EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
MCAFEE ASSOCIATES, INC.
MYSTERY ACQUISITION CORP.
AND
NETWORK GENERAL CORPORATION
DATED AS OF OCTOBER 13, 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 . . . . . . . . . . 3
1.5 Directors and Officers . . . . . . . . . . . . . . . . . 3
1.6 Effect on Capital Stock. . . . . . . . . . . . . . . . . 3
1.7 Surrender of Certificates. . . . . . . . . . . . . . . . 5
1.8 No Further Ownership Rights in Company Common Stock. . . 6
1.9 Lost, Stolen or Destroyed Certificates . . . . . . . . . 7
1.10 Tax and Accounting Consequences. . . . . . . . . . . . . 7
1.11 Taking of Necessary Action; Further Action . . . . . . . 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY . . . . . . . 7
2.1 Organization of Company. . . . . . . . . . . . . . . . . 8
2.2 Company Capital Structure. . . . . . . . . . . . . . . . 8
2.3 Obligations With Respect to Capital Stock. . . . . . . . 9
2.4 Authority. . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 SEC Filings; Company Financial Statements. . . . . . . .11
2.6 Absence of Certain Changes or Events . . . . . . . . . .12
2.7 Tax. . . . . . . . . . . . . . . . . . . . . . . . . . .13
2.8 Title to Properties; Absence of Liens and Encumbrances .14
2.9 Intellectual Property. . . . . . . . . . . . . . . . . .15
2.10 Compliance; Permits; Restrictions. . . . . . . . . . . .18
2.11 Litigation . . . . . . . . . . . . . . . . . . . . . . .19
2.12 Brokers' and Finders' Fees . . . . . . . . . . . . . . .19
2.13 Employment Matters . . . . . . . . . . . . . . . . . . .19
2.14 Environmental Matters. . . . . . . . . . . . . . . . . .24
2.15 Agreements, Contracts and Commitments. . . . . . . . . .25
2.16 Pooling of Interests . . . . . . . . . . . . . . . . . .26
2.17 Certain Payments . . . . . . . . . . . . . . . . . . . .26
2.18 Registration Statement; Joint Proxy
Statement/Prospectus . . . . . . . . . . . . . . . . . .26
2.19 Board Approval . . . . . . . . . . . . . . . . . . . . .27
2.20 Fairness Opinion . . . . . . . . . . . . . . . . . . . .27
2.21 Section 203 of the Delaware General Corporation Law
Not Applicable; Company Rights Plan. . . . . . . . . . .27
2.22 Customs. . . . . . . . . . . . . . . . . . . . . . . . .28
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB. . . . . . . . . . . . . . . . . . . . . . . . . .28
3.1 Organization of Parent . . . . . . . . . . . . . . . . .28
3.2 Parent and Merger Sub Capital Structure. . . . . . . . .29
3.3 Obligations With Respect to Capital Stock. . . . . . . .29
3.4 Authority. . . . . . . . . . . . . . . . . . . . . . . .30
3.5 SEC Filings; Parent Financial Statements . . . . . . . .31
3.6 Absence of Certain Changes or Events . . . . . . . . . .32
3.7 Tax. . . . . . . . . . . . . . . . . . . . . . . . . . .33
3.8 Title to Properties; Absence of Liens and Encumbrances .33
3.9 Intellectual Property. . . . . . . . . . . . . . . . . .33
3.10 Compliance; Permits; Restrictions. . . . . . . . . . . .35
3.11 Litigation . . . . . . . . . . . . . . . . . . . . . . .36
3.12 Brokers' and Finders' Fees . . . . . . . . . . . . . . .36
3.13 Statements; Joint Proxy Statement/Prospectus . . . . . .36
3.14 Valid Issuance . . . . . . . . . . . . . . . . . . . . .37
3.15 No Ownership of Company Common Stock . . . . . . . . . .37
3.16 Pooling of Interests . . . . . . . . . . . . . . . . . .37
3.17 Board Approval . . . . . . . . . . . . . . . . . . . . .37
3.18 Fairness Opinion . . . . . . . . . . . . . . . . . . . .37
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME . . . . . . . . . .37
