Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
HEWLETT-PACKARD COMPANY
TOWER BRIDGE ACQUISITION CORPORATION
AND
VERIFONE, INC.
DATED AS OF APRIL 22, 1997
TABLE OF CONTENTS
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ARTICLE I - THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effective Time; Closing . . . . . . . . . . . . . . . . . . . . 2
1.3 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Certificate of Incorporation; Bylaws . . . . . . . . . . . . . . 2
1.5 Directors and Officers . . . . . . . . . . . . . . . . . . . . . 3
1.6 Effect on Capital Stock. . . . . . . . . . . . . . . . . . . . . 3
1.7 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . 4
1.8 Surrender of Certificates. . . . . . . . . . . . . . . . . . . . 5
1.9 No Further Ownership Rights in VFI Common Stock. . . . . . . . . 7
1.10 Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . 7
1.11 Tax and Accounting Consequences. . . . . . . . . . . . . . . . . 7
1.12 Taking of Necessary Action; Further Action . . . . . . . . . . . 8
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF VFI. . . . . . . . . . . . . 8
2.1 Organization of VFI. . . . . . . . . . . . . . . . . . . . . . . 8
2.2 VFI Capital Structure. . . . . . . . . . . . . . . . . . . . . . 9
2.3 Obligations With Respect to Capital Stock. . . . . . . . . . . . 10
2.4 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.5 SEC Filings; VFI Financial Statements. . . . . . . . . . . . . . 12
2.6 Absence of Certain Changes or Events . . . . . . . . . . . . . . 13
2.7 Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.8 Title to Properties; Absence of Liens and Encumbrances . . . . . 16
2.9 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . 16
2.10 Compliance; Permits; Restrictions. . . . . . . . . . . . . . . . 21
2.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.12 Brokers' and Finders' Fees . . . . . . . . . . . . . . . . . . . 22
2.13 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . 22
2.14 Employees; Labor Matters . . . . . . . . . . . . . . . . . . . . 24
2.15 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . 25
2.16 Agreements, Contracts and Commitments. . . . . . . . . . . . . . 26
2.17 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . 28
2.18 Change of Control Payments . . . . . . . . . . . . . . . . . . . 28
2.19 Statements; Proxy Statement/Prospectus . . . . . . . . . . . . . 28
2.20 Board Approval . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.21 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . 29
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TABLE OF CONTENTS
(CONTINUED)
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2.22 Section 203 of the Delaware General Corporation Law Not
Applicable. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.23 Customs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF HP AND
MERGER SUB. . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.1 Organization of HP. . . . . . . . . . . . . . . . . . . . . . . 30
3.2 HP and Merger Sub Capital Structure . . . . . . . . . . . . . . 31
3.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.4 SEC Filings; HP Financial Statements. . . . . . . . . . . . . . 32
3.5 Absence of Certain Changes or Events. . . . . . . . . . . . . . 33
3.6 Statements; Proxy Statement/Prospectus. . . . . . . . . . . . . 33
3.7 Pooling of Interests. . . . . . . . . . . . . . . . . . . . . . 33
3.8 Valid Issuance. . . . . . . . . . . . . . . . . . . . . . . . . 33
3.9 No Ownership of VFI Common Stock. . . . . . . . . . . . . . . . 33
ARTICLE IV - CONDUCT PRIOR TO THE EFFECTIVE TIME. . . . . . . . . . . . . . 34
4.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE V - ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . 36
5.1 Proxy Statement/Prospectus; Registration Statement; Other
Filings; Board Recommendations . . . . . . . . . . . . . . . . 36
5.2 Meeting of Stockholders . . . . . . . . . . . . . . . . . . . . 37
5.3 Confidentiality; Access to Information. . . . . . . . . . . . . 38
5.4 No Solicitation.. . . . . . . . . . . . . . . . . . . . . . . . 38
5.5 Public Disclosure . . . . . . . . . . . . . . . . . . . . . . . 40
5.6 Legal Requirements. . . . . . . . . . . . . . . . . . . . . . . 41
5.7 Third Party Consents. . . . . . . . . . . . . . . . . . . . . . 41
5.8 Notification of Certain Matters . . . . . . . . . . . . . . . . 41
5.9 Best Efforts and Further Assurances . . . . . . . . . . . . . . 42
5.10 Stock Options and Employee Benefits.. . . . . . . . . . . . . . 42
5.11 Form S-8. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.12 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 45
5.13 NYSE Listing. . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.14 VFI Affiliate Agreement . . . . . . . . . . . . . . . . . . . . 46
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TABLE OF CONTENTS
(CONTINUED)
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5.15 Regulatory Filings; Reasonable Efforts. . . . . . . . . . . . . 47
5.16 Tax-Free Reorganization . . . . . . . . . . . . . . . . . . . . 47
5.17 Comfort Letter. . . . . . . . . . . . . . . . . . . . . . . . . 47
5.18 Pooling Covenant. . . . . . . . . . . . . . . . . . . . . . . . 47
5.19 Disqualified Individuals. . . . . . . . . . . . . . . . . . . . 48
ARTICLE VI - CONDITIONS TO THE MERGER . . . . . . . . . . . . . . . . . . . 48
6.1 Conditions to Obligations of Each Party to Effect the Merger. . 48
6.2 Additional Conditions to Obligations of VFI . . . . . . . . . . 49
6.3 Additional Conditions to the Obligations of HP and Merger Sub . 50
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . 52
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.2 Notice of Termination; Effect of Termination. . . . . . . . . . 54
7.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 54
7.4 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.5 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VIII - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . 57
8.1 Non-Survival of Representations and Warranties. . . . . . . . . 57
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.3 Interpretation; Knowledge . . . . . . . . . . . . . . . . . . . 58
8.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.5 Entire Agreement; Third Party Beneficiaries . . . . . . . . . . 59
8.6 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.7 Other Remedies; Specific Performance. . . . . . . . . . . . . . 59
8.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.9 Rules of Construction . . . . . . . . . . . . . . . . . . . . . 60
8.10 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.11 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . 60
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INDEX OF EXHIBITS
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Exhibit A Form of VeriFone Voting Agreement
Exhibit B Form of VeriFone Affiliate Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of April 22, 1997, among Hewlett-Packard Company, a
California corporation ("HP"), Tower Bridge Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of HP ("MERGER SUB"), and
VeriFone, Inc., a Delaware corporation ("VFI").
RECITALS
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A. Upon the terms and subject to the conditions of this Agreement and
in accordance with the Delaware General Corporation Law ("DELAWARE LAW"), HP
and VFI intend to enter into a business combination transaction.
B. The Board of Directors of VFI (i) has determined that the Merger
(as defined in Section 1.1) is consistent with and in furtherance of the
long-term business strategy of VFI and fair to, and in the best interests of,
VFI and its stockholders, (ii) has approved this Agreement, the Merger and
the other transactions contemplated by this Agreement and (iii) has
determined to recommend that the stockholders of VFI adopt and approve this
Agreement and approve the Merger.
C. Concurrently with the execution of this Agreement, and as a
condition and inducement to HP's willingness to enter into this Agreement, an
affiliate stockholder of VFI is entering into a Voting Agreement in
substantially the form attached hereto as EXHIBIT A.
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").
E. It is also intended by the parties hereto that the Merger shall
qualify for accounting treatment as a pooling of interests.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
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 and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and
into VFI (the "MERGER"), the separate corporate existence of Merger Sub shall
cease and VFI shall continue as the surviving corporation. VFI as the
surviving corporation after the Merger is hereinafter sometimes referred to
as the "SURVIVING CORPORATION."
1.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by
filing a Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with the relevant provisions of Delaware Law (the
"CERTIFICATE OF MERGER") (the time of such filing (or such later time as may
be agreed in writing by the parties and specified in the Certificate of
Merger) being the "EFFECTIVE TIME") as soon as practicable on or after the
Closing Date (as herein defined). The closing of the Merger (the "CLOSING")
shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Professional Corporation, at a time and date to be specified by the parties,
which shall be no later than the second business day after the satisfaction
or waiver of the conditions set forth in Article VI, or at such other time,
date and location as the parties hereto agree in writing (the "CLOSING DATE").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement 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 VFI and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of VFI 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 law and such Certificate of Incorporation
of the Surviving Corporation (subject, however, to Section 5.12); PROVIDED,
HOWEVER, that at the Effective Time the Certificate of Incorporation of the
Surviving Corporation shall be amended so that the name of the Surviving
Corporation shall be VeriFone, Inc.
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(b) The Bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be, at the Effective Time, the Bylaws of the
Surviving Corporation until thereafter amended, subject, however, to Section
5.12 hereof.
1.5 DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or
appointed and qualified. The initial officers of the Surviving Corporation
shall be the officers of VFI immediately prior to the Effective Time, until
their respective successors are duly appointed.
1.6 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, VFI or the holders
of any of the following securities:
(a) CONVERSION OF VFI COMMON STOCK. Each share of Common Stock,
$.01 par value per share, of VFI (the "VFI COMMON STOCK") issued and
outstanding immediately prior to the Effective Time, (other than any shares
of VFI Common Stock to be canceled pursuant to Section 1.6(b) and any
Dissenting Shares (as defined in and to the extent provided in Section
1.7(a)) will be canceled and extinguished and automatically converted
(subject to Sections 1.6(e) and (f)) into one (the "EXCHANGE RATIO") share of
Common Stock of HP (the "HP COMMON STOCK").
(b) CANCELLATION OF HP-OWNED STOCK. Each share of VFI Common
Stock held by VFI or owned by Merger Sub, HP or any direct or indirect wholly
owned subsidiary of VFI or of HP immediately prior to the Effective Time
shall be canceled and extinguished without any conversion thereof.
(c) STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLANS. At the
Effective Time, all options to purchase VFI Common Stock then outstanding
under VFI's Amended and Restated Incentive Stock Option Plan (the "ISO
PLAN"), VFI's Amended and Restated 1987 Supplemental Stock Option Plan (the
"SUPPLEMENTAL PLAN"), VFI's Amended and Restated 1992 Non-Employee Directors'
Stock Option Plan (the "DIRECTORS' PLAN"), the Enterprise Integration
Technologies Corporation 1991 Stock Plan, as amended (the "EIT PLAN" and
collectively, the "VFI STOCK OPTION PLANS"); all phantom stock grants then
outstanding under VFI's 1996 Restricted Phantom Stock Plan (the "1996 PHANTOM
PLAN"), VFI's 1997 Restricted Phantom Stock Plan (the "1997 PHANTOM PLAN")
and VFI's Phantom Stock Option Agreements for VFI employees in India (the
"INDIAN PHANTOM STOCK AGREEMENTS" and collectively, the "VFI PHANTOM STOCK
PLANS"); all then outstanding rights to acquire shares of VFI Common Stock
under VFI's Amended and Restated Employee Stock Purchase Plan (the "ESPP");
all Enterprise Integration Technologies Corporation Restricted Stock Purchase
Agreements (the
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"RESTRICTED STOCK PURCHASE AGREEMENTS"); and all then outstanding rights to
receive cash under the SHA Stock Bonus Plan Scheme for 1997 ("SHA STOCK BONUS
PLAN"), and India Stock Bonus Plan Scheme for 1997 (the "INDIA STOCK BONUS
PLAN" and collectively, the "VFI STOCK BONUS PLANS") shall be assumed by HP
in accordance with Section 5.10 hereof.
(d) CAPITAL STOCK OF MERGER SUB. Each share of Common Stock, $.01
par value per share, of Merger Sub (the "MERGER SUB COMMON STOCK") issued and
outstanding immediately prior to the Effective Time shall be converted into
one validly issued, fully paid and nonassessable share of Common Stock, $.01
par value per share, of the Surviving Corporation. Each certificate
evidencing ownership of shares of Merger Sub Common Stock shall 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 appropriately the effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into HP Common Stock or VFI Common Stock),
reorganization, recapitalization, reclassification or other like change with
respect to HP Common Stock or VFI Common Stock occurring or having a record
date on or after the date hereof and prior to the Effective Time.
(f) FRACTIONAL SHARES. No fraction of a share of HP Common Stock
will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of VFI Common Stock who would otherwise be entitled to a fraction of a
share of HP Common Stock (after aggregating all fractional shares of HP
Common Stock that otherwise would be received by such holder) shall receive
from HP 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
one share of HP Common Stock for the five (5) most recent days that HP Common
Stock has traded ending on the trading day immediately prior to the Effective
Time, as reported on the New York Stock Exchange.
1.7 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the
contrary, the shares of any holder of VFI Common Stock who has the right
under Delaware Law to demand appraisal rights and has demanded and perfected
appraisal rights for such shares in accordance with Delaware Law and who, as
of the Effective Time, has not effectively withdrawn or lost such appraisal
rights ("DISSENTING SHARES"), shall not be converted into HP Common Stock
pursuant to Section 1.6, but the holder thereof shall only be entitled to
such rights as are granted by Delaware Law.
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(b) Notwithstanding the foregoing, if any holder of shares of VFI
Common Stock who has the right under Delaware Law to demand and who does
demand appraisal of such shares under Delaware Law shall effectively withdraw
or lose (through failure to perfect or otherwise) the right to appraisal,
then, as of the later of the Effective Time or the occurrence of such event,
such holder's shares shall automatically be converted into and represent only
HP Common Stock and the right to receive cash in lieu of fractional shares of
HP Common Stock in accordance with Section 1.6 hereof, without interest
thereon.
(c) VFI shall give HP (i) prompt notice of any written demands for
appraisal of any shares of VFI Common Stock, withdrawals of such demands, and
any other instruments served pursuant to Delaware Law and received by VFI
which relate to any such demand for appraisal and (ii) the opportunity to
participate in all negotiations and proceedings which take place prior to the
Effective Time with respect to demands for appraisal under Delaware Law. VFI
shall not, except with the prior written consent of HP or as may be required
by applicable law, voluntarily make any payment with respect to any demands
for appraisal of VFI Common Stock or offer to settle or settle any such
demands. Any payments made in respect of Dissenting Shares shall be made by
VFI or the Surviving Corporation, as the case may be.
(d) Because the VFI Common Stock and the HP Common Stock are
listed on a national securities exchange, the parties hereto believe that no
appraisal rights will be available under Delaware Law for shares of VFI
Common Stock in connection with the Merger.
1.8 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. ▇▇▇▇▇▇ Trust and Savings Bank shall act as
the exchange agent (the "EXCHANGE AGENT") in the Merger.
(b) HP TO PROVIDE COMMON STOCK. Promptly after the Effective
Time, HP shall make available to the Exchange Agent for exchange in
accordance with this Article I, the shares of HP Common Stock issuable
pursuant to Section 1.6 in exchange for outstanding shares of VFI Common
Stock, and cash in an amount sufficient for payment in lieu of fractional
shares pursuant to Section 1.6(f) and any dividends or distributions to which
holders of shares of VFI Common Stock may be entitled pursuant to Section
1.8(d).
(c) EXCHANGE PROCEDURES. Promptly after the Effective Time, HP
shall cause the Exchange Agent to mail to each holder of record (as of the
Effective Time) of a certificate or certificates (the "CERTIFICATES"), which
immediately prior to the Effective Time represented outstanding shares of VFI
Common Stock whose
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shares were converted into shares of HP Common Stock pursuant to Section 1.6,
cash in lieu of any fractional shares pursuant to Section 1.6(f) and any
dividends or other distributions pursuant to Section 1.8(d), (i) a letter of
transmittal in customary form (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent and shall contain
such other provisions as HP may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for
certificates representing shares of HP Common Stock, cash in lieu of any
fractional shares pursuant to Section 1.6(f) and any dividends or other
distributions pursuant to Section 1.8(d). Upon surrender of Certificates for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by HP, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, the holders of
such Certificates shall be entitled to receive in exchange therefor
certificates representing the number of whole shares of HP Common Stock into
which their shares of VFI Common Stock were converted at the Effective Time,
payment in lieu of fractional shares which such holders have the right to
receive pursuant to Section 1.6(f) and any dividends or distributions payable
pursuant to Section 1.8(d), and the Certificates so surrendered shall
forthwith be canceled. Until so surrendered, outstanding Certificates will
be deemed from and after the Effective Time, for all corporate purposes,
subject to Section 1.8(d) as to the payment of dividends, to evidence the
ownership of the number of full shares of HP Common Stock into which such
shares of VFI 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(f) and any dividends or distributions payable
pursuant to Section 1.8(d).
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the date of this
Agreement with respect to HP Common Stock with a record date after the
Effective Time will be paid to the holders of any unsurrendered Certificates
with respect to the shares of HP Common Stock represented thereby until the
holders of record of such Certificates shall surrender such Certificates.
Subject to applicable law, following surrender of any such Certificates, the
Exchange Agent shall deliver to the record holders thereof, without interest,
certificates representing whole shares of HP Common Stock issued in exchange
therefor along with payment in lieu of fractional shares pursuant to Section
1.6(f) hereof and the amount of any such dividends or other distributions
with a record date after the Effective Time payable with respect to such
whole shares of HP Common Stock.
(e) TRANSFERS OF OWNERSHIP. If certificates representing shares
of HP Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will
be properly endorsed and otherwise
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in proper form for transfer and that the persons requesting such exchange
will have paid to HP or any agent designated by it any transfer or other
taxes required by reason of the issuance of certificates representing shares
of HP Common Stock in any name other than that of the registered holder of
the Certificates surrendered, or established to the satisfaction of HP 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 1.8, neither the Exchange Agent, HP, the Surviving Corporation
nor any party hereto shall be liable to a holder of shares of HP Common Stock
or VFI Common Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
1.9 NO FURTHER OWNERSHIP RIGHTS IN VFI COMMON STOCK. All shares of HP
Common Stock issued in accordance with the terms hereof (including any cash
paid in respect thereof pursuant to Section 1.6(f) and 1.8(d)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to
such shares of VFI Common Stock, and there shall be no further registration
of transfers on the records of the Surviving Corporation of shares of VFI
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.
