EXHIBIT (c)(13)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated January 11, 1999 (this "Agreement"), by
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and among Compaq Computer Corporation, a Delaware corporation ("Parent"), and
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▇▇▇▇▇▇▇▇.▇▇▇, a California corporation (the "Company").
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W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent and the Company are entering into an Agreement and Plan of
Merger (as such agreement may hereafter be amended from time to time, the
"Merger Agreement"; capitalized terms used but not defined in this Agreement
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shall have the meanings ascribed to them in the Merger Agreement), which
provides, upon the terms and subject to the conditions thereof, for (i) the
commencement by the Purchaser (as defined in the Merger Agreement) of a tender
offer (the "Offer") to purchase all of the issued and outstanding shares of the
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common stock, no par value, of the Company ("Common Stock") at the applicable
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Offer Price, and (ii) the subsequent merger of the Purchaser with and into the
Company (the "Merger"), whereby each share of Common Stock, other than shares
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owned directly or indirectly by Parent, the Purchaser or the Company and other
than dissenting shares, will be converted into the right to receive in cash the
Offer Price applicable thereto; and
WHEREAS, as a condition to the willingness of Parent to enter into the
Merger Agreement, Parent has required that the Company agree, and in order to
induce Parent to enter into the Merger Agreement, the Company has agreed, to
grant the Purchaser certain options to purchase shares of Common Stock of the
Company, upon the terms and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and in the Merger Agreement, the parties hereto agree as follows:
ARTICLE I
THE OPTIONS
SECTION 1.1. Grant of Top-Up Stock Option. Subject to the terms and
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conditions set forth herein, the Company hereby grants to the Purchaser an
irrevocable option (the "Top-Up Stock Option") to purchase that number of shares
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of Common Stock (the "Top-Up Option Shares") equal to the number of shares of
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Common Stock that, when added to the number of shares of Common Stock owned by
the Purchaser and its affiliates immediately following consummation of the
Offer, shall constitute 90% of the shares of Common Stock then outstanding on a
fully diluted basis (assuming the issuance of the Top-Up Option Shares) at a
purchase price per Top-Up Option Share equal to the Offer Price; provided,
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however, that the Top-Up Stock Option shall not be
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exercisable if the number of shares of Common Stock subject thereto exceeds the
number of authorized shares of Common Stock available for issuance. The Company
agrees to provide Parent and the Purchaser with information regarding the number
of shares of Common Stock available for issuance on an ongoing basis.
SECTION 1.2. Exercise of Top-Up Stock Option. (a) Subject to the
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conditions set forth in Section 2.1 and any additional requirements of law, the
Top-Up Stock Option may be exercised by the Purchaser, in whole, but not in
part, at any one time after the occurrence of a Top-Up Exercise Event (as
defined below) and prior to the Top-Up Termination Date (as defined below).
(b) A "Top-Up Exercise Event" shall occur for purposes of this
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Agreement upon the Purchaser's acceptance for payment pursuant to the Offer of
shares of Common Stock constituting more than 50% but less than 90% of the
shares of Common Stock then outstanding on a fully diluted basis.
(c) Except as provided in the last sentence of this Section 1.2.(c),
the "Top-Up Termination Date" shall occur for purposes of this Agreement upon
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the earliest to occur of: (i) the Effective Time; (ii) the date which is ten
(10) business days after the occurrence of a Top-Exercise Event; (iii) the
termination of the Merger Agreement; and (iv) the date on which the Purchaser
waives the Minimum Condition and accepts for payment the Revised Minimum Number
of Shares.
Notwithstanding the occurrence of the Top-Up Termination Date, the Purchaser
shall be entitled to purchase the Top-Up Option Shares if it has exercised the
Top-Up Option in accordance with the terms hereof prior to such occurrence, and
the occurrence of the Top-Up Termination Date shall not affect any rights
hereunder which by their terms do not terminate or expire prior to or as of such
date.