4.1 Conduct of Business by Company . . . . . . . . . . . . .37
4.2 Conduct of Business by Parent. . . . . . . . . . . . . .40
ARTICLE V ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . .41
5.1 Joint Proxy Statement/Prospectus; Registration
Statement; Other Filings; Board Recommendations. . . . .41
5.2 Meetings of Stockholders . . . . . . . . . . . . . . . .43
5.3 Confidentiality; Access to Information . . . . . . . . .43
5.4 No Solicitation. . . . . . . . . . . . . . . . . . . . .44
5.5 Public Disclosure. . . . . . . . . . . . . . . . . . . .47
5.6 Reasonable Efforts; Notification . . . . . . . . . . . .48
5.7 Third Party Consents . . . . . . . . . . . . . . . . . .49
5.8 Stock Options and Employee Benefits. . . . . . . . . . .49
5.9 Form S-8 . . . . . . . . . . . . . . . . . . . . . . . .50
5.10 Indemnification. . . . . . . . . . . . . . . . . . . . .50
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TABLE OF CONTENTS
(CONTINUED)
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5.11 Nasdaq Listing . . . . . . . . . . . . . . . . . . . . .51
5.12 Affiliate Agreements . . . . . . . . . . . . . . . . . .51
5.13 Regulatory Filings; Reasonable Efforts . . . . . . . . .51
5.14 Board of Directors of Parent Following the Merger. . . .52
ARTICLE VI CONDITIONS TO THE MERGER. . . . . . . . . . . . . . . .52
6.1 Conditions to Obligations of Each Party to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . .52
6.2 Additional Conditions to Obligations of Company. . . . .53
6.3 Additional Conditions to the Obligations of Parent and
Merger Sub . . . . . . . . . . . . . . . . . . . . . . .54
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER. . . . . . . . . . .55
7.1 Termination. . . . . . . . . . . . . . . . . . . . . . .55
7.2 Notice of Termination; Effect of Termination . . . . . .57
7.3 Fees and Expenses. . . . . . . . . . . . . . . . . . . .58
7.4 Amendment. . . . . . . . . . . . . . . . . . . . . . . .60
7.5 Extension; Waiver. . . . . . . . . . . . . . . . . . . .60
ARTICLE VIII GENERAL PROVISIONS. . . . . . . . . . . . . . . . . .60
8.1 Non-Survival of Representations and Warranties . . . . .60
8.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . .60
8.3 Interpretation; Knowledge. . . . . . . . . . . . . . . .62
8.4 Counterparts . . . . . . . . . . . . . . . . . . . . . .62
8.5 Entire Agreement; Third Party Beneficiaries. . . . . . .62
8.6 Severability . . . . . . . . . . . . . . . . . . . . . .63
8.7 Other Remedies; Specific Performance . . . . . . . . . .63
8.8 Governing Law. . . . . . . . . . . . . . . . . . . . . .63
8.9 Rules of Construction. . . . . . . . . . . . . . . . . .63
8.10 Assignment . . . . . . . . . . . . . . . . . . . . . . .64
8.11 Waiver of Jury Trial . . . . . . . . . . . . . . . . . .64
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INDEX OF EXHIBITS
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Exhibit A-1 Form of Company Voting Agreement
Exhibit A-2 Form of Parent Voting Agreement
Exhibit B-1 Form of Company Affiliate Agreement
Exhibit B-2 Form of Parent Affiliate Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as of
October 13, 1997, among McAfee Associates, Inc., a Delaware corporation
("PARENT"), Mystery Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB"), and Network General
Corporation, a Delaware corporation ("COMPANY").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement (as
defined in Section 1.2 below) and in accordance with the Delaware General
Corporation Law ("DELAWARE LAW"), Parent and Company intend to enter into a
business combination transaction.