1.10 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, certificates
representing the shares of HP Common Stock into which the shares of VFI
Common Stock represented by such Certificates were converted pursuant to
Section 1.6, cash for fractional shares, if any, as may be required pursuant
to Section 1.6(f) and any dividends or distributions payable pursuant to
Section 1.8(d); PROVIDED, HOWEVER, that HP may, in its discretion and as a
condition precedent to the issuance of such certificates representing shares
of HP Common Stock, 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 HP, the Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
1.11 TAX AND ACCOUNTING CONSEQUENCES.
(a) It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368 of the Code.
The parties hereto adopt this Agreement as a "plan of reorganization" within
the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Income
Tax Regulations.
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(b) It is intended by the parties hereto that the Merger shall
qualify for accounting treatment as a pooling of interests.
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 VFI and Merger Sub, the officers and directors of
VFI and Merger Sub will take all such lawful and necessary action. HP shall
cause Merger Sub to perform all of its obligations relating to this Agreement
and the transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF VFI
VFI represents and warrants to HP and Merger Sub, subject to the
exceptions disclosed in writing in the disclosure letter supplied by VFI to
HP dated as of the date hereof (the "VFI SCHEDULES"), as follows:
2.1 ORGANIZATION OF VFI.
(a) VFI and each of its subsidiaries is a corporation or other
legal entity duly organized, validly existing and in good standing (with
respect to jurisdictions which recognize such concept) under the laws of the
jurisdiction in which it is organized; has the corporate or other similar
power and authority to own, lease and operate its assets and property and to
carry on its business as now being conducted; and is duly qualified or
licensed to do business and is in good standing (with respect to
jurisdictions which recognize such concept) in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except where
the failure to be so qualified would not have a Material Adverse Effect (as
defined below) on VFI.
(b) VFI has delivered to HP a true and complete list of all of
VFI's subsidiaries as of the date of this Agreement, indicating the
jurisdiction of organization of each subsidiary and VFI's equity interest
therein.
(c) VFI has delivered or made available to HP a true and correct
copy of the Certificate of Incorporation and Bylaws of VFI and similar
governing instruments of each of its subsidiaries, each as amended to date,
and each such instrument is in full force and effect. Neither VFI nor any of
its subsidiaries is in violation of any of the provisions of its Certificate
of Incorporation or Bylaws or equivalent governing instruments.
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(d) When used in connection with VFI, the term "MATERIAL ADVERSE
EFFECT" means, for purposes of this Agreement, any change, event or effect
that is materially adverse to the business, assets (including intangible
assets), financial condition or results of operations of VFI and its
subsidiaries taken as a whole; PROVIDED, HOWEVER, that (i) any adverse
change, event or effect that is proximately caused by conditions affecting
the United States economy generally or the economy of any nation or region in
which VFI or any of its subsidiaries conducts a material amount of business
shall not be taken into account in determining whether there has been or
would be a "Material Adverse Effect" on or with respect to VFI (unless such
conditions adversely affect VFI in a materially disproportionate manner),
(ii) any adverse change, event or effect that is proximately caused by
conditions affecting any industry in which VFI competes shall not be taken
into account in determining whether there has been or would be a "Material
Adverse Effect" on or with respect to VFI (unless such conditions adversely
affect VFI in a materially disproportionate manner), (iii) any adverse
change, event or effect that is proximately caused by the announcement or
pendency of the Merger shall not be taken into account in determining whether
there has been or would be a "Material Adverse Effect" on or with respect to
VFI, and (iv) any adverse change, event or effect that is proximately caused
by any breach by HP of any covenant or obligation set forth in this Agreement
shall not be taken into account in determining whether there has been or
would be a "Material Adverse Effect" on or with respect to VFI; and, PROVIDED
FURTHER, that with respect to any dispute regarding whether a change, event
or effect is "proximately caused" by any of the foregoing, VFI shall have the
burden of proof by a preponderance of the evidence.
2.2 VFI CAPITAL STRUCTURE. The authorized capital stock of VFI
consists of 50,000,000 shares of Common Stock, $.01 par value per share, of
which there were 23,305,172 shares issued and outstanding as of April 21,
1997 (excluding shares held in treasury of which there are 1,954,453), and
2,000,000 shares of Preferred Stock, $.01 par value per share, of which no
shares are issued or outstanding. All outstanding shares of VFI Common Stock
are duly authorized, validly issued, fully paid and nonassessable and are not
subject to preemptive rights created by statute, the Certificate of
Incorporation or Bylaws of VFI or any agreement or document to which VFI is a
party or by which it is bound. As of April 21, 1997, there were options
outstanding to purchase an aggregate of 3,316,265 shares of VFI Common Stock,
issued to employees, consultants and non-employee directors pursuant to the
VFI Stock Option Plans. All shares of VFI Common Stock subject to issuance
as aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, would be duly authorized,
validly issued, fully paid and nonassessable. The VFI Schedules list for each
person who held options to acquire shares of VFI Common Stock as of April 21,
1997, the name of the holder of such option, the exercise price of such
option, the number of shares as to which such option had vested at such date,
the vesting schedule for such option and whether the
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exercisability of such option will be accelerated in any way by the
transactions contemplated by this Agreement, and indicates the extent of
acceleration, if any.
2.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth in
Section 2.2 and except for VFI Common Stock issued between April 21, 1997 and
the date of this Agreement upon exercise of stock options outstanding on
April 21, 1997, as of the date of this Agreement there are no equity
securities, partnership interests or similar ownership interests of any class
of VFI, or any securities exchangeable or convertible into or exercisable for
such equity securities, partnership interests or similar ownership interests,
issued, reserved for issuance or outstanding. Except for securities VFI
owns, directly or indirectly through one or more subsidiaries, and except for
shares of capital stock or other similar ownership interests of certain
subsidiaries of VFI that are owned by certain nominee equity holders as
required by the applicable law of the jurisdiction of organization of such
subsidiaries, as of the date of this Agreement, there are no equity
securities, partnership interests or similar ownership interests of any class
of any subsidiary of VFI, or any security exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. Except as
set forth in Section 2.2 and except for VFI Common Stock issued between April
21, 1997 and the date of this Agreement upon exercise of stock options
outstanding on April 21, 1997, as of the date of this Agreement there are no
options, warrants, equity securities, partnership interests or similar
ownership interests, calls, rights (including preemptive rights), commitments
or agreements of any character to which VFI or any of its subsidiaries is a
party or by which it is bound obligating VFI or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, or
repurchase, redeem or otherwise acquire, or cause the repurchase, redemption
or acquisition of, any shares of capital stock, partnership interests or
similar ownership interests of VFI or any of its subsidiaries or obligating
VFI or any of its subsidiaries to grant, extend, accelerate the vesting of or
enter into any such option, warrant, equity security, call, right, commitment
or agreement. As of the date of this Agreement, except as contemplated by
this Agreement, there are no registration rights and, to the knowledge of
VFI, there are no voting trusts, proxies or other agreements or
understandings to which VFI is a party or by which it is bound with respect
to any equity security of any class of VFI or with respect to any equity
security, partnership interest or similar ownership interest of any class of
any of its subsidiaries. Assuming that HP Common Stock continues to be
listed on a national securities exchange, stockholders of VFI are not
entitled to dissenters rights under applicable state law.
2.4 AUTHORITY.
(a) VFI has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby.
The
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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 VFI, subject only to the approval and
adoption of this Agreement and the approval of the Merger by VFI's
stockholders and the filing of the Certificate of Merger pursuant to Delaware
Law. A vote of the holders of at least a majority of the outstanding shares
of the VFI Common Stock is required for VFI's stockholders to approve and
adopt this Agreement and approve the Merger. This Agreement has been duly
executed and delivered by VFI and, assuming the due authorization, execution
and delivery by HP and, if applicable, Merger Sub, constitutes valid and
binding obligations of VFI, enforceable against VFI in accordance with its
terms, except as enforceability may be limited by bankruptcy and other
similar laws and general principles of equity. The execution and delivery of
this Agreement by VFI do not, and the performance of this Agreement by VFI
will not, (i) conflict with or violate the Certificate of Incorporation or
Bylaws of VFI or the equivalent organizational documents of any of its
subsidiaries, (ii) subject to obtaining the approval and adoption of this
Agreement and the approval of the Merger by VFI's stockholders as
contemplated in Section 5.2 and compliance with the requirements set forth in
Section 2.4(b) below, conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to VFI or any of its subsidiaries or by
which VFI or any of its subsidiaries or any of their respective properties is
bound or affected which conflict or violation would result, in VFI's
reasonable judgment, in a loss of material benefits to or any material
liability to VFI, HP or the Surviving Corporation, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or impair VFI's rights or alter
the rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or encumbrance on any of the properties or assets
of VFI or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which VFI or any of its subsidiaries is a party
or by which VFI or any of its subsidiaries or its or any of their respective
properties are bound or affected which would result, in VFI's reasonable
judgment, in a loss of material benefits to or any material liability to VFI,
HP or the Surviving Corporation. The VFI Schedules list all consents,
waivers and approvals under any of VFI's or any of its subsidiaries'
agreements, contracts, licenses or leases required to be obtained in
connection with the consummation of the transactions contemplated hereby,
which, if individually or in the aggregate not obtained, would result, in
VFI's reasonable judgment, in a loss of material benefits to or any material
liability to VFI, HP or the Surviving Corporation as a result of the Merger.
(b) 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, foreign or
domestic
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("GOVERNMENTAL ENTITY"), is required to be obtained or made by VFI in
connection with the execution and delivery of this Agreement or the
consummation of the Merger, except for (i) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware, (ii) the filing
of the Proxy Statement (as defined in Section 2.19) with the Securities and
Exchange Commission ("SEC") in accordance with the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), (iii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal, foreign and state securities (or related)
laws and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
(the "HSR ACT"), and the securities or antitrust laws of any foreign country,
and (iv) such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not be material to VFI or
HP or have a material adverse effect on the ability of the parties to
consummate the Merger.
2.5 SEC FILINGS; VFI FINANCIAL STATEMENTS.
(a) VFI has filed all forms, reports and documents required to be
filed by VFI with the SEC since January 1, 1996 and has made available to HP
such forms, reports and documents in the form filed with the SEC. All such
required forms, reports and documents (including those that VFI may file
subsequent to the date hereof) are referred to herein as the "VFI SEC
REPORTS." As of their respective dates, the VFI SEC Reports (i) were prepared
in accordance with and complied with the requirements of the Securities Act
of 1933, as amended (the "SECURITIES ACT"), or the Exchange Act, as the case
may be, and the rules and regulations of the SEC thereunder applicable to
such VFI SEC Reports and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. None of VFI's subsidiaries is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the VFI SEC Reports (the
"VFI FINANCIALS"), including any VFI SEC Reports filed after the date hereof
until the Closing, (x) complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, (y) was
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved (except as may
be indicated in the notes thereto or, in the case of unaudited interim
financial statements, as may be permitted by the SEC on Form 10-Q under the
Exchange Act) and (z) fairly presented the consolidated financial position of
VFI and its subsidiaries as at the respective dates thereof and the
consolidated results of VFI's operations and cash flows for the periods
indicated,
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except that the unaudited interim financial statements may not contain
footnotes. The balance sheet of VFI contained in VFI SEC Reports as of
December 31, 1996 is hereinafter referred to as the "VFI BALANCE SHEET."
Except as disclosed in the VFI Financials or in the consolidated unaudited
balance sheet of VFI as of March 31, 1997 previously delivered to HP, since
the date of the VFI Balance Sheet neither VFI nor any of its subsidiaries has
any liabilities (absolute, accrued, contingent or otherwise) of a nature
required to be disclosed on a balance sheet or in the related notes to the
consolidated financial statements prepared in accordance with GAAP which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of VFI and its subsidiaries taken as a
whole, except for (i) liabilities identified in the VFI Balance Sheet, (ii)
liabilities incurred since the date of the VFI Balance Sheet in the ordinary
course of business consistent with past practices, or (iii) liabilities
which, in any individual case or series of related cases, would not result,
in VFI's reasonable judgment, in a loss of material benefits to or any
material liability to VFI.
(c) VFI has heretofore furnished to HP a complete and correct copy
of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by VFI with the SEC pursuant to
the Securities Act or the Exchange Act.
(d) The financial statements of VFI for the fiscal quarter ended
March 31, 1997, previously delivered to HP and a copy of which is contained
in the VFI Schedules (the "MARCH FINANCIALS"), were prepared in accordance
with GAAP (except as may be permitted by the SEC on Form 10-Q under the
Exchange Act and except that the March Financials do not contain footnotes)
applied on a consistent basis throughout the periods involved and with VFI's
1996 annual financial statements previously filed with the SEC. The March
Financials fairly presented the consolidated financial position of VFI and
its subsidiaries as at March 31, 1997 and the consolidated results of VFI's
operations and cash flows for the periods indicated in accordance with GAAP.
The financial statements to be included in the Form 10-Q to be filed by VFI
with the SEC with respect to the fiscal quarter ended March 31, 1997 will be,
in form and substance, substantially identical to the March Financials.
2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. From the date of the VFI
Balance Sheet and until the date hereof there has not been: (i) any Material
Adverse Effect on VFI, (ii) any material change by VFI in its accounting
methods, principles or practices, except as required by concurrent changes in
GAAP, or (iii) any material revaluation by VFI of any of its assets,
including, without limitation, writing down the value of capitalized
inventory or writing off notes or accounts receivable other than in the
ordinary course of business.
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2.7 TAXES.
(a) DEFINITION OF TAXES. For the purposes of this Agreement,
"TAX" or "TAXES" refers to any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties, impositions and
liabilities relating to taxes, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added,
ad valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts and any obligations under any
agreements or arrangements with any other person with respect to such amounts
and including any liability for taxes of a predecessor entity.
(b) TAX RETURNS AND AUDITS.
(i) VFI and each of its subsidiaries have timely filed
all federal, state, local and foreign returns, estimates, information
statements and reports ("RETURNS") relating to Taxes required to be filed by
VFI and each of its subsidiaries with any Tax authority, except such Returns
which are not material to VFI, and have paid all Taxes shown to be due on
such Returns.
(ii) VFI and each of its subsidiaries as of the Effective
Time will have withheld with respect to its employees all federal and state
income taxes, the Federal Insurance Contribution Act ("FICA"), the Federal
Unemployment Tax Act ("FUTA") and other Taxes required to be withheld.
(iii) There is no Tax deficiency outstanding, proposed or
assessed against VFI or any of its subsidiaries, nor has VFI or any of its
subsidiaries executed any unexpired waiver of any statute of limitations on
or extending the period for the assessment or collection of any Tax.
(iv) No audit or other examination of any Return of VFI
or any of its subsidiaries by any Tax authority is in progress, nor has VFI
or any of its subsidiaries been notified in writing of any request for such
an audit or other examination.
(v) No adjustment relating to any Returns filed by VFI
or any of its subsidiaries has been proposed in writing formally or
informally by any Tax authority to VFI or any of its subsidiaries or any
representative thereof.
(vi) Neither VFI nor any of its subsidiaries has any
liability for unpaid Taxes which has not been accrued for or reserved on the
VFI Balance
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Sheet, whether asserted or unasserted, contingent or otherwise, which in any
individual case or series of related cases, would result, in VFI's reasonable
judgment, in a loss of material benefits to or any material liability to VFI
other than any liability for unpaid Taxes that may have accrued since the
date of the VFI Balance Sheet in connection with the operation of the
business of VFI and its subsidiaries in the ordinary course.
(vii) There is no contract, agreement, plan or arrangement
to which VFI is a party as of the date of this Agreement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of VFI or any of its subsidiaries that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code.
(viii) Neither VFI nor any of its subsidiaries has filed
any consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f)
asset (as defined in Section 341(f)(4) of the Code) owned by VFI.
(ix) Neither VFI nor any of its subsidiaries is party to
or has any obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement, except as required by applicable law.
(x) Except as may be required as a result of the Merger,
VFI and its subsidiaries have not been and will not be required to include
any adjustment in Taxable income for any Tax period (or portion thereof)
pursuant to Section 481 or Section 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 Closing.
(xi) None of VFI's or its subsidiaries' assets is tax
exempt use property within the meaning of Section 168(h) of the Code.
(xii) The VFI Schedules list (A) any foreign Tax holidays,
(B) any intercompany transfer pricing agreements, or other arrangements that
have been established by VFI or any of its subsidiaries with any Tax
authority and (C) any expatriate programs or policies affecting VFI or any of
its subsidiaries as of the date of this Agreement.
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2.8 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
(a) The VFI Schedules list the real property owned by VFI as of
the date of this Agreement. The VFI Schedules list all real property being
leased as of the date of this Agreement. All such real property is being
leased pursuant to lease agreements that are in full force and effect, are
valid and effective in accordance with their respective terms, and there is
not, under any of such leases, any existing default or event of default (or
event which with notice or lapse of time, or both, would constitute a
default) that would, in VFI's reasonable judgment, give rise to a claim in an
amount greater than $1 million.
(b) VFI has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any liens, pledges, charges, claims, security
interests or other encumbrances of any sort ("LIENS"), except as reflected in
the VFI Financials and except for liens for taxes not yet due and payable and
such Liens or other imperfections of title and encumbrances, if any, which
are not material in character, amount or extent, and which do not materially
detract from the value, or materially interfere with the present use, of the
property subject thereto or affected thereby.
2.9 INTELLECTUAL PROPERTY. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and
all rights therein: (i) all United States, international and foreign patents
and applications (including provisional applications) therefor that have not
been abandoned or withdrawn; (ii) all inventions (whether patentable or not),
invention disclosures, trade secrets, proprietary information, know how,
technology, technical data and customer lists, and all documentation relating
to any of the foregoing, and all improvements thereto; (iii) all copyrights,
registered copyrights and applications therefor, and moral or equivalent
rights, throughout the world; (iv) all industrial designs registered
industrial designs and applications therefor throughout the world; (v) all
trade names, logos, common law trademarks and service marks, registered
trademarks and service marks and applications therefor that have not been
abandoned or withdrawn, throughout the world; and (vi) all databases and data
collections and all rights therein, throughout the world.