(d) In the event the Purchaser wishes to exercise the Top-Up Stock
Option, the Purchaser shall send to the Company a written notice (a "Top-Up
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Exercise Notice," the date of which notice is referred to herein as the "Top-Up
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Notice Date") specifying the denominations of the certificate or certificates
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evidencing the Top-Up Option Shares which the Purchaser wishes to receive, the
place for the closing of the purchase and sale pursuant to the Top-Up Option
(the "Top-Up Closing") and a date not earlier than three (3) business days nor
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later than ten (10) business days from the Top-Up Notice Date for the Top-Up
Closing (the "Top-Up Closing Date"); provided, however, that (i) if the Top-Up
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Closing cannot be consummated by reason of any applicable laws or orders, the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which such restriction on consummation has expired or
been terminated, and (ii) without limiting the foregoing, if prior notification
to or approval of any Governmental Entity is required in connection with such
purchase, the Purchaser and the Company shall promptly file the required notice
or application for approval and shall cooperate in the expeditious filing of
such notice or application, and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which, as the case
may be, (A) any required notification period has expired or been terminated, or
(B) any required approval has been obtained, and in either event, any requisite
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waiting period has expired or been terminated. The Company shall, within two
(2) business days after receipt of the Top-Up Exercise Notice, deliver written
notice to the Purchaser specifying the number of Top-Up Option Shares and the
aggregate purchase price therefor.
SECTION 1.3. Grant of Topping Fee Option. (a) The Company hereby
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grants to Parent an irrevocable option (the "Topping Fee Option") to purchase up
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to a number of shares of Common Stock equal to the Topping Fee Option Number (as
defined in Section 1.3(b)). The Topping Fee Option shall be exercisable in the
manner set forth in Section 2.2 at a purchase price per share equal to the
Offer Price (the "Exercise Price"). The Topping Fee Option granted pursuant to
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this Agreement shall expire on the earliest to occur of: (i) the Effective Time,
and (ii) six (6) months after any termination of the Merger Agreement pursuant
to Article VII thereof (the "Topping Fee Termination Date"); provided, however,
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that the Topping Fee Option shall not expire if the Topping Fee Exercise Notice
(as defined below) has been given by Parent prior to the Topping Fee Termination
Date.
(b) For purposes of this Agreement, the "Topping Fee Option Number"
shall initially be that number of authorized shares of the Company's Common
Stock available for issuance, and shall be adjusted hereafter to reflect changes
in the Company's capitalization occurring after the date hereof in accordance
with Section 1.5.
SECTION 1.4. Exercise Of Topping Fee Option. At any time or from time
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to time prior to the Topping Fee Termination Date, Parent (or its designee) may
exercise the Topping Fee Option, in whole or in part, if on or after the date
hereof:
(a) any corporation, partnership, individual, trust, unincorporated
association, or other entity or "person" (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) other than
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Parent or any of its "affiliates" (as defined in the Exchange Act) (a "Third
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Party"), shall have:
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(i) commenced a bona fide tender offer or exchange offer for any
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shares of Common Stock of the Company, the consummation of which would
result in "beneficial ownership" (as defined under the Exchange Act) by
such Third Party (together with all such Third Party's affiliates and
"associates" (as such term is defined in the Exchange Act)) of 15% or more
of the then outstanding voting equity of the Company (either on a primary
or a fully diluted basis);
(ii) acquired beneficial ownership of shares of Common Stock of
the Company which, when aggregated with any shares of Company Stock already
owned by such Third Party, its affiliates and associates, would result in
the aggregate beneficial ownership by such Third Party its affiliates and
associates of 15% or more of the then outstanding voting equity of the
Company (either on a primary or a fully diluted basis), provided, however,
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that "Third Party" for purposes of this clause (ii) shall not include any
corporation, partnership, person or other entity or group which
beneficially owns more than
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15% of the outstanding voting equity of the Company (either on a primary or
a fully diluted basis) as of the date hereof and that does not, after the
date hereof, increase such ownership percentage by more than an additional
1% of the outstanding voting equity of the Company (either on a primary or
a fully diluted basis);
(iii) solicited "proxies" in a "solicitation" subject to the
proxy rules under the Exchange Act or executed any written consent with
respect to, or become a "participant" in, any "solicitation" (as such terms
are defined in Regulation 14A under the Exchange Act), in each case with
respect to the Common Stock of the Company; or
(b) any of the events described in Section 7.1(d)(ii) or (d)(iii) of
the Merger Agreement that would allow Parent to terminate the Merger Agreement
has occurred (but without the necessity of Parent having terminated the Merger
Agreement).