B. The Boards of Directors of Company and Parent (i) have determined
that the Merger (as defined in Section 1.1) is consistent with and in
furtherance of their respective long-term business strategies and fair to,
and in the best interests of, their respective stockholders, (ii) have
approved this Agreement, the Merger and the other transactions contemplated
by this Agreement and (iii) have, in the case of Company, subject to the
provisions of this Agreement, determined to recommend that the stockholders
of Company adopt and approve this Agreement and approve the Merger and, in
the case of Parent, subject to the provisions of this Agreement, determined
to recommend that the stockholders of Parent approve the issuance of shares
of Parent Common Stock (as defined in Section 1.6(a)) pursuant to the Merger.
C. The Board of Directors of Merger Sub has approved this Agreement,
the Merger and the other transactions contemplated by this Agreement.
D. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's and Company's respective willingness to
enter into this Agreement, certain stockholders of Company are entering into
Voting Agreements in substantially the form attached hereto as EXHIBIT A-1
(the "COMPANY VOTING AGREEMENTS"), and certain stockholders of Parent are
entering into Voting Agreements in substantially the form attached hereto as
EXHIBIT A-2 (the "PARENT VOTING AGREEMENTS").
E. 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").
F. 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 Company (the "MERGER"), the separate corporate existence of Merger Sub
shall cease and Company shall continue as the surviving corporation. Company
as the surviving corporation after the Merger is hereinafter sometimes
referred to as the "SURVIVING CORPORATION."
1.2 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 Company and Parent 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 Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
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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; 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 "Network
General Corporation."
(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.
1.5 DIRECTORS AND OFFICERS. The directors of Company immediately prior
to the Effective Time shall continue as directors of the Surviving
Corporation (together with such additional directors as may be elected by
Parent effective as of or after the Effective Time). For transition
purposes, Parent intends that such directors shall continue to serve as
directors of the Surviving Corporation for 180 days or more following the
Effective Time. The initial officers of the Surviving Corporation shall be
the officers of Merger Sub immediately prior to the Effective Time.
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, Company or the
holders of any of the following securities:
(a) CONVERSION OF COMPANY COMMON STOCK. Each share of Common
Stock, $0.01 par value per share, of Company (including, with respect to
each such share of Company Common Stock, the associated Rights (as defined in
that certain Rights Agreement (the "COMPANY RIGHTS PLAN") dated as of June
26, 1992, between Company and Chemical Trust Company of California, as
Rights Agent, as amended))(the "COMPANY COMMON STOCK") issued and outstanding
immediately prior to the Effective Time, other than any shares of Company
Common Stock to be canceled pursuant to Section 1.6(b), will be canceled and
extinguished and automatically converted (subject to Sections 1.6(e) and (f))
into the right to receive 0.4167 (the "EXCHANGE RATIO") shares of Common
Stock of Parent (the "PARENT COMMON STOCK") upon surrender of the certificate
representing such share of Company Common Stock in the manner provided in
Section 1.7 (or in the case of a lost, stolen or destroyed certificate, upon
delivery of an affidavit (and bond, if required) in the manner provided in
Section 1.9).
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(b) CANCELLATION OF PARENT-OWNED STOCK. Each share of Company
Common Stock held by Company or owned by Merger Sub, Parent or any direct or
indirect wholly owned subsidiary of Company or of Parent 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 Company Common Stock then outstanding
under Company's 1989 Stock Option Plan (the "ISO PLAN"), Company's 1989
Outside Directors Stock Option Plan (the "DIRECTORS' PLAN"), the Cinco
Networks, Inc. 1997 Stock Option Plan (the "CINCO PLAN"), and options granted
by ProTools, Inc. and assumed by Company (the "PROTOOLS OPTIONS" and together
with the ISO Plan, the Directors' Plan and the Cinco Plan, the "COMPANY STOCK
OPTION PLANS") shall be assumed by Parent in accordance with Section 5.8
hereof. Rights outstanding under Company's 1989 Employee Stock Purchase Plan
(the "ESPP") shall be treated as set forth in Section 5.8.