"VFI INTELLECTUAL PROPERTY" shall mean any Intellectual Property
that is owned by, or filed in the name of, VFI or any of its subsidiaries.
"VFI PRODUCT" shall mean any hardware or software product that is
distributed by or for VFI, either directly or indirectly, or any software
tool used by
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VFI in the performance of any services provided to VFI's customers, as
of the date hereof.
"VFI REGISTERED INTELLECTUAL PROPERTY" shall mean any Registered
Intellectual Property owned by, or filed in the name of, VFI or any of its
subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" shall mean all United States,
international and foreign: (i) patents and patent applications (including
provisional applications) that have not been abandoned or withdrawn; (ii)
registered trademarks and service marks and applications therefor that have
not been abandoned or withdrawn; (iii) registered copyrights and applications
therefor; and (iv) registered industrial designs and applications therefor.
(a) Section 2.9 of the VFI Schedules lists all VFI Registered
Intellectual Property as of the date hereof; and all patent applications
filed by or in the name of VFI or any of its subsidiaries that have been
abandoned or withdrawn and trademark and service ▇▇▇▇ registration
applications filed by or in the name of VFI or any of its subsidiaries that
have been abandoned or withdrawn, in each case since January 1, 1996.
(b) Section 2.9 of the VFI Schedules lists each proceeding or
action pending (including any mediation) as of the date hereof and to which
VFI or any of its subsidiaries is a party before any court or tribunal
(including the United States Patent and Trademark Office ("PTO"), or
equivalent authority anywhere in the world) related to any VFI Registered
Intellectual Property.
(c) There is no VFI Intellectual Property or VFI Registered
Intellectual Property that is subject to any proceeding or outstanding
decree, order, judgment, agreement entered pursuant to an order of a court,
tribunal or equivalent authority anywhere in the world, or stipulation in
connection with any proceeding materially restricting in any manner the use,
transfer, or licensing thereof by VFI, or that would be likely to materially
and adversely affect the validity, use or enforceability of any VFI
Intellectual Property or VFI Registered Intellectual Property. VFI is not a
party to any proceeding or outstanding decree, order, judgment, agreement
entered pursuant to an order of a court, tribunal or equivalent authority
anywhere in the world, or stipulation in connection with any proceeding
materially restricting in any manner the use, transfer, or licensing by VFI
of any Intellectual Property of any third party that is incorporated into a
necessary component of any VFI Product.
(d) Each item of VFI Registered Intellectual Property is
subsisting; all necessary registration, maintenance and renewal fees due as
of the date hereof in connection with such VFI Registered Intellectual
Property have been paid and all
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documents and certificates required to be filed with a patent, copyright,
trademark or other governmental authority in the United States or any foreign
jurisdiction for the purposes of maintaining such VFI Registered Intellectual
Property have been filed with such authority, except where the failure to pay
any fees or file any such documents would not result, in VFI's reasonable
judgment, in a loss of material benefits to or any material liability to VFI,
or upon the Closing, to HP or the Surviving Corporation.
(e) VFI: (i) owns and has good title to, or has all necessary
licenses (either express or implied) under or to, each item of Intellectual
Property that is incorporated into a necessary component of any VFI Product,
including all VFI Registered Intellectual Property, but excluding any
Intellectual Property incorporated into a necessary component of any VFI
Product that has been developed or created by a third party for VFI, free and
clear of any Lien (other than (A) licenses and related restrictions, (B) any
Lien reflected in the VFI Financials, and (C) any Lien not material in
character, amount or extent; and which Liens do not result, in VFI's
reasonable judgment, in a loss of material benefits to or any material
liability to VFI); (ii) owns and has good and exclusive title to, or has all
necessary licenses (either express or implied) under or to, each item of
Intellectual Property that is incorporated into a necessary component of the
VFI Products specified in Section 2.9 of the VFI Schedules, including all VFI
Registered Intellectual Property, but excluding any Intellectual Property
incorporated into a necessary component of any such VFI Products that has
been developed or created by a third party for VFI, free and clear of any
Lien (other than (A) licenses and related restrictions, (B) any Lien
reflected in the VFI Financials, and (C) any Lien not material in character,
amount or extent; and which Liens do not result, in VFI's reasonable
judgment, in a loss of material benefits to or any material liability to
VFI), excluding any custom development work of VFI Products performed by VFI
or any of its subsidiaries for any third party or, to the extent that failure
to so own, have such title or license would have a Material Adverse Effect on
VFI; and (iii) owns and has good title to, or has a license to each trademark
and trade name used in connection with the distribution of any VFI Products.
(f) To the extent that any Intellectual Property incorporated into
a necessary component of any VFI Products has been developed or created by a
third party for VFI, VFI either (i) has obtained ownership of, free and clear
of any Lien (other than (A) licenses and related restrictions, (B) any Lien
reflected in the VFI Financials, and (C) any Lien not material in character,
amount or extent; and which Liens do not materially detract from the current
manner of manufacture, use or distribution of such VFI Products that include
such Intellectual Property), or (ii) has obtained a license under or to such
third party's Intellectual Property, to the extent it is legally possible to
do so; except to the extent that the failure to do so does not result, in
VFI's reasonable judgment, in a loss of material benefits to or any material
liability to VFI.
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(g) Between January 1, 1996 and the date hereof, VFI has not
transferred ownership of, or granted any exclusive license with respect to,
any VFI Intellectual Property owned by VFI or any of its subsidiaries at the
time of its development or any VFI Registered Intellectual Property, to any
third party; except to the extent such Intellectual Property pertains to
custom development work of VFI Products performed by VFI or any of its
subsidiaries for any third party or if such transfer or grant would not
result, in VFI's reasonable judgment, in a loss of material benefits to or
any material liability to VFI.
(h) Section 2.9 of the VFI Schedules lists all material contracts,
licenses and other agreements to which VFI is a party as of the date hereof
(i) with respect to VFI Intellectual Property licensed or transferred by VFI
or any of its subsidiaries to any third party (other than (A) those with
end-users entered into in the ordinary course of business, (B) those with
distributors or resellers entered into in the ordinary course of business,
(C) those entered into in connection with the sale or lease of hardware
products and associated software entered into in the ordinary course of
business, (D) those relating to the performance of services by VFI in the
ordinary course of business, and (E) those entered into in the ordinary
course of business on terms that do not materially deviate from VFI's
standard terms previously disclosed to HP); or (ii) pursuant to which a third
party is licensing or transferring any Intellectual Property to VFI or any of
its subsidiaries that is incorporated into a necessary component of a VFI
Product (other than (A) those entered into in connection with the custom
development work of VFI Products performed by VFI or any of its subsidiaries
for any third party, (B) those that pertain to mass-marketed products
commercially available to similarly situated businesses, (C) those that
pertain to publicly available protocols or specifications that are used in
the development of VFI Products, and (D) those entered into in the ordinary
course of business on terms that do not materially deviate from VFI's
standard terms previously disclosed to HP.)
(i) Following the Closing Date, the Surviving Corporation will be
permitted to exercise all of VFI's rights under the contracts, licenses and
agreements required to be listed in Section 2.9 of the VFI Schedules to the
same extent VFI would have been permitted to exercise such rights had the
transactions contemplated by this Agreement not occurred and without the
payment of any material additional amounts or consideration other than
ongoing fees, royalties or payments which VFI would have been required to pay
had the transactions contemplated by this Agreement not occurred; except to
the extent that any contract, license, agreement or activity of HP or the
Surviving Corporation (entered into or taken by the Surviving Corporation
after the Closing) affects the exercise of such rights or the payment of such
amounts.
(j) Section 2.9 of the VFI Schedules lists or specifically refers
to all material contracts, licenses and agreements to which VFI or any of its
subsidiaries is a party as of the date hereof and wherein or whereby VFI or
any of its subsidiaries
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has agreed to, or assumed, any material obligation or duty to warrant,
indemnify, hold harmless or otherwise assume or incur any material obligation
or liability with respect to the infringement or misappropriation by VFI or
such third party of the Intellectual Property of any third party (other than
(A) those with end-users entered into in the ordinary course of business, (B)
those with distributors or resellers entered into in the ordinary course of
business, (C) those entered into in connection with the sale or lease of
hardware products and associated software entered into in the ordinary course
of business, (D) those relating to the performance of services by VFI in the
ordinary course of business, and (E) those entered into in the ordinary
course of business on terms that do not materially deviate from VFI's
standard terms previously disclosed to HP).
(k) The operation of the business of VFI as such business is
currently being operated with respect to VFI Products (including VFI's
design, development, manufacture, marketing and sale of VFI Products) is not
infringing or misappropriating the Intellectual Property of any third party
(provided that with respect to patent rights, such representation is limited
to VFI's knowledge) to the extent that such infringement or misappropriation
will result, in VFI's reasonable judgment, in a loss of material benefits to
or any material liability to VFI.
(l) Since January 1, 1993, VFI has not received written notice
from any third party that any VFI Product infringes or misappropriates the
Intellectual Property of any third party to the extent that such infringement
or misappropriation will result, in VFI's reasonable judgment, in a loss of
material benefits to or any material liability to VFI.
(m) To the knowledge of VFI, no person is infringing or
misappropriating any VFI Intellectual Property that would result, in VFI's
reasonable judgment, in a loss of material benefits to or any material
liability to VFI.
(n) VFI has taken reasonable steps to protect VFI's rights in
VFI's confidential information and trade secrets that it wishes to protect or
any trade secrets or confidential information of third parties provided to
VFI. Without limiting the foregoing, VFI makes reasonable and customary
efforts to implement a policy requiring each employee and contractor to
execute a proprietary information/confidentiality agreement in VFI's standard
form (as may have been changed over time).
-20-
2.10 COMPLIANCE; PERMITS; RESTRICTIONS.
(a) Neither VFI nor any of its subsidiaries is, in any material
respect, in conflict with, or in default or in violation of any law, rule,
regulation, order, judgment or decree applicable to VFI or any of its
subsidiaries or by which VFI or any of its subsidiaries or any of their
respective properties is bound or affected, except for conflicts, violations
and defaults that individually would not cause, in VFI's reasonable judgment,
VFI to lose benefits aggregating to $1 million or more, or to incur
liabilities aggregating to $1 million or more. No investigation or review by
any Governmental Entity is pending or, to the knowledge of VFI, has since
January 1, 1993, been threatened in a writing delivered to VFI against VFI or
any of its subsidiaries, nor, to VFI's knowledge, has any Governmental Entity
indicated an intention in a writing delivered to VFI to conduct an
investigation of VFI or any of its subsidiaries. There is no material
judgment, injunction, order or decree binding upon VFI or any of its
subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of VFI or any of
its subsidiaries, any acquisition of material property by VFI or any of its
subsidiaries or the conduct of business by VFI as currently conducted.
(b) VFI and its subsidiaries hold, to the extent legally required,
all permits, licenses, variances, exemptions, orders and approvals from a
Governmental Entity that are material to and required for the operation of
the business of VFI as currently conducted (collectively, the "VFI PERMITS"),
other than such VFI Permits, which if not held, would not result, in VFI's
reasonable judgment, in a loss of material benefit to or any material
liability to VFI. VFI and its subsidiaries are in compliance in all material
respects with the terms of the VFI Permits, except where the failure to be in
compliance with the terms of the VFI Permits would not result, in VFI's
reasonable judgment, in a loss of material benefit to or any material
liability to VFI.
2.11 LITIGATION. There is no action, suit, proceeding, arbitration or
investigation by a Governmental Entity pending, and to VFI's knowledge, no
person in a writing delivered to VFI since January 1, 1993 has threatened to
commence any action, suit, proceeding, arbitration or investigation against
VFI or any of its subsidiaries or to allege a claim which, in any individual
case or series of related cases, would result, in VFI's reasonable judgment,
in a loss of material benefit to or any material liability to VFI. No
Governmental Entity has at any time since January 1, 1996 challenged or
questioned in a writing delivered to VFI the legal right of VFI to
manufacture, offer or sell any of its products in the present manner or style
thereof.
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2.12 BROKERS' AND FINDERS' FEES. Except for fees payable to Deutsche
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. pursuant to an engagement letter dated March 4, 1997, a
copy of which has been provided to HP, VFI has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
2.13 EMPLOYEE BENEFIT PLANS.
(a) The VFI Schedules contain an accurate and complete list of each
plan, program, policy, contract, or agreement in effect as of the date of
this Agreement providing for compensation, severance, termination pay,
performance awards, stock or stock-related awards, fringe benefits or other
employee benefits of any kind, whether formal or informal, written or
otherwise, funded or unfunded and whether or not legally binding, including
without limitation, each "employee benefit plan" within the meaning of
Section 3(3) of ERISA, which is being maintained or contributed to by VFI or
any trade or business which is under common control with VFI within the
meaning of Section 414 of the Code (an "AFFILIATE") (or which has been
maintained or contributed to and under which VFI has, as of the date of this
Agreement, material obligations under) for the benefit of any current,
former, or retired employee, officer, or director of VFI or any Affiliate
(the "VFI EMPLOYEE PLANS"). As of the date of this Agreement, VFI does not
have any plan, commitment or intention, whether legally binding or not, to
establish any new VFI Employee Plan, to materially modify any VFI Employee
Plan (except to the extent required by law or to conform any such VFI
Employee Plan to the requirements of any applicable law, in each case as
previously disclosed to HP in writing, or as required by this Agreement), or
to enter into any VFI Employee Plan.
(b) VFI has provided or made available to HP (i) correct and complete
copies of all documents embodying each VFI Employee Plan including all
amendments thereto; (ii) the most recent annual actuarial valuations, if any,
prepared for each VFI Employee Plan; (iii) the three most recent annual
reports (Series 5500 and all schedules thereto), if any, required under ERISA
or the Code in connection with each VFI Employee Plan or related trust; (iv)
if the VFI Employee Plan is funded, the most recent annual and periodic
accounting of VFI Employee Plan assets; (v) the most recent summary plan
description together with the most recent summary of material modifications,
if any, required under ERISA with respect to each VFI Employee Plan; (vi) all
IRS determination letters and rulings issued to VFI relating to VFI Employee
Plans; (vii) all material agreements and contracts relating to each VFI
Employee Plan, including but not limited to, administration service
agreements, group annuity contracts and group insurance contracts; (viii) all
material communications from VFI to any Employees relating to any amendments,
terminations, establishments, increases or decreases in benefits,
acceleration of
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payments or vesting schedules or other events with respect to any VFI
Employee Plan which would result in any material liability to VFI; and (ix)
all registration statements and the most recent prospectuses prepared in
connection with each VFI Employee Plan.
(c) (i) VFI has performed in all respects all obligations required to
be performed by it under, is not in default or violation of, and has no
knowledge of any default or violation by any other party to each VFI Employee
Plan, except for any such nonperformance, default or violation, which in any
individual case or series of related cases, would not result, in VFI's
reasonable judgment, in a loss of material benefits to or any material
liability to VFI and each VFI Employee Plan has been established and
maintained in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations (including any applicable
exemptions thereto), including but not limited to ERISA or the Code; except
in any individual case or series of related cases, as would not result, in
VFI's reasonable judgment, in a loss of material benefits to or any material
liability to VFI; (ii) each VFI Employee Plan intended to qualify under
Section 401(a) of the Code and each trust intended to qualify under Section
501(a) of the Code has either received a favorable determination letter with
respect to each such VFI Employee Plan from the IRS or has remaining a period
of time under applicable Treasury regulations or IRS pronouncements in which
to apply for such a determination letter and make any amendments necessary to
obtain a favorable determination, and nothing has occurred since the date of
such letter that could reasonably be expected to affect the qualified status
of such plan; (iii) no "prohibited transaction", within the meaning of
Section 4975 of the Code or Sections 406 or 407 of ERISA, and not otherwise
exempt under Section 408 of ERISA, or Section 4975 of the Code has occurred
with respect to any VFI Employee Plan; (iv) there are no actions, suits or
administrative proceedings pending and to the knowledge of VFI, no person has
since January 1, 1993 threatened in a writing delivered to VFI to commence an
action or suit against any VFI Employee Plan or against the assets of any VFI
Employee Plan, except in any individual case or series of related cases, as
would not result, in VFI's reasonable judgment, in a loss of material
benefits to or any material liability to VFI; and (v) each VFI Employee Plan
can be amended, terminated or otherwise discontinued after the Effective Time
in accordance with its terms, without liability to VFI, HP or any Affiliate
(other than liabilities that may arise in accordance with the terms of such
VFI Employee Plan, including ordinary administration expenses typically
incurred in a termination event); (vi) there are no material inquiries or
proceedings pending against VFI, and, to the knowledge of VFI or any
Affiliate, neither the IRS nor the Department of Labor ("DOL") has since
January 1, 1993 threatened in a writing delivered to VFI to commence an
inquiry or proceeding against VFI with respect to any VFI Employee Plan; and
(vii) neither VFI nor any Affiliate is subject to any penalty or tax in
excess of $1 million with respect to any VFI Employee Plan under Section
402(1) of ERISA or Section 4975 through 4980 of the Code.
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(d) VFI does not now, nor has it ever, maintained, established,
sponsored, participated in, or contributed to, any pension plan which is
subject to Title IV of ERISA or Section 412 of the Code.
(e) At no time has VFI contributed to or been requested to contribute
to any "multi-employer plan," as defined in Section 3(37) of ERISA.
(f) No VFI Employee Plan provides, or has any liability to provide,
life insurance or medical or other employee welfare benefits to any employee
upon his or her retirement or termination of employment for any reason,
except as may be required by the Consolidated Omnibus Budget Reconciliation
Act of 1985 ("COBRA") or other applicable statute, and VFI has never
represented, promised or contracted (whether in oral or written form) to any
employee (either individually or to employees as a group) that such
employee(s) would be provided with life insurance or medical or other
employee welfare benefits upon their retirement or termination of employment,
except to the extent required by statute.
(g) Neither VFI nor any Affiliate has, prior to the Effective Time and
in any material respect, violated any of the health care continuation
requirements of COBRA or any similar provisions of state law applicable to
its employees.