In the event that Parent wishes to exercise all or any part of the
Topping Fee Option, Parent shall give written notice (the "Topping Fee Exercise
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Notice," with the date of the Topping Fee Exercise Notice being referred to
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herein as the "Topping Fee Notice Date") to the Company, specifying the number
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of shares of Common Stock of the Company it will purchase and a place and date
(not earlier than three (3) nor later than ten (10) business days from the
Topping Fee Notice Date) for closing such purchase (a "Topping Fee Closing");
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provided, however, that (i) if the Topping Fee Closing cannot be consummated by
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reason of any applicable laws or orders, the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which such
restriction on consummation has expired or been terminated, and (ii) without
limiting the foregoing, if prior notification to or approval of any Governmental
Entity is required in connection with such purchase, Parent and the Company
shall promptly file the required notice or application for approval and shall
cooperate in the expeditious filing of such notice or application, and the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which, as the case may be, (A) any required
notification period has expired or been terminated, or (B) any required approval
has been obtained, and in either event, any requisite waiting period has expired
or been terminated.
SECTION 1.5. Adjustments Upon Share Issuances, Changes in
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Capitalization, etc. (a) In the event of any change in the Common Stock or in
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the number of outstanding shares of Common Stock by reason of a stock dividend,
split-up, recapitalization, combination, exchange of shares or similar
transaction or any other change in the corporate or capital structure of the
Company (including, without limitation, the declaration or payment of an
extraordinary dividend of cash, securities or other property), the type and
number of the shares to be issued by the Company upon exercise of the Topping
Fee Option granted hereunder shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such transaction, so that
Parent shall receive upon exercise of such Option the number and class of shares
or other securities or property that Parent would have received with respect to
the Common Stock if such Option had been exercised immediately prior to such
event or the record date therefor, as applicable, and such Common Stock
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had elected to the fullest extent it would have been permitted to elect, to
receive such securities, cash or other property.
(b) In the event that the Company shall enter into an agreement (i)
to consolidate with or merge into any person, other than Parent or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Parent or one of
its subsidiaries, to merge into the Company and the Company shall be the
continuing or surviving corporation, but, in connection with such merger, the
then outstanding shares of Company's Common Stock shall be changed into or
exchanged for stock or other securities of the Company or any other person or
cash or any other property, or the then outstanding shares of Company's Common
Stock shall after such merger represent less than 50% of the outstanding shares
and share equivalents of the surviving corporation, or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Parent or one of its subsidiaries, then, and in each such case, proper
provision shall be made in the agreements governing such transaction so that
Parent shall receive upon exercise of the Topping Fee Option granted hereunder
the number and class of shares or other securities or property that Parent would
have received with respect to the Common Stock if such Option had been exercised
immediately prior to such transaction or the record date therefor, as
applicable, and such Common Stock had elected to the fullest extent it would
have been permitted to elect, to receive such securities, cash or other
property.
(c) The rights of Parent under this Section 1.5 shall be in addition
to, and shall in no way limit, its rights against the Company for any breach of
the Merger Agreement.
(d) The provisions of this Agreement shall apply with appropriate
adjustments to any securities for which the Topping Fee Option granted hereunder
becomes exercisable pursuant to this Section 1.5.