(d) CAPITAL STOCK OF MERGER SUB. Each share of Common Stock,
$0.001 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, $0.01 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 Parent Common Stock or Company Common Stock),
reorganization, recapitalization, reclassification or other like change with
respect to Parent Common Stock or Company Common Stock occurring on or after
the date hereof and prior to the Effective Time.
(f) FRACTIONAL SHARES. No fraction of a share of Parent Common
Stock will be issued by virtue of the Merger, but in lieu thereof each holder
of shares of Company Common Stock who would otherwise be entitled to a
fraction of a share of Parent Common Stock (after aggregating all fractional
shares of Parent Common Stock that otherwise would be received by such
holder) shall receive from Parent an amount of cash (rounded to the nearest
whole cent) equal to the product of (i) such fraction, multiplied by (ii) the
average closing price of one share of Parent Common Stock for the five (5)
most recent days that Parent Common Stock has traded ending on the trading
day immediately prior to the Effective Time, as reported on the Nasdaq
National Market System ("NASDAQ").
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1.7 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. Parent shall select a bank or trust company
reasonably acceptable to Company to act as the exchange agent (the "EXCHANGE
AGENT") in the Merger.
(b) PARENT TO PROVIDE COMMON STOCK. Promptly after the Effective
Time, Parent shall make available to the Exchange Agent for exchange in
accordance with this Article I, the shares of Parent Common Stock issuable
pursuant to Section 1.6 in exchange for outstanding shares of Company 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 Company Common Stock may be entitled pursuant to Section
1.7(d).
(c) EXCHANGE PROCEDURES. As soon as practicable after the
Effective Time, and in no event later than five (5) business days thereafter,
Parent 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 Company Common Stock whose shares were converted into shares of Parent
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 1.7(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 Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for certificates representing shares of
Parent Common Stock, cash in lieu of any fractional shares pursuant to
Section 1.6(f) and any dividends or other distributions pursuant to Section
1.7(d). Upon surrender of Certificates for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by Parent, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the holders of such Certificates shall be
entitled to receive in exchange therefor certificates representing the number
of whole shares of Parent Common Stock into which their shares of Company
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
1.7(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 1.7(d) as
to the payment of dividends, to evidence only the ownership of the number of
full shares of Parent Common Stock into which such shares of Company Common
Stock shall have been so converted and
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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 1.7(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 Parent 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 Parent 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 Parent 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 Parent Common Stock.
(e) TRANSFERS OF OWNERSHIP. If certificates representing shares
of Parent 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 in proper form for transfer and that the
persons requesting such exchange will have paid to Parent or any agent
designated by it any transfer or other taxes required by reason of the
issuance of certificates representing shares of Parent Common Stock in any
name other than that of the registered holder of the Certificates
surrendered, or established to the satisfaction of Parent or any agent
designated by it that such tax has been paid or is not payable.
(f) NO LIABILITY. Notwithstanding anything to the contrary in
this Section 1.7, neither the Exchange Agent, Parent, the Surviving
Corporation nor any party hereto shall be liable to a holder of shares of
Parent Common Stock or Company Common Stock for any amount properly paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Parent Common Stock issued in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Section 1.6(f) and 1.7(d)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to
such shares of Company Common Stock, and there shall be no further
registration of transfers on the records of the Surviving Corporation of
shares of Company Common Stock which were outstanding immediately prior to
the Effective Time. If after the
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Effective Time Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article
I.
1.9 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of
Company 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 1.7(d); PROVIDED, HOWEVER, that Parent may, in its
discretion and as a condition precedent to the issuance of such certificates
representing shares of Parent Common Stock, cash and other distributions,
require the owner of such lost, stolen or destroyed Certificates to deliver a
bond in such sum as it may reasonably direct as indemnity against any claim
that may be made against Parent, the Surviving Corporation or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
1.10 TAX 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,
and each of the parties hereto will use its commercially reasonable efforts
to cause the Merger to be treated as such a reorganization. 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.