(h) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not constitute an event under any VFI
Employee Plan, trust or loan that will or may result in any payment (whether
of severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits
with respect to any current, former or retired employee of VFI, except to the
extent required by statute.
(i) No payment or benefit which will or may be made (i) by VFI or its
affiliates, or (ii) (x) pursuant to or as a result of any agreement or
understanding in place as of the date of this Agreement or (y) to VFI's
knowledge as of the date hereof HP or any of its affiliates, with respect to
any Employee as a result of the transactions contemplated by this Agreement
will be characterized as an "excess parachute payment," within the meaning of
Section 280G(b)(1) of the Code.
2.14 EMPLOYEES; LABOR MATTERS. Between January 1, 1996 and the date of
this Agreement, to VFI's knowledge based on written notice from a former
employer of a VFI employee, no employee of VFI has violated any employment
contract, patent disclosure agreement or non competition agreement between
such employee and any former employer of such employee due to such employee
being employed by VFI and disclosing to VFI trade secrets or proprietary
information of such employer. To VFI's knowledge, there are no activities or
proceedings of any labor union to organize any employees of VFI or any of its
subsidiaries and there are no strikes, or material
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slowdowns, work stoppages or lockouts, or threats thereof by or with respect
to any employees of VFI or any of its subsidiaries. VFI is not, and has
never been, a party to any collective bargaining agreement. VFI and its
subsidiaries are, and since January 1, 1996, VFI and its subsidiaries have
been in compliance in all material respects with all applicable laws
regarding employment practices, terms and conditions of employment, and wages
and hours (including, without limitation, ERISA, WARN or any similar state or
local law), except for any noncompliance which, in any individual case or
series of related cases, would not result, in VFI's reasonable judgment, in a
loss of material benefits to or any material liability to VFI.
2.15 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIAL. Except as reasonably would not result, in
any individual case or series of related cases, in VFI's reasonable judgment,
in a loss of material benefit to or any material liability to VFI, no
underground storage tanks and no amount of any substance that has been
designated by any Governmental Entity or by applicable federal, state or
local law to be radioactive, toxic, hazardous or otherwise a danger to health
or the environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant
to the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, or defined as a hazardous waste pursuant to the United
States Resource Conservation and Recovery Act of 1976, as amended, and the
regulations promulgated pursuant to said laws, but excluding office and
janitorial supplies, (a "HAZARDOUS MATERIAL") are present, as a result of the
actions of VFI or any of its subsidiaries or any affiliate of VFI, or, to
VFI's knowledge, as a result of any actions of any third party or otherwise,
in, on or under any property, including the land and the improvements, ground
water and surface water thereof, that VFI or any of its subsidiaries has at
any time owned, operated, occupied or leased.
(b) HAZARDOUS MATERIALS ACTIVITIES. Except as reasonably would
not, in any individual case or series of related cases, result, in VFI's
reasonable judgment, in a loss of material benefit to or any material
liability to VFI, (i) neither VFI nor any of its subsidiaries has
transported, stored, used, manufactured, disposed of, released or exposed its
employees or others to Hazardous Materials in violation of any law currently
in effect, and (ii) neither VFI nor any of its subsidiaries has disposed of,
transported, sold, used, released, exposed its employees or others to or
manufactured any product containing a Hazardous Material (collectively
"HAZARDOUS MATERIALS ACTIVITIES") in violation of any rule, regulation,
treaty or statute promulgated by any Governmental Entity in effect prior to
or as of the date hereof to prohibit, regulate or control Hazardous Materials
or any Hazardous Material Activity.
(c) PERMITS. VFI and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the "VFI
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ENVIRONMENTAL PERMITS") necessary for the conduct of VFI's and its
subsidiaries' Hazardous Material Activities and other businesses of VFI and
its subsidiaries as such activities and businesses are currently being
conducted. VFI and its subsidiaries are in compliance in all material
respects with the terms of the VFI Environmental Permits, except as would not
result, in VFI's reasonable judgment, in a loss of material benefit to or any
material liability to VFI.
(d) ENVIRONMENTAL LIABILITIES. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, and to
VFI's knowledge, no action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim has since January 1, 1996 been
threatened by any Governmental Entity against VFI or any of its subsidiaries
in a writing delivered to VFI concerning any VFI Environmental Permit,
Hazardous Material or any Hazardous Materials Activity of VFI or any of its
subsidiaries.
2.16 AGREEMENTS, CONTRACTS AND COMMITMENTS. As of the date of this
Agreement, neither VFI nor any of its subsidiaries is a party to or is bound
by:
(a) any employment or consulting agreement, contract or commitment
with any (i) officer or (ii) employee whose annual base compensation exceeds
$125,000 or member of VFI's Board of Directors, other than those that are
terminable by VFI or any of its subsidiaries on no more than 30 days notice
without liability or financial obligation, except to the extent general
principles of wrongful termination law or applicable foreign law may limit
VFI's or any of its subsidiaries' ability to terminate employees at will;
(b) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting of benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement;
(c) any agreement of indemnification or any guaranty other than:
(i) any agreement of indemnification or guaranty entered into in the ordinary
course of business, (ii) any agreement of indemnification entered into in
connection with the sale or lease of hardware products (or in connection with
the sale, lease or license of the software related to or incorporated in
hardware products) in the ordinary course of business, (iii) any agreement of
indemnification entered into in connection with services performed in the
ordinary course of business, (iv) any indemnification agreement between VFI
or any of its subsidiaries and any of their respective officers, directors or
employees; (v) guarantees of obligations of a VFI subsidiary by VFI or
another VFI subsidiary in the ordinary course of business, and (vi) any
agreement of
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indemnification entered into in connection with the licensing by VFI of
software in the ordinary course of business;
(d) any agreement, contract or commitment containing any covenant
limiting in any material respect the right of VFI or any of its subsidiaries
or subsequent parent or sister companies to engage in any line of business or
to compete with any person or granting any exclusive distribution rights;
(e) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by VFI or any of its subsidiaries
after the date of this Agreement of a material amount of assets not in the
ordinary course of business or pursuant to which VFI has any material
ownership interest in any corporation, partnership, joint venture or other
business enterprise;
(f) any joint marketing or development agreement currently in
force under which VFI or any of its subsidiaries have continuing material
obligations to jointly market any product, technology or service and which
may not be canceled without penalty upon notice of 30 days or less, or any
material agreement pursuant to which VFI or any of its subsidiaries have
continuing material obligations to jointly develop any intellectual property
that will not be owned, in whole or in part, by VFI or any of its
subsidiaries and which may not be canceled without penalty upon notice of 90
days or less;
(g) any agreement, contract or commitment currently in force to
provide source code to any third party for any product or technology that is
material to VFI and its subsidiaries taken as a whole, except for (i) any
agreement, contract or commitment pursuant to which source code is provided
for maintenance of the source code or for development of modifications
thereto only, and not for distribution of source or object code to third
parties, and (ii) any source code escrow agreement entered into in the
ordinary course of business that contains provisions relating to the release
of source code if VFI and/or any of its subsidiaries ceases to do business or
fails to provide appropriate maintenance; or
(h) any agreement, contract or commitment currently in force to
license any third party to manufacture or reproduce any VFI Product, except
as a distributor in the normal course of business.
Neither VFI nor any of its subsidiaries, nor to VFI's knowledge any
other party to a VFI Contract (as defined below), is in breach, violation or
default under, and neither VFI nor any of its subsidiaries has since January
1, 1996 received, to its knowledge, written notice that it has breached,
violated or defaulted under, any of the material terms or conditions of any
material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument to which VFI
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or any of its subsidiaries is a party or by which it is bound that are
exhibits to VFI's SEC Reports, that are required to be disclosed in the VFI
Schedules pursuant to clauses (a) through (h) above or pursuant to Section
2.9 hereof or that are otherwise material to VFI (any such agreement,
contract or commitment, a "VFI CONTRACT") in such a manner as would permit
any other party to cancel or terminate any such VFI Contract, or would permit
any other party to seek damages, which would result, in VFI's reasonable
judgment, in a loss of benefits to VFI and/or liabilities to VFI in excess of
$1 million (for any individual breach, violation or default).
2.17 POOLING OF INTERESTS. Neither VFI nor any of its directors,
officers, affiliates or stockholders has taken any action which would
preclude HP's ability to account for the Merger as a pooling of interests.
2.18 CHANGE OF CONTROL PAYMENTS. The VFI Schedules set forth each plan
or agreement as to which VFI is a party as of the date hereof pursuant to
which any amounts may become payable (whether currently or in the future) to
current or former officers and directors of VFI as a result of or in
connection with the Merger.
2.19 STATEMENTS; PROXY STATEMENT/PROSPECTUS. The information supplied
by VFI for inclusion in the Registration Statement (as defined in Section
3.4(b)) shall not at the time the Registration Statement is filed with the
SEC and at the time it becomes effective under the Securities Act contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The information supplied by VFI for inclusion in the proxy
statement/prospectus to be sent to the stockholders of VFI in connection with
the meeting of VFI's stockholders to consider the approval and adoption of
this Agreement and the approval of the Merger (the "VFI 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 VFI's stockholders or at the time of the VFI
Stockholders' Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in 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 VFI Stockholders' Meeting
which has become false or misleading. The Proxy Statement will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder. If at any time prior to the Effective Time
any event relating to VFI or any of its affiliates, officers or directors
should be discovered by VFI which is required to be set forth in an amendment
to the Registration Statement or a supplement to the Proxy Statement, VFI
shall promptly inform HP. Notwithstanding the foregoing, VFI makes no
representation or warranty with respect to any
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information supplied by HP or Merger Sub which is contained in any of the
foregoing documents.
2.20 BOARD APPROVAL. The Board of Directors of VFI has, as of the date
of this Agreement, determined (i) that the Merger is fair to, and in the best
interests of VFI and its stockholders, and (ii) to recommend that the
stockholders of VFI approve and adopt this Agreement and approve the Merger.
2.21 FAIRNESS OPINION. VFI's Board of Directors has received an opinion
from Deutsche ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ dated as of the date hereof, to the effect that
as of the date hereof, the Exchange Ratio is fair to VFI's stockholders from
a financial point of view and will deliver to HP a copy of such opinion
within 3 business days following the date hereof.
2.22 SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW NOT APPLICABLE.
The Board of Directors of VFI has taken all actions so that the restrictions
contained in Section 203 of the Delaware General Corporation Law applicable
to a "business combination" (as defined in such Section 203) will not apply
to the execution, delivery or performance of this Agreement or to the
consummation of the Merger or the other transactions contemplated by this
Agreement.
2.23 CUSTOMS. VFI has acted with reasonable care to properly value and
classify, in accordance with applicable tariff laws, rules and regulations,
all goods that VFI or any of its subsidiaries import into the United States
or into any other country (the "IMPORTED GOODS"). To VFI's knowledge, there
are currently no claims for material amounts pending against VFI by the U.S.
Customs Service (or other foreign customs authorities) relating to the
valuation, classification or marking of the Imported Goods. To VFI's
knowledge, since January 1, 1993, there have not been any material penalties
assessed or claimed by the U.S. Customs Service or foreign customs
authorities with respect to the Imported Goods. To VFI's knowledge, VFI and
its subsidiaries have paid to the U.S. Customs Service and relevant foreign
customs authorities, with such exceptions as are not material, all duties,
tariffs and excise taxes assessed, due and payable prior to April 22, 1997
with such exceptions as would not result, in any individual case or series of
related cases, in VFI's reasonable judgment, in a loss of material benefits
to or any material liability to VFI.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HP AND MERGER SUB
HP and Merger Sub represent and warrant to VFI as follows:
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3.1 ORGANIZATION OF HP.
(a) Each of HP and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized; has the corporate power and authority to own, lease
and operate its assets and property and to carry on its business as now being
conducted; and is duly qualified or licensed to do business and is in good
standing in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified would not have a Material Adverse Effect (as defined below) on HP.
(b) HP has delivered or made available to VFI a true and correct
copy of the charter and Bylaws of HP and Merger Sub, each as amended to date,
and each such instrument is in full force and effect. Neither HP nor Merger
Sub is in violation of any of the provisions of its charter or Bylaws.
(c) When used in connection with HP, the term "MATERIAL ADVERSE
EFFECT" means, for purposes of this Agreement, any change, event or effect
that is materially adverse to the business, assets (including intangible
assets), financial condition or results of operations of HP and its
subsidiaries taken as a whole; PROVIDED, HOWEVER, that (i) any adverse
change, event or effect that is proximately caused by conditions affecting
the United States economy generally or the economy of any nation or region in
which HP or any of its subsidiaries conducts a material amount of business
shall not be taken into account in determining whether there has been or
would be a "Material Adverse Effect" on or with respect to HP (unless such
conditions adversely affect HP in a materially disproportionate manner), (ii)
any adverse change, event or effect that is proximately caused by conditions
affecting any industry in which HP competes shall not be taken into account
in determining whether there has been or would be a "Material Adverse Effect"
on or with respect to HP (unless such conditions adversely affect HP in a
materially disproportionate manner), (iii) any adverse change, event or
effect that is proximately caused by the announcement or pendency of the
Merger shall not be taken into account in determining whether there has been
or would be a "Material Adverse Effect" on or with respect to HP, and (iv)
any adverse change, event or effect that is proximately caused by any breach
by VFI of any covenant or obligation set forth in this Agreement shall not be
taken into account in determining whether there has been or would be a
"Material Adverse Effect" on or with respect to HP; and, PROVIDED FURTHER,
that with respect to any dispute regarding whether a change, event or effect
is "proximately caused" by any of the foregoing, HP shall have the burden of
proof by a preponderance of the evidence.
3.2 HP AND MERGER SUB CAPITAL STRUCTURE. The authorized capital stock
of HP consists of 2,400,000,000 shares of Common Stock, of which there were
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1,016,181,501 shares issued and outstanding as of January 31, 1997, and
300,000,000 shares of Preferred Stock, of which no shares are issued or
outstanding. The authorized capital stock of Merger Sub consists of 1,000
shares of Common Stock, $.01 par value, 100 of which, as of the date hereof,
are issued and outstanding and are held by HP. Merger Sub was formed on
April 11, 1997, for the purpose of consummating the Merger and has no
material assets or liabilities except as necessary for such purpose. All
outstanding shares of HP Common Stock are duly authorized, validly issued,
fully paid and nonassessable and are not subject to preemptive rights created
by statute, the Articles of Incorporation or Bylaws of HP or any agreement or
document to which HP is a party or by which it is bound.
3.3 AUTHORITY.
(a) Each of HP and Merger Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of HP and Merger
Sub, subject only to the filing of the Certificate of Merger pursuant to
Delaware Law. This Agreement has been duly executed and delivered by each of
HP and Merger Sub and, assuming the due authorization, execution and delivery
by VFI, constitutes the valid and binding obligation of HP and Merger Sub,
enforceable against HP and Merger Sub in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws and
general principles of equity. The execution and delivery of this Agreement
by each of HP and Merger Sub does not, and the performance of this Agreement
by each of HP and Merger Sub will not, (i) conflict with or violate the
Articles of Incorporation or Bylaws of HP or the Certificate of Incorporation
or Bylaws of Merger Sub, (ii) conflict with or violate in any material
respect any law, rule, regulation, order, judgment or decree applicable to HP
or Merger Sub or by which any of their respective properties is bound or
affected or (iii) result in any material breach of or constitute a material
default (or an event that with notice or lapse of time or both would become a
material default) under, or impair HP's rights or alter the material rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a material lien or encumbrance on any of the material properties
or assets of HP or Merger Sub pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which HP or Merger Sub is a party or by which HP
or Merger Sub or any of their respective properties are bound or affected.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required
to be obtained or made by HP or Merger Sub in connection with the execution
and delivery
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of this Agreement or the consummation of the Merger, except for (i) the
filing of a Form S-4 Registration Statement (the "REGISTRATION STATEMENT")
with, and the declaration of the effectiveness of the Registration Statement
by, the SEC in accordance with the Securities Act, (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware,
(iii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal, foreign
and state securities (or related) laws and the HSR Act and the securities or
antitrust laws of any foreign country, and (iv) such other consents,
authorizations, filings, approvals and registrations which if not obtained or
made would not be material to HP or VFI or have a material adverse effect on
the ability of the parties to consummate the Merger.
3.4 SEC FILINGS; HP FINANCIAL STATEMENTS.
(a) HP has filed all forms, reports and documents required to be
filed by HP with the SEC since November 1, 1995, and has made available to
VFI such forms, reports and documents in the form filed with the SEC. All
such required forms, reports and documents (including those that HP may file
subsequent to the date hereof) are referred to herein as the "HP SEC
REPORTS." As of their respective dates, the HP SEC Reports (i) were prepared
in accordance with, and in compliance with, the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such HP SEC Reports, and (ii)
did not at the time they were filed (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing) contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. None of HP's subsidiaries is required to file any forms, reports
or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the HP SEC Reports (the
"HP FINANCIALS"), including any HP SEC Reports filed after the date hereof
until the Closing, (x) complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, (y) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the
SEC on Form 10-Q under the Exchange Act) and (z) fairly presented the
consolidated financial position of HP and its subsidiaries as at the
respective dates thereof and the consolidated results of HP's operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements may not contain footnotes. The balance sheet of HP
contained in HP SEC Reports as of January 31, 1997 is hereinafter referred to
as the "HP BALANCE SHEET."
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3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the HP
Balance Sheet, there has not been any Material Adverse Effect on HP.
3.6 STATEMENTS; PROXY STATEMENT/PROSPECTUS. The information supplied
by HP for inclusion in the Registration Statement shall not at the time the
Registration Statement is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The information
supplied by HP for inclusion in the Proxy Statement shall not, on the date
the Proxy Statement is first mailed to VFI's stockholders or at the time of
the VFI Stockholders' Meeting contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in 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 VFI Stockholders' Meeting
which has become false or misleading. If at any time prior to the Effective
Time, any event relating to HP or any of its affiliates, officers or
directors should be discovered by HP which is required to be set forth in an
amendment to the Registration Statement or a supplement to the Proxy
Statement, HP shall promptly inform VFI. Notwithstanding the foregoing, HP
makes no representation or warranty with respect to any information supplied
by VFI which is contained in any of the foregoing documents.