ARTICLE II
CLOSING
SECTION 2.1. Conditions to Closing. The obligation of the Company to
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deliver any shares of Common Stock to Parent upon the exercise of the Top-Up
Option or the Topping Fee Option, as applicable, is subject to the following
conditions:
(a) All waiting periods, if any, under the HSR Act applicable to the
issuance of Common Stock pursuant to the Top-Up Option or the Topping Fee
Option hereunder shall have expired or have been terminated; and
(b) There shall be no preliminary or permanent injunction or other
final, non-appealable judgment by a court of competent jurisdiction
preventing or prohibiting the exercise of the Top-Up Option or the Topping
Fee Option, as applicable, or the delivery of the shares of Common Stock in
respect of any such exercise.
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SECTION 2.2. Closing. (a) At any Top-Up Closing or Topping Fee
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Closing, (i) the Company shall deliver to the Purchaser or Parent, as
applicable, a certificate or certificates evidencing the applicable number of
shares of Common Stock being purchased in proper form for transfer upon exercise
of the Top-Up Option or the Topping Fee Option, as applicable, in the
denominations designated by the Purchaser or Parent in the Top-Up Exercise
Notice or the Topping Fee Exercise Notice, in each case as applicable, and, if
the Topping Fee Option has been exercised in part, a new Topping Fee Option
evidencing the rights of Parent to purchase the balance of the shares of Common
Stock subject thereto, and (ii) the Purchaser or Parent shall purchase the
shares of Common Stock from the Company at the Offer Price or the Exercise
Price, as applicable. Payment by the Purchaser of the Offer Price or Parent of
the Exercise Price may be made, at the option of the Purchaser or Parent, by
delivery of (i) cash by wire transfer, or (ii) a promissory note, (adequately
secured by collateral other than the Shares acquired), in form and substance
reasonably satisfactory to the Company and in a principal face amount equal to
the aggregate amount of the applicable purchase price, which promissory note
shall bear interest at a rate equal to 6% per annum (or such level of interest
rate that is adequate to prevent imputed income under applicable regulations)
and shall be payable in full with accrued interest upon the earlier to occur of
(i) five (5) business days after the applicable Closing hereunder, and (ii) two
(2) business days following written demand given by the Company to the Purchaser
or Parent at any time following the Effective Time.
(b) The Company shall pay all expenses, and any and all federal,
state and local taxes and other charges, that may be payable in connection with
the preparation, issuance and delivery of stock certificates under this Section
2.2.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent (except as
otherwise may be prohibited, restricted or limited by law or any rule or
regulation of a regulatory entity) as follows:
SECTION 3.1. Organization; Authority Relative to this Agreement. The
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Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of California. The Company has all requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due and valid authorization, execution and delivery by
Parent, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally, and by general
equitable principles.
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SECTION 3.2. Authority to Issue Shares. The Company has taken all
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necessary corporate action to authorize and reserve and permit it to issue, and
at all times from the date hereof through the Top-Up Termination Date and the
Topping Fee Termination Date shall have reserved, the shares of Common Stock
issuable pursuant to this Agreement. All of the shares of Common Stock issuable
pursuant to this Agreement, upon their issuance and delivery in accordance with
the terms of this Agreement, will be duly authorized, validly issued, fully paid
and nonassessable, will be delivered free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Purchaser's or Parent's, as applicable, voting rights,
charges, adverse rights and other encumbrances of any nature whatsoever (other
than this Agreement) and will not be subject to any preemptive rights.
SECTION 3.3. No Conflict; Required Filings and Consents. (a) The
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execution and delivery of this Agreement by the Company does not, and the
performance by the Company of its obligations hereunder and the consummation of
the transactions contemplated hereby will not, (i) conflict with or violate the
articles of incorporation or bylaws of the Company, (ii) assuming that all
consents and filings described in Section 3.3(b) have been obtained or made,
conflict with or violate any law applicable to the Company or by which any
property or asset of the Company is bound or affected, or (iii) result in any
violation pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company is a party or by which the Company or any of its properties may be bound
or affected.
