to Parent the sum
of $25,000,000.
(c) In the event that (i) Parent shall terminate this Agreement pursuant to
Section 7.1(c)(i) or 7.1(c)(v) under circumstances not described in Section
7.3(b)(v); or (ii) Parent shall terminate this Agreement pursuant to Section
7.1(c)(ii) or 7.1(f)(ii) (under circumstances not described in Section
7.3(b)(iv)), Company shall promptly reimburse Parent for all of the
out-of-pocket costs and expenses incurred by Parent in connection with this
Agreement and the transactions contemplated hereby (including, without
limitation, the fees and expenses of its advisors, accountants and legal
counsel); and, in the event (A) any Takeover Proposal or Trigger Event is,
within twelve months of the later of (x) such termination of this Agreement and
(y) the payment of the above described expenses, consummated (as defined in
Section 7.3(g)) by or with any person (or any affiliate of any person) that made
a Takeover Proposal prior to termination of this Agreement or that caused a
Trigger Event prior to such termination, or (B) any other Takeover Proposal or
Trigger Event not described in clause (A) is consummated (as defined in Section
7.3(g)) within six months of the later of (x) such termination of this Agreement
and (y) the payment of the above-described expenses, Company shall promptly pay
to Parent the additional sum of $25,000,000 (less any amounts paid by Company to
Parent under Section 7.3(b)).
(d) In the event that Company shall terminate this Agreement pursuant to
Section 7.1(d) Parent shall promptly reimburse Company for all of the
out-of-pocket costs and expenses incurred by Company in connection with this
Agreement and the transactions contemplated hereby (including, without
limitation, the fees and expenses of its advisors, accountants and legal
counsel).
(e) As used herein, a "Trigger Event" shall occur if any Person (as that
term is defined in Section 13(d) of the Exchange Act and the regulations
promulgated thereunder) acquires securities representing 15% or more, or
commences a tender or exchange offer, open market purchase program or other
publicly announced initiative following the successful consummation of which the
offeror and its affiliate would beneficially own securities representing 15% or
more, of the voting power of Company; provided, however, a Trigger Event shall
not be deemed to include the acquisition by any Person of securities
representing 15% or more of Company if such Person has acquired such securities
not with the purpose nor with the effect of changing or influencing the control
of Company, nor in connection with or as a participant in any transaction having
such purpose or effect, including without limitation not in connection with such
Person (i) making any public announcement with respect to the voting of such
shares at any meeting to consider any merger, consolidation, sale of substantial
assets or other business combination or extraordinary transaction involving
Company; (ii) making, or in any way participating in, any "solicitation" of
"proxies" (as such terms are defined or used in Regulation 14A under the
Exchange Act) to vote any voting securities of Company (including, without
limitation, any such
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solicitation subject to Rule 14a-11 under the Exchange Act) or seeking to advise
or influence any Person with respect to the voting of any voting securities of
Company, directly or indirectly, relating to a merger or other business
combination involving Company or the sale or transfer of a significant portion
of assets (excluding the sale or disposition of assets in the ordinary course of
business) of Company; (iii) forming, joining or in any way participating in any
"group" within the meaning of Section 13(d)(3) of the Exchange Act with respect
to any voting securities of Company, directly or indirectly, relating to a
merger or other business combination involving Company or the sale or transfer
of a significant portion of assets (excluding the sale or disposition of assets
in the ordinary course of business) of Company; or (iv) otherwise acting, alone
or in concert with others, to seek control of Company or to seek to control or
influence the management or policies of Company.
(f) For purposes of this Agreement, "Takeover Proposal" means any offer or
proposal for, or any indication of interest in, a merger or other business
combination involving Company or any of its subsidiaries or the acquisition of
15% or more of the outstanding shares of capital stock of Company, or a
significant portion of the assets of, Company or any of its subsidiaries, other
than the transactions contemplated by this Agreement.
(g) For purposes of Section 7.3(c) above, (A) "consummation" of a Takeover
Proposal shall occur on the date a written agreement is entered into with
respect to a merger or other business combination involving Company or the
acquisition of 15% or more of the outstanding shares of capital stock of
Company, or sale or transfer of any material assets (excluding the sale or
disposition of assets in the ordinary course of business) of Company or any of
its subsidiaries and (B) "consummation" of a Trigger Event shall occur on the
date any Person (other than any shareholder which currently owns 15% or more of
the outstanding shares of capital stock of Company provided such shareholder
does not increase its ownership) or any of its affiliates or associates would
beneficially own securities representing 15% or more of the voting power of
Company, following a tender or exchange offer.
7.4 Amendment. The boards of directors of the parties hereto may cause
this Agreement to be amended at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto; provided that an
amendment made subsequent to adoption of the Agreement by the stockholders of
Company or Merger Sub shall not (i) alter or change the amount or kind of
consideration to be received on conversion of the Company Common Stock, (ii)
alter or change any term of the Certificate of Incorporation of the Surviving
Corporation to be effected by the Merger, or (iii) alter or change any of the
terms and conditions of the Agreement if such alteration or change would
materially adversely affect the holders of Company Common Stock or Merger Sub
Common Stock.
7.5 Extension; Waiver. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival at Effective Time. The representations, warranties and
agreements set forth in this Agreement shall terminate at the Effective Time,
except that the agreements set forth in Article I, Section 5.4
(Confidentiality), 5.10 (Forms S-3 and S-8), 5.17 (Indemnification), 5.20 (Best
Efforts and
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Further Assurances), 7.3 (Expenses and Termination Fees), 7.4 (Amendment), and
this Article VIII shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt) to the parties
at the following address (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Merger Sub, to:
Cisco Systems, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Senior Vice President, Legal and Government Affairs
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxx Xxxx
Xxx Xxxxxxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(b) if to Company, to:
Aironet Wireless Communications, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxx, XX 00000
Attention: President
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Day, Xxxxx & Xxxxxx LLP
City Place I
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
and to
Xxxxxxx Xxxxx Xxxxxx LLP
000 Xxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Esq. and Xxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
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8.3 Interpretation. When a reference is made in this Agreement to Exhibits
or Schedules, such reference shall be to an Exhibit or Schedule to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases "the
date of this Agreement", "the date hereof", and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to November 8, 1999.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Nonassignability; Parties in Interest. This
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits, the
Schedules, including the Company Disclosure Schedule and the Parent Disclosure
Schedule (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, except for the Confidentiality Agreement, which shall continue in full
force and effect, and shall survive any termination of this Agreement or the
Closing, in accordance with its terms; (b) are not intended to confer upon any
other person any rights or remedies hereunder, except as set forth in Sections
1.6(a) - (c) and (f), 1.7 - 1.9, 5.9, 5.10, 5.12 and 5.17; and (c) shall not be
assigned by operation of law or otherwise except as otherwise specifically
provided.
8.6 Severability. In the event that any provision of this Agreement, or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.7 Remedies Cumulative. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws that might otherwise govern under applicable principles
of conflicts of law. Each of the parties hereto irrevocably consents to the
exclusive jurisdiction of any court located within the State of Delaware in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon them in any
manner authorized by the laws of the State of Delaware for such persons and
waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction and such process.
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8.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
[SIGNATURE PAGE FOLLOWS.]
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