3.7 POOLING OF INTERESTS. Neither HP nor any of its directors,
officers, affiliates or stockholders has taken any action which would
preclude HP's ability to account for the Merger as a pooling of interests.
3.8 VALID ISSUANCE. The HP Common Stock to be issued in the Merger,
when issued in accordance with the provisions of this Agreement, will be
validly issued, fully paid and nonassessable.
3.9 NO OWNERSHIP OF VFI COMMON STOCK. HP does not own, beneficially or
of record, any shares of VFI Common Stock.
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ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS. During the period from the date of this
Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, VFI and each of its
subsidiaries shall, except as permitted by the terms of this Agreement or to
the extent that HP shall otherwise consent in writing, which consent shall
not be unreasonably withheld, or as provided in Section 4 of the VFI
Schedules, carry on its business, in all material respects, in the usual,
regular and ordinary course, and in compliance with all applicable laws and
regulations, pay its debts and taxes when due subject to good faith disputes
over such debts or taxes, pay or perform other material obligations when due,
and use its reasonable best efforts consistent with past practices and
policies to (i) preserve intact its present business organization, (ii) keep
available the services of its present officers and employees and (iii)
preserve its relationships with customers, suppliers, distributors,
licensors, licensees, and others with which it has business dealings.
In addition, except as permitted by the terms of this Agreement, and
except as provided in Section 4 of the VFI Schedules, without the prior
written consent of HP (which consent shall not be unreasonably withheld)
during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement pursuant to its terms and the
Effective Time, VFI shall not do any of the following and shall not permit
its subsidiaries to do any of the following (except as required by applicable
law):
(a) Waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of options or restricted stock, or reprice
options granted under any employee, consultant or director stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(b) Grant any severance or termination pay to any officer or
employee except payments in amounts consistent with policies and past
practices or pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in writing or made
available to HP, or adopt any new severance plan;
(c) Transfer or license to any person or entity or otherwise
extend the term of any agreement with respect to, amend or modify in any
material respect any rights (including without limitation distribution
rights) to the VFI Intellectual Property, or enter into assignments of future
patent rights, other than non-exclusive licenses and distribution rights in
the ordinary course of business and consistent with past practice;
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(d) Declare or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for any capital stock;
(e) Repurchase or otherwise acquire, directly or indirectly, any
shares of capital stock of VFI, except repurchases of unvested shares at cost
in connection with the termination of the employment relationship with any
employee pursuant to agreements in effect as of the date hereof;
(f) Issue, deliver, sell, authorize or propose the issuance,
delivery or sale of, any shares of capital stock or any securities
convertible into shares of capital stock, or subscriptions, rights, warrants
or options to acquire any shares of capital stock or any securities
convertible into shares of capital stock, or enter into other agreements or
commitments of any character obligating it to issue any such shares or
convertible securities, other than the issuance delivery and/or sale of (i)
shares of VFI Common Stock pursuant to the exercise of stock options therefor
outstanding as of the date of this Agreement, (ii) shares of VFI Common Stock
issuable to participants in the VFI ESPP consistent with the terms thereof
and (iii) shares of VFI Common Stock upon the exercise of rights outstanding
as of the date hereof under the 1997 Phantom Plan.
(g) Cause, permit or propose any amendments to any charter
document or Bylaw (or similar governing instruments of any subsidiaries);
(h) Acquire or agree to acquire by merging or consolidating with,
or by purchasing any equity interest in or a material portion of the assets
of, or by any other manner, any business or any corporation, partnership
interest, 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 the business of VFI or enter into any
material joint ventures, strategic partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of VFI, except in the ordinary course of business consistent
with past practice or lend funds to any third party (other than intracompany
loans and travel advances in the ordinary course of business);
(j) Incur any indebtedness for borrowed money (other than (i) in
connection with the financing of ordinary course trade payables; (ii)
pursuant to existing credit facilities or any modifications, renewals or
replacements of such credit facilities (it being understood that the maximum
amount of borrowing which may be
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made under such credit facilities may be increased by up to 20% of the
current maximum amount) in the ordinary course of business; (iii) in
connection with leasing activities in the ordinary course of business; or
(iv) for tax planning purposes in the ordinary course of business) or
guarantee any indebtedness of any person for borrowed money (except that VFI
may guarantee any indebtedness of any subsidiary of VFI, and any subsidiary
of VFI may guarantee any indebtedness of VFI or of any other subsidiary of
VFI), or issue or sell any debt securities or warrants or rights to acquire
debt securities of VFI or guarantee any debt securities of others;
(k) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, enter into any employment contract
(other than: (x) offer letters and letter agreements with employees who are
terminable "at will," (y) as required by law, or (z) employment contracts
that are customarily entered into outside the United States), pay any special
bonus or special remuneration to any director or employee other than in the
ordinary course of business, consistent with past practice, or increase the
salaries or wage rates of its officers or employees other than in the
ordinary course of business, consistent with past practice;
(l) Make any payments outside of the ordinary course of business
in excess of $1 million for purposes of settling any dispute;
(m) Take any action, or permit any of its affiliates to take any
action, that would be reasonably likely to interfere with HP's ability to
account for the Merger as a pooling of interests whether or not otherwise
permitted by the provisions of this Article IV;
(n) Enter into any material agreement requiring the consent or
approval of any third party with respect to the Merger; or
(o) Agree in writing or otherwise to take any of the actions
described in Article 4 (a) through (n) above.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT; OTHER FILINGS;
BOARD RECOMMENDATIONS.
(a) As promptly as practicable after the execution of this
Agreement, VFI and HP will prepare, and file with the SEC, the Proxy
Statement and HP will prepare and file with the SEC the Registration
Statement in which the Proxy Statement will be included as a prospectus.
Each of VFI and HP will respond to any
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comments of the SEC, will use its respective reasonable best efforts to have
the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing and, to the extent that presenting
this Agreement and the Merger to VFI's stockholders for their approval and
adoption would not violate applicable law, VFI will cause the Proxy Statement
to be mailed to the VFI stockholders at the earliest practicable time after
the Registration Statement is declared effective by the SEC. As promptly as
practicable after the date of this Agreement, each of VFI and HP will prepare
and file any other filings required to be filed by it under the Exchange Act,
the Securities Act or any other Federal, foreign or Blue Sky or related laws
relating to the Merger and the transactions contemplated by this Agreement
(the "OTHER FILINGS"). Each of VFI and HP will notify the other promptly
upon the receipt of any comments from the SEC or its staff or any other
government officials and of any request by the SEC or its staff or any other
government officials for amendments or supplements to the Registration
Statement, the Proxy Statement or any Other Filing or for additional
information and will supply the 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 Registration Statement, the Proxy Statement, the Merger or any
Other Filing. Each of VFI and HP will cause all documents that it is
responsible for filing with the SEC or other regulatory authorities under
this Section 5.1(a) to comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
Whenever VFI or HP obtains knowledge of the occurrence of any event which is
required to be set forth in an amendment or supplement to the Proxy
Statement, the Registration Statement or any Other Filing, VFI or HP, as the
case may be, will promptly inform the other of such occurrence and cooperate
in filing with the SEC or its staff or any other government officials, and/or
mailing to stockholders of VFI, such amendment or supplement.
(b) The Proxy Statement will include the recommendation of the
Board of Directors of VFI in favor of adoption and approval of this Agreement
and approval of the Merger (except that notwithstanding anything to the
contrary contained in this Agreement, the Board of Directors of VFI may
withdraw, modify in a manner adverse to HP or refrain from making such
recommendation to the extent that the Board determines, in good faith, after
consultation with outside legal counsel, that compliance with the Board's
fiduciary duties under applicable law would require it to do so).
5.2 MEETING OF STOCKHOLDERS. Promptly after the date hereof, to the
extent permitted of the Board of Directors of VFI under applicable law, VFI
will take all action necessary in accordance with the Delaware Law and its
Certificate of Incorporation and Bylaws to convene and hold the VFI
Stockholders' Meeting to be held as promptly as practicable (on a date
reasonably acceptable to the parties hereto),
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and in any event (to the extent permissible under applicable law) within 45
days after the declaration of effectiveness of the Registration Statement,
for the purpose of voting upon this Agreement and the Merger; PROVIDED,
HOWEVER, that notwithstanding anything to the contrary contained in this
Agreement, VFI may adjourn or postpone the VFI Stockholders' Meeting to the
extent necessary to ensure that any necessary supplement or amendment to the
Proxy Statement is provided to VFI's stockholders in advance of a vote on the
Merger and this Agreement. Unless the Board of Directors of VFI withdraws,
modifies or refrains from making the recommendation set forth in Section
5.1(b) in accordance with Section 5.1(b), VFI will use its reasonable best
efforts to solicit from its stockholders proxies in favor of the adoption and
approval of this Agreement and the approval of the Merger and to take all
other action necessary or advisable to secure the vote or consent of its
stockholders required by the rules of the New York Stock Exchange or Delaware
Law to obtain such approvals.
5.3 CONFIDENTIALITY; ACCESS TO INFORMATION.
(a) The parties acknowledge that VFI and HP have previously
executed a Confidential Disclosure Agreement, dated as of February 24, 1997
(the "CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will
continue in full force and effect in accordance with its terms.
(b) ACCESS TO INFORMATION. VFI will afford HP and its
accountants, counsel and other representatives reasonable access during
normal business hours to the properties, books, records and personnel of VFI
during the period prior to the Effective Time to obtain all information
concerning the business, including the status of product development efforts,
properties, results of operations and personnel of VFI, as HP may reasonably
request. No information or knowledge obtained by HP in any investigation
pursuant to this Section 5.3 will affect or be deemed to modify any
representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
5.4 NO SOLICITATION.
(a) From and after the date of this Agreement until the earlier of
the Effective Time or termination of this Agreement pursuant to its terms,
VFI and its subsidiaries will not, and will instruct their respective
directors, officers, employees, representatives, investment bankers, agents
and affiliates not to, directly or indirectly, (i) solicit or knowingly
encourage submission of, any Acquisition Proposal (as defined below) by any
person, entity or group (other than HP and its affiliates, agents and
representatives), or (ii) participate in any discussions or negotiations
with, or disclose any non-public information concerning VFI or any of its
subsidiaries to, or afford any access to the properties, books or records of
VFI or
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any of its subsidiaries to, or otherwise assist or facilitate, or enter into
any agreement or understanding with, any person, entity or group (other than
HP and its affiliates, agents and representatives), in connection with any
Acquisition Proposal with respect to VFI. For the purposes of this
Agreement, an "ACQUISITION PROPOSAL" means any proposal or offer for (i) any
merger, consolidation, sale of substantial assets or similar transactions
involving VFI or any of its material subsidiaries (other than sales of assets
or inventory in the ordinary course of business or as permitted under the
terms of this Agreement), (ii) sale by VFI of any shares of capital stock of
VFI except as may be permitted pursuant to Article IV, (iii) without limiting
clause (ii) above, the acquisition by any person (including without
limitation by way of a tender offer or an exchange offer) of beneficial
ownership or a right to acquire beneficial ownership of, or the formation of
any "group" (as defined under Section 13(d) of the Exchange Act and the rules
and regulations thereunder) which beneficially owns, or has the right to
acquire beneficial ownership of, 10% or more of the then outstanding shares
of capital stock of VFI (except for acquisitions in the market for passive
investment purposes of not more than 15% of the then outstanding shares of
capital stock of VFI only in circumstances where the person or group
qualifies for filing a Schedule 13G with respect thereto and is not and does
not become obligated to file a Schedule 13D); or (iv) any public announcement
of a proposal, plan or intention to do any of the foregoing or any agreement
to engage in any of the foregoing. VFI will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal. VFI will (i) notify HP
as promptly as practicable if it receives any Acquisition Proposal or written
inquiry or any written request for information or access in connection with a
potential Acquisition Proposal and (ii) as promptly as practicable notify HP
of the significant terms and conditions of any such Acquisition Proposal. In
addition, subject to the other provisions of this Section 5.4, from and after
the date of this Agreement until the earlier of the Effective Time and
termination of this Agreement pursuant to its terms, VFI and its subsidiaries
will not, and will instruct their respective directors, officers, employees,
representatives, investment bankers, agents and affiliates not to, directly
or indirectly, make or authorize any public statement, recommendation or
solicitation in support of any Acquisition Proposal made by any person,
entity or group (other than HP or any of its affiliates, agents or
representatives); PROVIDED, HOWEVER, that nothing contained in this Agreement
shall prohibit VFI's Board of Directors from taking and disclosing to VFI's
stockholders a position with respect to a tender or exchange offer pursuant
to Rules 14d-9 and 14e-2 promulgated under the Exchange Act.
(b) Notwithstanding anything to the contrary contained in Section
5.4(a) or elsewhere in this Agreement but subject to the prohibitions
contained in the subparagraphs of Section 4.1 hereof, prior to the Effective
Time, VFI may, to the extent the Board of Directors of VFI determines, in
good faith, after consultation with outside legal counsel, that the Board's
fiduciary duties under applicable law require
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it to do so, participate in discussions or negotiations with, and, subject to
the requirements of paragraph (c) below, furnish non-public information, and
afford access to the properties, books or records of VFI, to any person,
entity or group after such person, entity or group has delivered to VFI in
writing, an unsolicited bona fide Acquisition Proposal (which may be subject
to customary conditions, including a "due diligence" condition) which the
Board of Directors of VFI in its good faith reasonable judgment determines,
after consultation with its independent financial advisors, would reasonably
be likely to result in a transaction more favorable than the Merger to the
stockholders of VFI from a financial point of view (a "SUPERIOR PROPOSAL").
In addition, notwithstanding the provisions of paragraph (a) above or any
other provisions of this Agreement, in connection with an Acquisition
Proposal or a possible Acquisition Proposal, VFI may refer any third party to
this Section 5.4 or make a copy of this Section 5.4 available to a third
party. In the event VFI receives a Superior Proposal, nothing contained in
this Agreement (but subject to the terms of this paragraph (b)) will prevent
the Board of Directors of VFI from recommending such Superior Proposal to its
stockholders, if the Board determines, in good faith, after consultation with
outside legal counsel, that such action is required by its fiduciary duties
under applicable law; in such case, the Board of Directors of VFI may (in
accordance with Section 5.1(b)) withdraw, modify or refrain from making its
recommendation set forth in Section 5.1(b), and, to the extent it does so,
VFI may refrain from soliciting proxies to secure the vote of its
stockholders as may otherwise be required by Section 5.2; PROVIDED, HOWEVER,
that VFI shall (i) provide HP at least 24 hours prior notice of any VFI Board
meeting at which VFI's Board of Directors is reasonably expected to consider
a Superior Proposal and (ii) not recommend to its stockholders a Superior
Proposal for a period of not less than the greater of 2 business days and 48
hours after HP's receipt of a copy of such Superior Proposal (or a
description of the significant terms and conditions thereof, if not in
writing); and PROVIDED FURTHER, that unless this Agreement is terminated
pursuant to Section 7.1, nothing contained in this Section 5.4(b) shall limit
VFI's obligation to hold and convene the VFI Stockholders' Meeting
(regardless of whether the recommendation of the Board of Directors of VFI
shall have been withdrawn, modified or not yet made) or to provide the VFI
stockholders with material information relating to such meeting.
(c) Notwithstanding anything to the contrary in this Section 5.4,
VFI will not provide any non-public information to a third party unless: (i)
VFI provides such non-public information pursuant to a nondisclosure
agreement with terms regarding the protection of confidential information at
least as restrictive as such terms in the Confidentiality Agreement; and (ii)
such non-public information has been previously delivered to HP.
5.5 PUBLIC DISCLOSURE. HP and VFI will consult with each other, and to
the extent practicable, agree, before issuing any press release or otherwise
making any
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public statement with respect to the Merger, this Agreement or an Acquisition
Proposal and will not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or any
listing agreement with a national securities exchange. At any time after the
date hereof, VFI may file with the SEC a report on Form 8-K with respect to
this Agreement and may file a copy of this Agreement and any related
agreements as an exhibit to such report, provided that HP shall have a
reasonable opportunity to review and comment on such report prior to filing.
The parties have agreed to the text of the joint press release announcing the
signing of this Agreement.
5.6 LEGAL REQUIREMENTS. Each of HP, Merger Sub and VFI will take all
reasonable actions necessary or desirable 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 (including furnishing all
information required in connection with approvals by or filings with any
Governmental Entity, and prompt resolution of any litigation prompted hereby)
and will promptly cooperate with and furnish information to any party hereto
necessary in connection with any such filings with or investigations by any
Governmental Entity, and any other such requirements imposed upon any of them
or their respective subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement. HP will use its reasonable best
efforts to take such steps as may be necessary to comply with the securities,
blue sky and related laws of all jurisdictions which are applicable to the
issuance of HP Common Stock pursuant hereto. VFI will use its reasonable
best efforts to assist HP as may be necessary to comply with the securities,
blue sky and related laws of all jurisdictions which are applicable in
connection with the issuance of HP Common Stock pursuant hereto.
5.7 THIRD PARTY CONSENTS. As soon as practicable following the date
hereof, HP and VFI will each use its reasonable best efforts to obtain any
material consents, waivers and approvals under any of its or its
subsidiaries' agreements, contracts, licenses or leases required to be
obtained in connection with the consummation of the transactions contemplated
hereby.