(b) No consent of, or filing with, any Governmental Entity is
required by the Company in connection with the execution and delivery of this
Agreement, the performance by the Company of its obligations hereunder or the
consummation by the Company of the transactions contemplated hereby, except for
(i) compliance with the HSR Act, and (ii) consents or filings the failure of
which to be obtained or made would not, individually or in the aggregate,
prevent or materially delay the consummation of the transactions contemplated
hereby or the performance by the Company of any of its obligations hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the Company as follows:
SECTION 4.1. Organization; Authority Relative to this Agreement.
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Parent is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Parent has all
requisite corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent and
the consummation by Parent of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of
Parent. This Agreement has been duly and validly executed and delivered by
Parent and, assuming the due and valid authorization,
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execution and delivery by the Company, constitutes a valid and binding
obligation of Parent, enforceable against Parent in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, and by general equitable principles.
SECTION 4.2. No Conflict; Required Filings and Consents. (a) The
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execution and delivery of this Agreement by Parent do not, and the performance
by Parent of its obligations hereunder and the consummation of the transactions
contemplated hereby will not, (i) conflict with or violate the articles of
incorporation or bylaws or equivalent organizational documents of Parent, (ii)
assuming that all consents and filings described in Section 4.2(b) have been
obtained or made, conflict with or violate any law applicable to Parent or by
which any property or asset of Parent is bound or affected or (iii) result in
any violation pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent is a party or by which Parent or any of its properties may be
bound or affected.
(b) No consent of, or filing with, any Governmental Entity is
required by Parent in connection with the execution and delivery of this
Agreement, the performance by Parent of any of its obligations hereunder or the
consummation by Parent of the transactions contemplated hereby, except for (i)
compliance with the HSR Act, and (ii) consents or filings the failure of which
to be obtained or made would not, individually or in the aggregate, prevent or
materially delay the consummation of the transactions contemplated hereby or the
performance by Parent of any of its obligations hereunder.
SECTION 4.3. Investment Intent. The purchase of shares of Common
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Stock pursuant to this Agreement is for the account of the Purchaser or Parent,
as applicable, for the purpose of investment and not with a view to or for sale
in connection with any distribution thereof within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"), and the rules and regulations
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promulgated thereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Registration Rights; Listing of Shares. Upon the
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written request of Parent, the Company agrees to effect up to two registrations
under the Securities Act and any applicable state securities laws covering any
part or all of the Topping Fee Option (provided that only shares of Common Stock
will be distributed to the public) and any part or all of the shares of Common
Stock purchased pursuant to the Topping Fee Option, which registration shall be
continued in effect for 90 days, unless, in the written opinion of counsel to
the Company, addressed to Parent and reasonably satisfactory in form and
substance to counsel for Parent, such registration is not required for the sale
and distribution of such shares of Common Stock in the manner contemplated by
Parent. The registration effected under this paragraph shall be effected at the
Company's expense except for any underwriting commissions. If shares of Common
Stock are offered in a firm
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commitment underwriting, the Company will provide reasonable and customary
indemnification to the underwriters. In the event of any demand for registration
pursuant to this paragraph, the Company may delay the filing of the registration
statement for a period of up to 90 days if, in the good faith judgment of the
Board of Directors of the Company, such delay is necessary in order to avoid
interference with a planned material transaction involving the Company. In the
event the Company effects a registration of its Common Stock for its own account
or for any other shareholder of the Company (other than on Form S-4 or Form S-8,
or any successor or similar form), it shall allow Parent to participate in such
registration; provided, however, that if the managing underwriters in such
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offering advise the Company in writing that in their opinion the number of
shares of Common Stock requested to be included in such registration exceeds the
number which can be sold in such offering, the Company will include the
securities requested to be included therein pro rata among the holders
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requesting to be included.
SECTION 5.2. Restrictive Legends. Certificates evidencing the
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shares of Common Stock to be delivered hereunder may include legends legally
required including the legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES OR BLUE SKY LAWS, AND MAY BE REOFFERED OR SOLD ONLY IF SO
REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT, DATED AS OF
JANUARY 11, 1999, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER UPON
REQUEST.
It is understood and agreed that (i) the reference to the resale restrictions of
the Securities Act and state securities or blue sky laws in the foregoing legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Company or Parent, as the case may be, shall have delivered to the other
party a copy of a letter from the staff of the Securities and Exchange
Commission, or an opinion of counsel, in form and substance reasonably
satisfactory to the other party, to the effect that such legend is not required
for purposes of the Securities Act or such laws; (ii) the reference to the
provisions of this Agreement in the foregoing legend shall be removed by
delivery of substitute certificate(s) without such reference if the shares of
Common Stock have been sold or transferred in compliance with the provisions of
this Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law. Certificates representing shares sold in a registered public offering
pursuant to Section 5.1 shall not be required to bear the legend set forth in
this Section 5.2.
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SECTION 5.3. Certain Repurchases. (a) Upon written notice to the
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Company by Parent (the "Repurchase Notice") at any time prior to the Topping Fee
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Termination Date (the "Repurchase Period"), the Company and its successors in
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interest shall repurchase from Parent all or any portion of (i) the Topping Fee
Option, as specified by Parent, at the Option Repurchase Price set forth in
Section 5.3(b)(i), or (ii) the shares of the Company's Common Stock purchased by
Parent pursuant to the Topping Fee Option, as specified by Parent, at the Share
Repurchase Price set forth in Section 5.3(b)(iii).
(b) For purposes of this Section 5.3, the following definitions shall
apply: (i) "Option Repurchase Price" shall mean (A) the difference between the
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Option Repurchase Market/Offer Price (as defined below) for shares of the
Company's Common Stock as of the date of the applicable Repurchase Notice and
the Exercise Price, multiplied by (B) the number of shares of the Company's
Common Stock purchasable pursuant to the Topping Fee Option or the portion
thereof covered by the applicable Repurchase Notice, but only if the Option
Repurchase Market/Offer Price is greater than the Exercise Price; (ii) "Option
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Repurchase Market/Offer Price" shall mean, as of any date, the higher of (A) the
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highest price per share offered as of such date pursuant to any tender or
exchange offer or other offer with respect to a business combination offer
involving the Company or any of its material subsidiaries as the target party
which was made prior to such date and not terminated or withdrawn as of such
date, and (B) the Fair Market Value (as defined below) of the Company's Common
Stock as of such date; (iii) "Share Repurchase Price" shall mean the product of
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(A) the sum of (1) the Exercise Price paid by Parent per share of the Company's
Common Stock acquired pursuant to the Topping Fee Option, and (2) if the Share
Repurchase Market/Offer Price (as defined below) is greater than the Exercise
Price, the difference between the Share Repurchase Market/Offer Price and the
Exercise Price, and (B) the number of shares of the Company's Common Stock to be
repurchased pursuant to this Section 5.3; (iv) "Share Repurchase Market/Offer
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Price" shall mean, as of any date, the higher of (A) the highest price per share
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offered pursuant to a tender or exchange offer or other business combination
offer involving the Company as the target party during the Repurchase Period
prior to the delivery by Parent of a Repurchase Notice, and (B) the Fair Market
Value (as defined below) of the Company's Common Stock as of such date; (v)
"Fair Market Value" shall mean, with respect to any security, the per share
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average of the last sale prices on The Nasdaq National Market (or such other
national stock exchange or national market system as shall then be the primary
trading market for such security) for the ten (10) trading days immediately
preceding the applicable date.
(c) In the event that Parent exercises its rights under this Section
5.3, the Company shall, within ten (10) business days thereafter, pay the
required amount to Parent in immediately available funds, and Parent shall
surrender to the Company the Topping Fee Option or any certificate or
certificates evidencing the shares of the Company's Common Stock purchased by
Parent pursuant thereto, and Parent shall warrant that it has sole beneficial
ownership of the Topping Fee Option or such shares and that the Topping Fee
Option or such shares are then free and clear of all claims, liens, charges,
encumbrances and security interests of any nature whatsoever.