5.8 NOTIFICATION OF CERTAIN MATTERS. HP and Merger Sub will give
prompt notice to VFI, and VFI will give prompt notice to HP, after obtaining
knowledge of the occurrence, or failure to occur, of any event, which
occurrence or failure to occur would be reasonably likely to cause (a) any
representation or warranty contained in this Agreement and made by it to be
untrue or inaccurate at any time from the date of this Agreement to the
Effective Time such that the condition set forth in Section 6.2(a) or 6.3(a),
as the case may be, would not be satisfied as a result thereof or (b) any
failure of HP and Merger Sub or VFI, as the case may be, or to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement such that the condition
set forth in Section
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6.2(b) or 6.3(b), as the case may be, would not be satisfied as a result
thereof. Notwithstanding the above, the delivery of any notice pursuant to
this section will not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
5.9 BEST EFFORTS AND FURTHER ASSURANCES. Subject to the respective
rights and obligations of HP and VFI under this Agreement (including the
rights of VFI under Section 5.1(b) and under Section 5.4(b)), each of the
parties to this Agreement will use its reasonable best efforts to effectuate
the Merger and the other transactions contemplated hereby and to fulfill and
cause to be fulfilled the conditions to closing under this Agreement;
provided that neither HP nor VFI nor any subsidiary or affiliate thereof will
be required to agree to any divestiture by itself or any of its affiliates of
shares of capital stock or of any business, assets or property, or the
imposition of any material limitation on the ability of any of them to
conduct their businesses or to own or exercise control of such assets,
properties and stock. Subject to the foregoing, each party hereto, at the
reasonable request of another party hereto, will 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 the
transactions contemplated hereby.
5.10 STOCK OPTIONS AND EMPLOYEE BENEFITS.
(a) At the Effective Time, each outstanding option to purchase
shares of VFI Common Stock (each a "VFI STOCK OPTION") under the VFI Stock
Option Plans, whether or not exercisable, will be assumed by HP. Each VFI
Stock Option so assumed by HP under this Agreement will continue to have, and
be subject to, the same terms and conditions set forth in the applicable VFI
Stock Option Plan immediately prior to the Effective Time and the stock
option agreement (including, without limitation, any repurchase rights) by
which it is evidenced, except that (i) each VFI Stock Option will be
exercisable (or will become exercisable in accordance with its terms) for
that number of whole shares (and no fractional shares) of HP Common Stock
equal to the product of the number of shares of VFI Common Stock that were
issuable upon exercise of such VFI Stock Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, rounded down to the nearest
whole number of shares of HP Common Stock and (ii) the per share exercise
price for the shares of HP Common Stock issuable upon exercise of such
assumed VFI Stock Option will be equal to the quotient determined by dividing
the exercise price per share of VFI Common Stock at which such VFI Stock
Option was exercisable immediately prior to the Effective Time by the
Exchange Ratio, rounded up to the nearest whole cent. As soon as reasonably
practicable after the Effective Time, HP will issue to each holder of an
outstanding VFI Stock Option a notice describing the foregoing assumption of
such VFI Stock Option by HP.
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(b) It is intended that VFI Stock Options assumed by HP shall
qualify following the Effective Time as incentive stock options as defined in
Section 422 of the Code to the extent VFI Stock Options qualified as
incentive stock options immediately prior to the Effective Time and the
provisions of this Section 5.10 shall be applied consistent with such intent.
(c) At the Effective Time, each phantom stock option grant ("VFI
PHANTOM STOCK GRANT") under the VFI Phantom Stock Plans, whether or not
exercisable, will be assumed by HP. Each VFI Phantom Stock Grant so assumed
by HP under this Agreement will continue to have, and be subject to, the same
terms and conditions set forth in the applicable VFI Phantom Stock Plan
immediately prior to the Effective Time and the phantom stock agreement by
which it is evidenced, except that (i) the number of shares of stock subject
to the VFI Phantom Stock Grant shall equal the number of whole shares (and no
fractional shares) of HP Common Stock equal to the product of the number of
shares of VFI Common Stock that were subject to such VFI Phantom Stock Grant
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded down to the nearest whole number of shares of HP Common Stock and
(ii) the redemption value per share after the Effective Time shall be
calculated based on the fair market value of a share of HP Common Stock. As
soon as reasonably practicable after the Effective Time, HP will issue to
each holder of an outstanding VFI Phantom Stock Grant a notice describing the
foregoing assumption of such VFI Phantom Stock Grant by HP.
(d) At the Effective Time, each outstanding purchase right (an
"Assumed Purchase Right") under the ESPP shall be deemed to constitute a
purchase right to acquire, on the same terms and conditions as were
applicable under the ESPP immediately prior to the Effective Time, a number
of shares of HP Common Stock determined as provided in the ESPP except that
the purchase price of such shares of HP Common Stock under each Assumed
Purchase Right shall be the lower of (i) the quotient determined by dividing
eighty-five percent (85%) of the fair market value of the VFI Common Stock on
the offering date of each assumed offering by the Exchange Ratio or (ii)
eighty-five percent (85%) of the fair market value of the HP Common Stock on
each exercise date of the assumed offering occurring after the Effective
Time. As soon as practicable after the Effective Time, HP shall deliver to
the participants in the ESPP appropriate notice setting forth such
participants' rights pursuant thereto and that the purchase rights pursuant
to the ESPP shall continue in effect on the same terms and conditions.
(e) At the Effective Time, each outstanding right to receive cash
(an "Assumed Cash Right") under the VFI Stock Bonus Plans shall be deemed to
constitute a right to receive cash, on the same terms and conditions as were
applicable under the VFI Stock Bonus Plans immediately prior to the Effective
Time, except that the calculation of the right to receive cash shall be made
using (i) as the beginning
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price the quotient determined by dividing eighty-five percent (85%) of the
fair market value of the VFI Common Stock on the offering date of the assumed
offering by the Exchange Ratio and (ii) as the ending price eighty-five
percent (85%) of the fair market value of the HP Common Stock on each
exercise date of the assumed offering occurring after the Effective Time. As
soon as practicable after the Effective Time, HP shall deliver to the
participants in the VFI Stock Bonus Plans appropriate notice setting forth
such participants' rights pursuant thereto and that the rights to receive
cash payments pursuant to the VFI Stock Bonus Plans shall continue in effect
on the same terms and conditions.
(f) HP shall assume all Restricted Stock Purchase Agreements and
VFI shall assign its repurchase rights under such Restricted Stock Purchase
Agreements to HP pursuant to Section 4(d) of the Restricted Stock Purchase
Agreements. The Restricted Stock Purchase Agreements so assumed by HP under
this Agreement will continue to have, and be subject to, the same terms and
conditions set forth in the applicable Restricted Stock Purchase Agreement by
which it is evidenced (including, without limitation, any repurchase rights)
immediately prior to the Effective Time, except that (i) the Restricted Stock
Purchase Agreement will be for that number of whole shares (and no fractional
shares) of HP Common Stock equal to the product of the number of shares of
VFI Common Stock that have not vested immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of HP Common Stock and (ii) the per share repurchase price for the
unvested shares of HP Common Stock subject to the repurchase right will be
equal to the quotient determined by dividing the purchase price per share of
VFI Common Stock at which such VFI Common Stock was purchased under the
Restricted Stock Purchase Agreement by the Exchange Ratio, rounded down to
the nearest whole cent. As soon as reasonably practicable after the
Effective Time, HP will issue to the holder of the Restricted Stock Purchase
Agreement a notice describing the foregoing assumption of such Restricted
Stock Purchase Agreements by HP.
(g) HP will reserve sufficient shares of HP Common Stock for
issuance under Section 5.10 and under Section 1.6(c) hereof.
5.11 FORM S-8. HP agrees to file a registration statement on Form S-8
for (i) the shares of HP Common Stock issuable with respect to assumed VFI
Stock Options, (ii) if required, the shares of HP Common Stock issued
pursuant to a Restricted Stock Purchase Agreement and (iii) the assumed
"rights" under the ESPP, as soon as reasonably practical (and in any event
within five days) after the Effective Time.
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5.12 INDEMNIFICATION.
(a) From and after the Effective Time, HP will cause the Surviving
Corporation to fulfill and honor in all respects the obligations of VFI
pursuant to each indemnification agreement currently in effect between VFI
and each person who is or was a director or officer of VFI or any of its
subsidiaries at or prior to the Effective Time (the "INDEMNIFIED PARTIES")
and any indemnification provisions under VFI's Certificate of Incorporation
or Bylaws as in effect on the date hereof. The Certificate of Incorporation
and By-laws of the Surviving Corporation will contain provisions with respect
to exculpation and indemnification that are at least as favorable to the
Indemnified Parties as those contained in the Certificate of Incorporation
and Bylaws of VFI as in effect on the date hereof, which provisions will not
be amended, repealed or otherwise modified from the Effective Time in any
manner that would adversely affect the rights thereunder of any Indemnified
Party, unless such modification is required by law.
(b) Without limiting the provisions of paragraph (a), after the
Effective Time HP will cause the Surviving Corporation, to the fullest extent
permitted under applicable law or under the Surviving Corporation's
Certificate of Incorporation or By-laws, to indemnify and hold harmless each
Indemnified Party against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, to the extent arising out of or pertaining to any action or
omission in his or her capacity as a director or officer of VFI or any of its
subsidiaries arising out of or pertaining to the transactions contemplated by
this Agreement (except in respect of actions or omissions that constitute bad
faith or willful misconduct) for a period of six years after the Effective
Time; PROVIDED, HOWEVER, that if, at any time prior to the sixth anniversary
of the Effective Time, any Indemnified Party delivers to HP a written notice
asserting a claim for indemnification under this Section 5.12(b), then the
claim asserted in such notice shall survive the sixth anniversary of the
Effective Time until such time as such claim is fully and finally resolved.
In the event of any such claim, action, suit, proceeding or investigation (i)
HP will have the right to control any defense, (ii) any counsel retained by
the Indemnified Parties for any period after the Effective Time must be
reasonably satisfactory to HP, and (iii) after the Effective Time, HP will
cause the Surviving Corporation to pay the reasonable fees and expenses of
such counsel, promptly after statements therefor are received (provided that
in the event that any Indemnified Party is not entitled to indemnification
hereunder, any amounts advanced on his or her behalf shall be remitted to the
Surviving Corporation); PROVIDED, HOWEVER, that neither HP nor the Surviving
Corporation will be liable for any settlement effected without its express
written consent. The Indemnified Parties as a group may retain only one
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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 positions of any two
or more Indemnified Parties.
(c) Without limiting any of the obligations of HP or the Surviving
Corporation set forth elsewhere in this Section 5.12, HP shall cause the
Surviving Corporation to maintain in effect, during the three-year period
commencing as of the Effective Time, a policy of directors' and officers'
liability insurance for the benefit of each of the Indemnified Parties
providing coverage and containing terms no less advantageous to the
Indemnified Parties than the coverage and terms of VFI's existing policy of
directors' and officers' liability insurance; PROVIDED, HOWEVER, that the
Surviving Corporation shall not be required to pay a per annum premium in
excess of 150% of the per annum premium that VFI currently pays for its
existing policy of directors' and officers' liability insurance (it being
understood that, if the premium required to be paid by the Surviving
Corporation for such policy would exceed such 150% amount, then the coverage
of such policy shall be reduced to the maximum amount of coverage that can be
obtained for a per annum premium in such 150% amount).
(d) This Section 5.12 will survive the consummation of the Merger,
is intended to benefit and may be enforced by each of the Indemnified Parties
following the Effective Time, and will be binding on all successors and
assigns of the Surviving Corporation and HP.
5.13 NYSE LISTING. HP agrees to cause to be listed on the New York
Stock Exchange the shares of HP Common Stock issuable, and those required to
be reserved for issuance, in connection with the Merger, upon official notice
of issuance.
5.14 VFI AFFILIATE AGREEMENT. Set forth on the VFI Schedules is a list
of those persons who may be deemed to be, in VFI's reasonable judgment,
affiliates of VFI within the meaning of Rule 145 promulgated under the
Securities Act (each a "VFI AFFILIATE"). VFI will provide HP with such
information and documents as HP reasonably requests for purposes of reviewing
such list. VFI will use its reasonable best efforts to deliver or cause to
be delivered to HP, as promptly as practicable on or following the date
hereof, from each VFI Affiliate an executed affiliate agreement in
substantially the form attached hereto as EXHIBIT B (the "VFI AFFILIATE
AGREEMENT"), each of which will be in full force and effect as of the
Effective Time. HP will be entitled to place appropriate legends on the
certificates evidencing any HP Common Stock to be received by a VFI Affiliate
pursuant to the terms of this Agreement, and to issue appropriate stop
transfer instructions to the transfer agent for the HP Common Stock,
consistent with the terms of the VFI Affiliate Agreement.
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5.15 REGULATORY FILINGS; REASONABLE EFFORTS. As soon as may be
reasonably practicable, VFI and HP each shall file with the United States
Federal Trade Commission (the "FTC") and the Antitrust Division of the United
States Department of Justice ("DOJ") Notification and Report Forms relating
to the transactions contemplated herein as required by the HSR Act, as well
as comparable pre-merger notification forms required by the merger
notification or control laws and regulations of any applicable jurisdiction,
as agreed to by the parties. VFI and HP each shall promptly (a) supply the
other with any information which may be required in order to effectuate such
filings and (b) supply any additional information which reasonably may be
required by the FTC, the DOJ or the competition or merger control authorities
of any other jurisdiction and which the parties may reasonably deem
appropriate.
5.16 TAX-FREE REORGANIZATION. No party shall take any action either
prior to or after the Effective Time that could reasonably be expected to
cause the Merger to fail to qualify as a "reorganization" under Section
368(a) of the Code.
5.17 COMFORT LETTER. VFI shall use reasonable best efforts to cause
Ernst & Young LLP, certified public accountants to VFI, to provide comfort
letter(s) dated the date on which the Registration Statement shall become
effective and the Effective Time, respectively, and reasonably acceptable to
HP, relating to the performance of Ernst & Young LLP of customary procedures,
including a review of interim financial statement information as described in
SAS No. 71, with respect to the financial statements of VFI contained in or
incorporated by reference in the Registration Statement.
5.18 POOLING COVENANT.
(a) Prior to the earlier of termination of this Agreement and the
Effective Time, HP will not take any action, and HP will not permit any of
its affiliates to take any action, that would be reasonably likely to
interfere with HP's ability to account for the Merger as a pooling of
interests. In addition, HP will use its reasonable best efforts to deliver
or cause to be delivered to VFI, on or as promptly as practicable following
the date hereof (and in any event no later than the date 30 days prior to the
Effective Time), from each person who may be deemed to be an "affiliate" of
HP within the meaning of Rule 145 promulgated under the Securities Act, an
agreement (which will be in full force and effect as of the Effective Time)
requiring such person to refrain from taking any action that would be
reasonably likely to interfere with HP's ability to account for the Merger as
a pooling of interests. In addition, without limiting, and in addition to,
the covenants set forth in Article IV hereof, prior to the earlier of
termination of this Agreement and the Effective Time, VFI will not take any
action, and VFI will not permit any of its affiliates to take any
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action, that would be reasonably likely to interfere with HP's ability to
account for the Merger as a pooling of interests.
(b) HP shall use its reasonable best efforts to cause Price
Waterhouse LLP to deliver within six business days following the date hereof
to it a letter (which may contain customary qualifications and assumptions
and which may be based in part on a letter from Ernst & Young LLP) to the
effect that Price Waterhouse LLP concurs with HP management's conclusion
that, as of that date, no condition exists that would preclude HP from
accounting for the Merger as a "pooling of interests"; to the extent that HP
receives such a letter, HP shall promptly deliver a copy to VFI.
5.19 DISQUALIFIED INDIVIDUALS. VFI shall request that each Disqualified
Individual (as defined below) execute an agreement whereby such Disqualified
Individual will agree to limit the payments he or she may receive relating to
the Merger to the extent necessary to prevent any such payment from being
non-deductible under Section 280G of the Code. A Disqualified Individual
shall mean any person performing personal services for VFI who would receive
payments which would be non-deductible under Section 280G of the Code. VFI
will use its reasonable best efforts to identify each Disqualified Individual
and send each such Disqualified Individual an agreement within 20 days
following the date hereof.
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 effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) VFI STOCKHOLDER APPROVAL. This Agreement shall have been
approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law, by the stockholders of VFI.
(b) REGISTRATION STATEMENT EFFECTIVE; PROXY STATEMENT. 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 in writing by the SEC.
(c) NO ORDER; HSR ACT. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or
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permanent) which is in effect and which has the effect of making the Merger
illegal or otherwise prohibiting consummation of the Merger. All waiting
periods, if any, under the HSR Act relating to the transactions contemplated
hereby will have expired or terminated early.
(d) TAX OPINIONS. HP and VFI shall each have received written
opinions from their respective tax counsel (the General Tax Counsel of HP and
▇▇▇▇▇▇ Godward LLP, respectively), in form and substance reasonably
satisfactory to them, 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; PROVIDED, HOWEVER, that if the
counsel to either HP or VFI does not render such opinion, this condition
shall nonetheless be deemed to be satisfied with respect to such party if
counsel to the other party renders such opinion to such party. The parties
to this Agreement agree to make such reasonable representations as requested
by such counsel for the purpose of rendering such opinions.