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SECTION 5.4. Best Efforts. Subject to the terms and conditions of
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this Agreement, the Parent and the Company shall each use its best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
Each party shall promptly consult with the other and provide any necessary
information and material with respect to all filings made by such party with any
governmental or regulatory authority in connection with this Agreement or the
transactions contemplated hereby.
SECTION 5.5. Further Assurances. The Company shall perform such
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further acts and execute such further documents and instruments as may
reasonably be required to vest in the Purchaser and Parent the power to carry
out the provisions of this Agreement. If the Purchaser or Parent shall exercise
any applicable Option granted hereunder, or any portion thereof, in accordance
with the terms of this Agreement, the Company shall, without additional
consideration, execute and deliver all such further documents and instruments
and take all such further action as the Purchaser or Parent may reasonably
request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
SECTION 5.6. Survival. All of the representations, warranties and
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covenants contained herein shall survive a Closing hereunder and shall be deemed
to have been made as of the date hereof and as of the date of each Closing.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Amendment. This Agreement may not be amended except by
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an instrument in writing signed by the parties hereto.
SECTION 6.2. Waiver. Any party hereto may (a) extend the time for or
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waive compliance with the performance of any obligation or other act of any
other party hereto or (b) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
SECTION 6.3. Fees and Expenses. Subject to Section 2.2(b) and except
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as provided in Section 9.1 of the Merger Agreement, all costs, fees and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such expenses; provided, that if any legal action is instituted to enforce or
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interpret the terms of this Agreement, the prevailing party in such action shall
be entitled, in addition to any other relief to which the party is entitled, to
reimbursement of its actual attorneys fees.
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SECTION 6.4. Notices. All notices, requests, claims, demands and
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other communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by telecopy or by overnight courier (providing
proof of delivery) to the respective parties at their addresses as specified in
Section 9.4 of the Merger Agreement.
SECTION 6.5. Severability. If any term or other provision of this
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Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner to the fullest extent permitted by applicable law in order that the
transactions contemplated hereby may be consummated as originally contemplated
to the fullest extent possible.
SECTION 6.6. Assignment; Binding Effect; Benefit. Neither this
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Agreement nor any of the rights, interests or obligations hereunder shall be
assigned, in whole or in part, by operation of law or otherwise, by any of the
parties hereto without the prior written consent of the other parties, except
that Parent or the Purchaser may assign, in its discretion, any or all of its
rights, interests and obligations hereunder to any direct or indirect subsidiary
of Parent (or, in the case of the Purchaser, to Parent), but no such assignment
shall relieve Parent or the Purchaser of any of its respective obligations
hereunder. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by, the parties hereto and
their respective successors and permitted assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement, express
or implied, is intended to confer on any person other than the parties hereto or
their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
SECTION 6.7. Governing Law. This Agreement shall be governed by and
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construed in accordance with the laws of the State of California, without giving
effect to the principles of conflicts of laws thereof.
SECTION 6.8. Headings. The descriptive headings contained in this
--------
Agreement are included for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 6.9. Counterparts. This Agreement may be executed and
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delivered (including by facsimile transmission) in two or more counterparts, all
of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
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SECTION 6.10. Entire Agreement. This Agreement constitutes the
----------------
entire agreement, and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Agreement.
SECTION 6.11. Specific Performance. Each of the parties hereto
--------------------
acknowledges and agrees that in the event of any breach of this Agreement, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. It is accordingly agreed that the parties hereto
(i) will waive, in any action for specific performance, the defense of adequacy
of a remedy at law, and (ii) shall be entitled, in addition to any other remedy
to which they may be entitled at law or in equity, to compel specific
performance of this Agreement.
SECTION 6.12 Third-party beneficiary. On its formation, the
-----------------------
Purchaser shall be an intended third-party beneficiary of the provisions of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, all as of
the date first written above.
COMPAQ COMPUTER CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
▇▇▇▇▇▇▇▇.▇▇▇
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief
Executive Officer
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