(e) NYSE LISTING. The shares of HP Common Stock issuable to
stockholders of VFI pursuant to this Agreement and such other shares required
to be reserved for issuance in connection with the Merger shall have been
authorized for listing on the New York Stock Exchange upon official notice of
issuance.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF VFI. The obligation of VFI
to consummate and effect the Merger shall be subject to the satisfaction at
or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by VFI:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of HP and Merger Sub contained in this Agreement shall have been
true and correct on and as of the date of this Agreement (it being understood
that, for purposes of determining whether such representations and warranties
shall have been true and correct, (i) any inaccuracies therein that shall
have been cured (without such cure resulting or being reasonably expected to
result in a loss of material benefits or a material liability to HP or
otherwise having or being reasonably expected to have a material negative
impact on HP's business or financial condition) in all material respects
shall be disregarded and (ii) any inaccuracy therein (together with all other
inaccuracies) that shall not have resulted nor reasonably be expected to
result in a loss by HP of a material benefit or in a material liability to HP
and that shall not otherwise have had, nor shall reasonably be expected to
have, a material negative impact on HP's business or financial condition
shall be disregarded). In addition, the representations and warranties of HP
and Merger Sub contained in this Agreement shall be true and correct on and
as of the Closing Date except for changes contemplated by this Agreement and
except for those representations and warranties which address matters only as
of the date of this Agreement or any other particular
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date (other than the Closing Date) which shall remain true and correct as of
such particular date, (it being understood that, for purposes of determining
whether such representations and warranties made as of the date of this
Agreement or any other particular date (other than the Closing Date) and the
representations in Sections 3.2 and 3.8 shall have been true and correct, (i)
any inaccuracies therein that shall have been cured (without such cure
resulting or reasonably being expected to result in a loss of material
benefits or a material liability to HP or otherwise having or being
reasonably expected to have a material negative impact on HP's business or
financial condition) in all material respects shall be disregarded and (ii)
any inaccuracy therein (together with all other inaccuracies) that shall not
have resulted in nor reasonably be expected to result in a loss by HP of a
material benefit or in a material liability to HP and that shall not
otherwise have had, nor shall reasonably be expected to have, a material
negative impact on HP's business or financial condition shall be
disregarded), with the same force and effect as if made on and as of the
Closing Date, except in such cases (other than the representations in
Sections 3.2 and 3.8) where the failure to be so true and correct would not
have a Material Adverse Effect on HP. VFI shall have received a certificate
with respect to the foregoing signed on behalf of HP by an authorized officer
of HP;
(b) AGREEMENTS AND COVENANTS. HP and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them
on or prior to the Closing Date, and VFI shall have received a certificate to
such effect signed on behalf of HP by an authorized officer of HP;
(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with
respect to HP shall have occurred since the date of this Agreement; and
(d) OPINION OF ACCOUNTANTS. VFI shall have received from Ernst &
Young LLP, independent auditors for VFI, a letter dated the Closing Date
(which may contain customary qualifications and assumptions), to the effect
that Ernst & Young LLP concurs with VFI management's conclusion that no
conditions exist related to VFI that would preclude HP from accounting for
the Merger as a pooling of interests; and VFI shall have received from Price
Waterhouse LLP, the independent auditors for HP, a copy of a letter addressed
to HP dated the Closing Date, in substance reasonably satisfactory to VFI
(and which may contain customary qualifications and assumptions and which may
be based in part on the letter referred to above from Ernst & Young LLP to
VFI), to the effect that Price Waterhouse LLP concurs with HP management's
conclusion that as of that date, no conditions exist that would preclude HP
from accounting for the Merger as a pooling of interests.
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6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF HP AND MERGER SUB. The
obligations of HP and Merger Sub to consummate and effect the Merger shall be
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
HP:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of VFI contained in this Agreement shall have been true and
correct as of the date of this Agreement (it being understood that, for
purposes of determining whether such representations and warranties shall
have been true and correct, (i) any inaccuracies therein that shall have been
cured (without such cure resulting or being reasonably expected to result in
a loss of material benefits or a material liability to VFI, otherwise having
or being reasonably expected to have a material negative impact on VFI's
business or financial condition or materially impairing or being reasonably
expected to materially impair the value to HP of VFI) in all material
respects shall be disregarded and (ii) any inaccuracy therein (together with
all other inaccuracies) that shall not have resulted nor shall reasonably be
expected to result in a loss by VFI of a material benefit or in a material
liability to VFI, that shall not otherwise have had, nor shall reasonably be
expected to have, a material negative impact on VFI's business or financial
condition and that shall not have materially impaired, nor shall reasonably
be expected to materially impair, the value to HP of VFI, shall be
disregarded). In addition, the representations and warranties of VFI
contained in this Agreement shall be true and correct on and as of the
Closing Date except for changes contemplated by this Agreement and except for
those representations and warranties which address matters only as of the
date of this Agreement or any other particular date (other than the Closing
Date), which shall remain true and correct as of such particular date, (it
being understood that, for purposes of determining whether such
representations and warranties made as of the date of this Agreement or any
other particular date (other than the Closing Date) and the representations
in Sections 2.2, 2.3 and 2.21 shall have been true and correct, (i) any
inaccuracies therein that shall have been cured (without such cure resulting
or being reasonably expected to result in a loss of material benefits or a
material liability to VFI, otherwise having or being reasonably expected to
have a material negative impact on VFI's business or financial condition or
materially impairing or being reasonably expected to materially impair the
value to HP of VFI) in all material respects shall be disregarded and (ii)
any inaccuracy therein (together with all other inaccuracies) that shall not
have resulted nor shall reasonably be expected to result in a loss by VFI of
a material benefit or in a material liability to VFI, that shall not
otherwise have had, nor shall reasonably be expected to have, a material
negative impact on VFI's business or financial condition and that shall not
have materially impaired, nor shall reasonably be expected to materially
impair the value to HP of VFI, shall be disregarded), with the same force and
effect as if made on and as of the Closing Date, except in such cases (other
than the representations in Sections 2.2, 2.3 and 2.21) where the failure to
be so true and correct would not have a Material
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Adverse Effect on VFI. HP shall have received a certificate with respect to
the foregoing signed on behalf of VFI by the Chief Executive Officer and the
Chief Financial Officer of VFI;
(b) AGREEMENTS AND COVENANTS. VFI shall have performed or
complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date, and HP shall have received a certificate to such effect signed
on behalf of VFI by the Chief Executive Officer and the Chief Financial
Officer of VFI;
(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with
respect to VFI shall have occurred since the date of this Agreement; and
(d) OPINION OF ACCOUNTANTS. HP shall have received from Ernst &
Young LLP, independent auditors for VFI, a copy of a letter addressed to VFI
dated on the Closing Date, in substance reasonably satisfactory to HP (and
which may contain customary qualifications and assumptions), to the effect
that Ernst & Young LLP concurs with VFI management's conclusion that no
conditions exist related to VFI that would preclude HP from accounting for
the Merger as a pooling of interests; and HP shall have received from Price
Waterhouse LLP, the independent auditors for HP, a letter dated the Closing
Date, in substance reasonably satisfactory to HP (which may contain customary
qualifications and assumptions and which may be based in part on the letter
referred to above from Ernst & Young LLP to VFI) to the effect that Price
Waterhouse LLP concurs with HP management's conclusion that, as of that date,
no conditions exist that would preclude HP from accounting for the Merger as
a "pooling of interests."
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the Merger by the
stockholders of VFI:
(a) by mutual written consent duly authorized by the Boards of
Directors of HP and VFI;
(b) by either VFI or HP if the Merger shall not have been
consummated by October 31, 1997 for any reason; PROVIDED, HOWEVER, 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 a principal
cause of or resulted in the
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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 either VFI or HP if a Governmental Entity shall have issued
an order, decree or ruling or taken any other action, in any case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or other action is final and
nonappealable;
(d) by either VFI or HP if the required approvals of the
stockholders of VFI contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
VFI stockholders duly convened therefor as contemplated by this Agreement or
at any adjournment thereof (PROVIDED that the right to terminate this
Agreement under this Section 7.1(d) shall not be available to VFI where the
failure to obtain VFI stockholder approval shall have been caused by the
action or failure to act of VFI and such action or failure to act constitutes
a material breach by VFI of this Agreement);
(e) by either VFI or HP at any time prior to the approval of the
Merger by VFI's stockholders, if the Board of Directors of VFI accepts or
recommends a Superior Proposal to the stockholders of VFI;
(f) by HP, if the Board of Directors of VFI shall have withheld,
withdrawn or modified in a manner adverse to HP its recommendation in favor
of adoption and approval of this Agreement and approval of the Merger;
(g) by VFI, upon a breach of any representation, warranty,
covenant or agreement on the part of HP set forth in this Agreement, or if
any such representation or warranty of HP shall have become inaccurate, in
either case such that the conditions set forth in Section 6.2(a) or Section
6.2(b) would not be satisfied as of the time of such breach or as of the time
such representation or warranty shall have become inaccurate, PROVIDED that
if such inaccuracy in HP's representations and warranties or breach by HP is
curable by HP through the exercise of its reasonable best efforts, then (i)
VFI may not terminate this Agreement under this Section 7.1(g) with respect
to a particular breach or inaccuracy prior to or during the 45-day period
commencing upon delivery by VFI of written notice to HP describing such
breach or inaccuracy, provided HP continues to exercise reasonable best
efforts to cure such breach or inaccuracy and (ii) VFI may not, in any event,
terminate this Agreement under this Section 7.1(g) if such inaccuracy or
breach shall have been cured (without such cure resulting in or being
reasonably expected to result in a loss of material benefits or a material
liability to HP or otherwise having or being reasonably expected to have a
material negative impact upon HP's business or financial condition) in all
material respects during such 45-day period; and, PROVIDED FURTHER that VFI
may not
-53-
terminate this Agreement pursuant to this paragraph (g) if it shall have
materially breached this Agreement; or
(h) by HP, upon a breach of any representation, warranty, covenant
or agreement on the part of VFI set forth in this Agreement, or if any such
representation or warranty of VFI shall have become inaccurate, in either
case such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become inaccurate, PROVIDED, that if
such inaccuracy in VFI's representations and warranties or breach by VFI is
curable by VFI through the exercise of its reasonable best efforts, then (i)
HP may not terminate this Agreement under this Section 7.1(h) with respect to
a particular breach or inaccuracy prior to or during the 45-day period
commencing upon delivery by HP of written notice to VFI describing such
breach or inaccuracy, provided VFI continues to exercise reasonable best
efforts to cure such breach or inaccuracy and (ii) HP may not, in any event,
terminate this Agreement under this Section 7.1(h) if such inaccuracy or
breach shall have been cured (without such cure resulting in or being
reasonably expected to result in a loss of material benefits or a material
liability to VFI, otherwise having, or being reasonably expected to have, a
material negative impact upon VFI's business or financial condition or
materially impairing or being reasonably expected to materially impair the
value to HP of VFI) in all material respects during such 45-day period; and,
PROVIDED FURTHER that HP may not terminate this Agreement pursuant to this
paragraph (h) if it shall have materially breached this Agreement.
7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination of
this Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties
hereto. In the event of the termination of this Agreement as provided in
Section 7.1, this Agreement shall be of no further force or effect, except
(i) as set forth in this Section 7.2, Section 7.3 and Article 8
(miscellaneous), each of which shall survive the termination of this
Agreement, (ii) nothing herein shall relieve any party from liability for any
willful breach of this Agreement, (iii) nothing herein shall relieve VFI from
liability for any breach (whether or not willful) of the representation set
forth in Section 2.17 or the covenants set forth in Section 4.1(m) or Section
5.18(a), and (iv) nothing herein shall relieve HP from liability for any
breach (whether or not willful) of the representation set forth in Section
3.7 or the covenant set forth in Section 5.18(a). No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement, all of which obligations shall survive termination
of this Agreement in accordance with their terms.
-54-
7.3 FEES AND EXPENSES.
(a) GENERAL. Except as set forth in this Section 7.3, all fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses
whether or not the Merger is consummated; PROVIDED, HOWEVER, that HP and VFI
shall share equally all fees and expenses, other than attorneys' and
accountants fees and expenses, incurred in relation to the printing and
filing (with the SEC) of the Proxy Statement (including any preliminary
materials related thereto) and the Registration Statement (including
financial statements and exhibits) and any amendments or supplements thereto.
(b) VFI PAYMENTS.
(i) If prior to or concurrent with termination of this
Agreement either (x) the Board of Directors of VFI shall have withheld,
withdrawn or modified in a manner adverse to HP its recommendation in favor
of adoption and approval of this Agreement and approval of the Merger and
there shall not have occurred since the date hereof a Material Adverse Effect
on HP prior to the time such recommendation is withheld, withdrawn or
modified and HP shall not be in material breach of this Agreement at the time
such recommendation is withheld, withdrawn or modified (other than such
breaches as have been cured as of the time such recommendation is withheld,
withdrawn or modified), or (y) the Board of Directors of VFI accepts or
recommends a Superior Proposal to the shareholders of VFI and there shall not
have occurred since the date hereof a Material Adverse Effect on HP prior to
the time of such acceptance or recommendation and HP shall not be in material
breach of this Agreement at the time of such acceptance or recommendation
(other than such breaches as have been cured as of the time of such
acceptance or recommendation), then VFI shall pay to HP an amount equal to
$30 million within one business day following the termination of this
Agreement.
(ii) If no payment shall be required pursuant to clause
7.3(b)(i) above, and if:
(x) the vote of the stockholders of VFI as
contemplated by this Agreement approving and adopting this Agreement and
approving the Merger shall not have been obtained by reason of the failure to
obtain the required vote at a meeting of stockholders duly convened therefor
as contemplated by this Agreement (a "VFI NEGATIVE VOTE"), and
(y) prior to such VFI Negative Vote there shall
have occurred an Acquisition Proposal for a VFI Acquisition (as defined
below)
-55-
which shall have been publicly disclosed and not withdrawn prior to such VFI
Negative Vote, and
(z) within 6 months following the termination of
this Agreement, VFI shall enter into a definitive agreement providing for a
VFI Acquisition (regardless of with whom such definitive acquisition
agreement is entered into) or the Board of Directors of VFI shall recommend
to the VFI stockholders that they accept a tender or exchange offer (or
series of related tender or exchange offers), not by VFI or its subsidiaries,
for 40% or more of the VFI Common Stock,
then, provided that there shall have not occurred a Material Adverse
Effect on HP prior to the VFI Negative Vote and provided that HP shall not
have been in material breach of this Agreement at the time of the VFI
Negative Vote, VFI shall pay to HP an amount equal to $30 million within one
business day following consummation of a VFI Acquisition (provided that a VFI
Acquisition is consummated within 18 months following termination of this
Agreement (regardless of with whom such VFI Acquisition is consummated)).
"VFI ACQUISITION" means: any transaction or series of related transactions
involving (i) a merger or consolidation or other similar business combination
of VFI pursuant to which the stockholders of VFI immediately preceding such
transaction or series of related transactions hold less than 60% of the
equity interests in the surviving or resulting entity of such transaction or
transactions; (ii) a sale by VFI or its subsidiaries of assets (including
capital stock or assets of VFI's subsidiaries but excluding assets sold in
the ordinary course of business and VFI intracompany transfers) having a fair
market value in excess of 40% of the fair market value of all the assets of
VFI and its subsidiaries immediately prior to such sale; (iii) a sale and
issuance by VFI of shares of capital stock of VFI which would, upon issuance,
represent more than 40% or more of the outstanding shares of capital stock of
VFI other than in an underwritten public offering or underwritten private
placement; or (iv) the acquisition by any person or group (including without
limitation by way of a tender offer or an exchange offer) of beneficial
ownership or a right to acquire beneficial ownership of 40% or more of the
then outstanding shares of capital stock of VFI.
(c) Payment of the fees described in Section 7.3(b) above shall
not be in lieu of damages incurred in the event of breach of this Agreement.
7.4 AMENDMENT. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto.
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
-56-
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. Delay in exercising any right under
this Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of VFI, HP and Merger Sub contained in this
Agreement shall terminate at the Effective Time, and only the covenants that
by their terms survive the Effective Time 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 sent via telecopy (receipt confirmed) to the parties at
the following addresses or telecopy numbers (or at such other address or
telecopy numbers for a party as shall be specified by like notice):
(a) if to HP or Merger Sub, to:
Hewlett-Packard Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Director, Corporate Department
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-57-
with a copies to:
Hewlett-Packard Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to VFI, to:
VeriFone, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cooley Godward LLP
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-58-
8.3 INTERPRETATION; KNOWLEDGE.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise
indicated. When a reference is made in this Agreement to Sections, such
reference shall be to a Section of 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
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. When reference is made herein to "THE BUSINESS OF" an
entity, such reference shall be deemed to include the business of all direct
and indirect subsidiaries of such entity. Reference to the subsidiaries of an
entity shall be deemed to include all direct and indirect subsidiaries of
such entity. In determining whether any item results in a loss by VFI or HP
of "MATERIAL BENEFITS" or "MATERIAL LIABILITY" to VFI or HP, such reference
to VFI or HP, as the case may be, shall be deemed to refer, as the case may
be, to VFI and its subsidiaries taken as a whole or HP and its subsidiaries
taken as a whole. In addition, reference to a "MATERIAL NEGATIVE IMPACT"
upon the business or financial condition of VFI or HP shall be deemed to
refer to the business or financial condition of VFI and its subsidiaries
taken as a whole or HP and its subsidiaries taken as a whole, as the case may
be, and such term shall be deemed to be a lower standard of materiality than
a Material Adverse Effect.
(b) For purposes of this Agreement (a) as it relates to HP, the
term "KNOWLEDGE" means, with respect to any matter in question, that any of
the Chief Executive Officer, Chief Financial Officer or Controller of HP, has
actual knowledge of such matter and (b) as it relates to VFI, the term
"KNOWLEDGE" means, with respect to any matter in question, that any of the
Chief Executive Officer, Chief Financial Officer or General Counsel or
corporate counsel has actual knowledge of such matter.
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 party, it being understood that all
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and
the documents and instruments and other agreements among the parties hereto
as contemplated by or referred to herein, including VFI Schedules (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, it being understood that the
-59-
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 5.12.
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 OTHER REMEDIES; SPECIFIC PERFORMANCE. 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. The
parties hereto agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to seek an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
8.8 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof.
8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation 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.
8.10 ASSIGNMENT. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
-60-
8.11 WAIVER OF JURY TRIAL. EACH OF HP, VFI AND MERGER SUB HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF HP, VFI OR MERGER SUB IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
*****
-61-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
HEWLETT-PACKARD COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Title: Executive Vice President
-----------------------------
TOWER BRIDGE ACQUISITION CORPORATION
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Title: V.P. and Secretary
-----------------------------
VERIFONE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Title: Senior V.P. and CFO
-----------------------------
**** REORGANIZATION AGREEMENT ****
EXHIBIT A
VOTING AGREEMENT
This Voting Agreement ("AGREEMENT") is made and entered into as of
April 22, 1997, between Hewlett-Packard Company, a California corporation
("PARENT"), and the undersigned stockholder ("STOCKHOLDER") of VeriFone, Inc., a
Delaware corporation (the "COMPANY").
RECITALS
A. Concurrently with the execution of this Agreement, Parent, the Company
and Tower Bridge Acquisition Corporation, a Delaware corporation and a wholly-
owned subsidiary of Parent ("MERGER SUB"), are entering into an Agreement and
Plan of Reorganization (the "MERGER AGREEMENT") which provides for the merger
(the "MERGER") of Merger Sub with and into the Company. Pursuant to the Merger,
shares of capital stock of the Company will be converted into Common Stock of
Parent on the basis described in the Merger Agreement.
B. The Stockholder is the record holder of such number of outstanding
shares of Common Stock of the Company as is indicated on the final page of this
Agreement. In addition, the Stockholder holds options to purchase such number
of shares of Common Stock of the Company as is indicated on the final page of
this Agreement.
C. As a material inducement to enter into the Merger Agreement, Parent
desires the Stockholder to agree, and the Stockholder is willing to agree, to
vote the Shares (as defined below) and other such shares of capital stock of the
Company over which Stockholder has voting power so as to facilitate consummation
of the Merger.
NOW, THEREFORE, intending to be legally bound, the parties agree as
follows:
1. AGREEMENT TO VOTE SHARES; ADDITIONAL PURCHASES.
1.1 AGREEMENT TO VOTE SHARES. At every meeting of the stockholders
of the Company called with respect to any of the following, and at every
adjournment thereof, and on every action or approval by written consent of the
stockholders of the Company with respect to any of the following, Stockholder
shall cause the Shares and any New Shares (as defined below) to be voted in
favor of approval of the Merger Agreement and the Merger.
1.2 DEFINITION. For purposes of this Agreement, "Shares" shall mean
all issued and outstanding shares of Common Stock of the Company owned of record
or beneficially (over which beneficially-owned shares the Stockholder exercises
voting power) by the Stockholder as of the record date for persons entitled
(a) to receive notice of, and to vote at the meeting of the stockholders of the
Company called for the purpose of voting on the matter referred to in
Section 1.1, or (b) to take action by written consent of the stockholders of the
Company with respect to the matter referred to in Section 1.1
1.3 ADDITIONAL PURCHASES. Stockholder agrees that any shares of
capital stock of the Company that Stockholder purchases or with respect to which
Stockholder otherwise acquires beneficial ownership (over which beneficially-
owned shares the Stockholder exercises voting power) after the execution of this
Agreement and prior to the date of termination of this Agreement ("New Shares")
shall be subject to the terms and conditions of this Agreement to the same
extent as if they constituted Shares.
2. IRREVOCABLE PROXY. Concurrently with the execution of this Agreement,
Stockholder agrees to deliver to Parent a proxy in the form attached hereto as
Exhibit A (the "PROXY"), which shall be irrevocable, with respect to the Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. Stockholder (i) is
the owner of the shares of Common Stock of the Company, and the options to
purchase shares of Common Stock of the Company, indicated on the final page of
this Agreement, which at the date hereof are free and clear of any liens,
claims, options, charges or other encumbrances; (ii) does not beneficially own
any securities of the Company other than the shares of Common Stock of the
Company, and options to purchase shares of Common Stock of the Company,
indicated on the final page of this Agreement; and (iii) has full power and
authority to make, enter into and carry out the terms of this Agreement.
4. ADDITIONAL DOCUMENTS. Stockholder and Parent hereby covenant and
agree to execute and deliver any additional documents necessary or desirable, in
the reasonable opinion of Parent or Stockholder, as the case may be, to carry
out the intent of this Agreement.
5. CONSENT AND WAIVER. Stockholder (not in his capacity as a director or
officer of the Company) hereby gives any consents or waivers that are reasonably
required for the consummation of the Merger under the terms of any agreements to
which Stockholder is a party or pursuant to any rights Stockholder may have.
-2-
6. TERMINATION. This Agreement shall terminate and shall have no further
force or effect as of the earlier to occur of (i) such date and time as the
Merger shall become effective in accordance with the terms and provisions of the
Merger Agreement or (ii) such date and time as the Merger Agreement shall have
been terminated pursuant to Article VII thereof.
7. MISCELLANEOUS.
7.1 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
7.2 BINDING EFFECT AND ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without prior written consent of the other.
7.3 AMENDMENTS AND MODIFICATION. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
7.4 SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. The parties hereto
acknowledge that Parent will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
Stockholder set forth herein. Therefore, it is agreed that, in addition to any
other remedies that may be available to Parent upon any such violation, Parent
shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to Parent at law
or in equity.
7.5 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if delivered in
person, by cable, telegram or telex, or sent by mail (registered or certified
mail, postage prepaid, return receipt requested) or overnight courier (prepaid)
to the respective parties as follows:
If to Parent: Hewlett-Packard Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President and Chief Executive Officer
-3-
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to the Stockholder: To the address for notice set forth on the
last page hereof.
With a copy to: Cooley Godward LLP
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall only be effective upon receipt.
7.6 GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of
California (without regard to the principles of conflict of laws thereof).
7.7 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matter.
7.8 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
7.9 EFFECT OF HEADINGS. The section headings herein are for
convenience only and shall not affect the construction or interpretation of
this Agreement.
-4-
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.
PARENT
By:__________________________________
Name:________________________________
Title:_______________________________
STOCKHOLDER:
By:__________________________________
Name:________________________________
Title:_______________________________
Stockholder's Address for Notice:
_____________________________________
_____________________________________
_____________________________________
________Outstanding Shares of Common Stock
of the Company
________Shares of Common Stock of the Company
subject to outstanding stock options
***VOTING AGREEMENT***
-5-
EXHIBIT A
IRREVOCABLE PROXY
The undersigned Stockholder of VeriFone, Inc., a Delaware corporation
(the "COMPANY"), hereby irrevocably appoints the directors on the Board of
Directors of Hewlett-Packard Company, a California corporation ("PARENT"),
and each of them, as the sole and exclusive attorneys and proxies of the
undersigned, with full power of substitution and resubstitution, to the full
extent of the undersigned's rights with respect to the voting of the Shares
(as defined in the Voting Agreement of even date between Parent and the
Stockholder (the "VOTING AGREEMENT")) on the matter described below (and on
no other matter), until such time as that certain Agreement and Plan of
Reorganization dated as of April 22, 1997 (the "MERGER AGREEMENT"), among
Parent, Tower Bridge Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB"), and the Company, shall be
terminated in accordance with its terms or the Merger (as defined in the
Merger Agreement) becomes effective. Upon the execution hereof, all prior
proxies given by the undersigned with respect to the Shares and any and all
other shares or securities issued or issuable in respect thereof on or after
the date hereof are hereby revoked and no subsequent proxies will be given.
This proxy is irrevocable, is granted pursuant to the Voting Agreement and
is granted in consideration of Parent entering into the Merger Agreement. The
attorneys and proxies named above will be empowered at any time prior to the
earlier of termination of the Merger Agreement and the date on which the Merger
becomes effective to exercise all voting rights (including, without limitation,
the power to execute and deliver written consents with respect to the Shares) of
the undersigned at every annual, special or adjourned meeting of the Company's
stockholders, and in every written consent in lieu of such a meeting, or
otherwise, to vote the Shares in favor of approval of the Merger and the Merger
Agreement.
The attorneys and proxies named above may only exercise this proxy to vote
the Shares subject hereto at any time prior to the earlier of termination of the
Merger Agreement and the date on which the Merger becomes effective, at every
annual, special or adjourned meeting of the Stockholders of the Company and in
every written consent in lieu of such meeting, in favor of approval of the
Merger and the Merger Agreement. The undersigned Stockholder may vote the
Shares on all other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
This proxy is irrevocable.
Dated: April __, 1997
Signature of Stockholder:____________________
Print Name of Stockholder:___________________
***PROXY***
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EXHIBIT B
VERIFONE, INC. AFFILIATE AGREEMENT
This AFFILIATE AGREEMENT ("AGREEMENT") is dated as of April 22, 1997,
between Hewlett-Packard Company, a California corporation ("PARENT"),
VeriFone, Inc., a Delaware corporation (the "COMPANY") and the undersigned
(the "AFFILIATE").
WHEREAS, Parent and the Company have entered into an Agreement and Plan
of Reorganization ("MERGER AGREEMENT") pursuant to which Parent and the
Company intend to enter into a business combination transaction to pursue
their long term business strategies (the "MERGER") (capitalized terms used
and not otherwise defined herein shall have the respective meanings ascribed
to them in the Merger Agreement);
WHEREAS, pursuant to the Merger, at the Effective Time, all of the
issued and outstanding shares of the Company's Common Stock, including any
shares owned by Affiliate as of the Effective Time, will be converted into
shares of Parent Common Stock as set forth in the Merger Agreement;
WHEREAS, Affiliate has been advised that Affiliate may be deemed to be
an "affiliate" of the Company, as the term "affiliate" is used (i) for
purposes of paragraphs (c) and (d) of Rule 145 of the Rules and Regulations
of the Securities and Exchange Commission (the "SEC") and (ii) in the SEC's
Accounting Series Releases 130 and 135, as amended, although nothing
contained herein shall be construed as an admission by Affiliate that
Affiliate is in fact an affiliate of the Company;
WHEREAS, it will be a condition to consummation of the Merger pursuant
to the Merger Agreement that the independent accounting firms that audit the
annual financial statements of Parent and the Company will have delivered
their written concurrences with the conclusions of management of Parent and
the Company to the effect that the Merger will be accounted for as a pooling
of interests under Accounting Principles Board Opinion No. 16;
WHEREAS, the execution and delivery of this Agreement by Affiliate is a
material inducement to Parent to enter into the Merger Agreement.
NOW, THEREFORE, intending to be legally bound, the parties hereby agree
as follows:
1. ACKNOWLEDGMENTS BY AFFILIATE. Affiliate acknowledges and understands
that the representations, warranties and covenants by Affiliate set forth herein
will be relied upon by Parent, the Company, and their respective affiliates,
counsel and accounting firms for purposes of determining Parent's eligibility to
account for the Merger as a "pooling of interests," and that substantial losses
and damages may be incurred by these persons if Affiliate's representations,
warranties or covenants are breached. Affiliate has carefully read this
Agreement and the Merger Agreement and has had an opportunity to discuss the
requirements of this Agreement with Affiliate's professional advisors, who are
qualified to advise Affiliate with regard to such matters.
2. COMPLIANCE WITH RULE 145 AND THE ACT.
(a) Affiliate has been advised that (i) the issuance of shares of
Parent Common Stock in connection with the Merger is expected to be effected
pursuant to a Registration Statement on Form S-4 under the Securities Act of
1933, as amended (the "ACT"), and as such will not be deemed "restricted
securities" within the meaning of Rule 144 promulgated thereunder and resale
of such shares will not be subject to any restrictions other than as set
forth in Rule 145 of the Act unless otherwise transferred pursuant to an
effective registration statement under the Act or an appropriate exemption
from registration, (ii) Affiliate may be deemed to be an affiliate of the
Company, and (iii) no sale, transfer or other disposition by Affiliate of any
Parent Common Stock received by Affiliate in the Merger will be registered
under the Act. Affiliate accordingly agrees not to sell, transfer or
otherwise dispose of any Parent Common Stock issued to Affiliate in the
Merger unless (x) such sale, transfer or other disposition is made in
conformity with the requirements of Rule 145(d) promulgated under the Act,
(y) an authorized representative of the SEC takes the position in writing to
the effect that the SEC would take no action, or that the staff of the SEC
would not recommend that the SEC take action, with respect to such sale,
transfer or other disposition, and a copy of such written position ("No
Action Correspondence") is delivered to Parent, or (z) Affiliate delivers to
Parent a written opinion of counsel, reasonably acceptable to Parent in form
and substance, that such sale, transfer or other disposition is otherwise
exempt from registration under the Act.
(b) Parent will give stop transfer instructions to its transfer
agent with respect to any Parent Common Stock received by Affiliate pursuant
to the Merger and there will be placed on the certificates representing such
Parent Common Stock, or any substitutions therefor, a legend stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, APPLIES AND MAY ONLY BE
TRANSFERRED (A) IN CONFORMITY WITH RULE 145(d) UNDER SUCH
ACT, (B) IN ACCORDANCE WITH A WRITTEN OPINION OF
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COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND
SUBSTANCE THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR (C) AS IS
OTHERWISE PERMITTED UNDER THAT CERTAIN AFFILIATE AGREEMENT
DATED AS OF April 22, 1997, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE ISSUER."
The legend set forth above shall be removed (by delivery of a substitute
certificate without such legend) and Parent shall instruct its transfer agent
to remove such legend, if Affiliate delivers to Parent (i) satisfactory
written evidence that the shares have been sold in compliance with Rule 145
(in which case, the substitute certificate will be issued in the name of the
transferee), (ii) a copy of the No Action Correspondence, (iii) an opinion of
counsel, in form and substance reasonably satisfactory to Parent to the
effect that public sale of the shares by the holder thereof is no longer
subject to Rule 145, or (iv) a written request for removal of such legend
after the earlier of (x) the inapplicability of Rule 145 by its terms or (y)
the effective date of any action by the SEC eliminating the restrictions upon
sale, transfer or disposition under Rule 145 or otherwise rendering
compliance with such restrictions unnecessary.
3. COVENANTS RELATED TO POOLING OF INTERESTS. In accordance with SAB
65, during the period contemplated by SAB 65, until the earlier of (A)
Parent's public announcement of financial results covering at least 30 days
of combined operations of Parent and the Company or (B) the Merger Agreement
is terminated in accordance with its terms, Affiliate will not sell,
exchange, transfer, pledge, distribute, or otherwise dispose of or grant any
option, establish any "short" or put-equivalent position with respect to or
enter into any similar transaction (through derivatives or otherwise)
intended or having the effect, directly or indirectly, to reduce its risk
relative to: (A) any shares of Company Common Stock, except pursuant to and
upon the consummation of the Merger; or (B) any shares of Parent Common Stock
received by Affiliate in the Merger or any shares of Parent Common Stock
received by Affiliate upon exercise of options assumed by Parent in
connection with the Merger. Parent may, at its discretion, cause a
restrictive legend covering the restrictions referred to in this Section 3 to
be placed on Parent Common Stock certificates issued to Affiliate in the
Merger and place a stock transfer notice consistent with the restrictions
referred to in this Section 3 with its transfer agent with respect to such
certificates, provided that such restrictive legend shall be removed and/or
such notice shall be countermanded promptly upon expiration of the necessity
therefor at the request of Affiliate.
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4. PERMITTED TRANSFERS. Notwithstanding anything to the contrary
contained in this Agreement, Affiliate may (with the consent of Parent, not
to be unreasonably withheld): (a) transfer shares of Common Stock of the
Company to the Company in payment of the exercise price of options to
purchase Common Stock of the Company; (b) transfer shares of Parent Common
Stock to Parent in payment of the exercise price of options to purchase
Parent Common Stock, (c) transfer shares of Common Stock of the Company to
any organization qualified under Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, so long as such organization has traditionally been
supported by contributions from the general public (as opposed to being
supported largely by a specific donor); and (d) transfer of shares of Common
Stock of the Company or shares of Parent Common Stock to a trust established
for the benefit of Affiliate and/or for the benefit of one or more members of
Affiliate's family, or make a bona fide gift of shares of Common Stock of the
Company or shares of Parent Common Stock to one or more members of
Affiliate's family, provided that in the case of a transfer or gift pursuant
to this clause (d), a transferee of such shares agrees to be bound by the
limitations set forth in this Agreement.
5. SPECIFIC PERFORMANCE. Affiliate agrees that irreparable damages
would occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms, or were otherwise
breached. It is, accordingly, agreed that Parent shall be entitled to
injunctive relief to prevent breaches of the provisions of this Agreement,
and to enforce specifically the terms and provisions hereof, in addition to
any other remedy to which Parent may be entitled at law or in equity.
6. MISCELLANEOUS.
(a) For the convenience of the parties hereto, this Agreement may
be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
document.
(b) This Agreement shall be enforceable by, and shall inure to the
benefit of and be binding upon, the parties hereto and their respective
successors and assigns. As used herein, the term "successors and assigns"
shall mean, where the context so permits, heirs, executors, administrators,
trustees and successor trustees, and personal and other representatives.
(c) This Agreement shall be governed by and construed, interpreted
and enforced in accordance with the internal laws of the State of California
(without regard to the principles of conflict of laws thereof).
(d) If a court of competent jurisdiction determines that any
provision of this Agreement is not enforceable or enforceable only if limited
in time
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and/or scope, this Agreement shall continue in full force and effect with
such provision stricken or so limited.
(e) Counsel to and accountants for the parties to the Agreement
shall be entitled to rely upon this Agreement as needed.
(f) This Agreement shall not be modified or amended, or any right
hereunder waived or any obligation excused, except by a written agreement
signed by both parties.
(g) Notwithstanding any other provision contained herein, this
Agreement and all obligations of Affiliate hereunder shall terminate upon the
termination of the Merger Agreement in accordance with its terms.
(h) Parent currently intends to file on a timely basis, from and
after the Effective Time and as long as is necessary in order to permit
Affiliate to sell Parent Common Stock held by Affiliate pursuant to Rule 145,
all reports required to be filed by it pursuant to the Exchange Act, and
currently intends to otherwise make available adequate information regarding
Parent in such manner as may be required to satisfy the requirements of Rule
144(c) under the Act as now in effect.
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Executed as of the date shown on the first page of this Agreement.
HEWLETT-PACKARD COMPANY
By:__________________________________
Name:________________________________
Title:_______________________________
VERIFONE, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
AFFILIATE
By:__________________________________
Name of Affiliate:___________________
Name of Signatory (if different from
Affiliate):
_____________________________________
Title of Signatory
(if applicable):_____________________
Number of shares of the Company's Common Stock beneficially owned by Affiliate:
__________________________________
Number of shares of the Company's Common Stock subject to options beneficially
owned by Affiliate:
__________________________________
***AFFILIATE AGREEMENT***
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