(b) It is intended by the parties hereto that the Merger shall
qualify for accounting treatment as a pooling of interests.
1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of Company and Merger Sub, the officers and directors
of Company and Merger Sub will take all such lawful and necessary action.
Parent shall cause Merger Sub to perform all of its obligations relating to
this Agreement and the transactions contemplated thereby.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Parent and Merger Sub, subject to the
exceptions specifically disclosed in writing in the disclosure letter and
referencing a specific representation supplied by Company to Parent dated as
of the date hereof and certified by a duly authorized officer of Company (the
"COMPANY SCHEDULES"), as follows:
2.1 ORGANIZATION OF COMPANY.
(a) Company and each of its material subsidiaries (i) is a
corporation or other legal entity duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is organized;
(ii) has the corporate or other power and authority to own, lease and operate
its assets and property and to carry on its business as now being conducted;
and (iii), except as would not be material to Company, is duly qualified or
licensed to do business 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.
(b) Company has delivered to Parent a true and complete list of
all of Company's subsidiaries as of the date of this Agreement, indicating
the jurisdiction of organization of each subsidiary and Company's equity
interest therein.
(c) Company has delivered or made available to Parent a true and
correct copy of the Certificate of Incorporation and Bylaws of Company and
similar governing instruments of each of its material subsidiaries, each as
amended to date, and each such instrument is in full force and effect.
Neither Company nor any of its material subsidiaries is in violation of any
of the provisions of its Certificate of Incorporation or Bylaws or equivalent
governing instruments.
2.2 COMPANY CAPITAL STRUCTURE. The authorized capital stock of Company
consists of 100,000,000 shares of Common Stock, $0.01 par value per share, of
which there were 42,461,275 shares issued and outstanding as of October 10,
1997 (excluding shares held in treasury of which there are none), and
2,000,000 shares of Preferred Stock, $0.01 par value per share, of which no
shares are issued or outstanding. All outstanding shares of Company 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 Company or any agreement or document to which
Company is a party or by which it is bound. As of October 10, 1997, Company
had reserved an aggregate of
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11,300,548 shares of Company Common Stock, net of exercises, for issuance
pursuant to the Company Stock Option Plans. As of October 10, 1997, there
were options outstanding to purchase an aggregate of 2,699,996 shares of
Company Common Stock pursuant to the Company Stock Option Plans. As of
October 10, 1997, Company had reserved an aggregate of 2,000,000 shares of
Company Common Stock for issuance pursuant to the ESPP. All shares of
Company 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 Company Schedules list each person who holds options to
acquire shares of Company Common Stock of which the exercisability will be
accelerated in any way by the transactions contemplated by this Agreement as
well as the number of shares subject to such options and the extent of such
acceleration.
2.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth in
Section 2.2, there are no equity securities, partnership interests or similar
ownership interests of any class of Company, 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 Company owns free and clear of all claims
and encumbrances, directly or indirectly through one or more subsidiaries,
and except for shares of capital stock or other similar ownership interests
of certain subsidiaries of Company 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 material subsidiary of Company, 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, 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 Company or any of its material
subsidiaries is a party or by which it is bound obligating Company or any of
its material 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 Company or any of its
material subsidiaries or obligating Company or any of its material
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,
the Company Voting Agreement and the Company Affiliate Agreement (as defined
in Section 5.12), there are no registration rights and, to the knowledge of
Company, there are no voting trusts, proxies or other agreements or
understandings to which
-9-
Company is a party or by which it is bound with respect to any equity
security of any class of Company or with respect to any equity security,
partnership interest or similar ownership interest of any class of any of its
material subsidiaries. Stockholders of Company will not be entitled to
dissenters rights under applicable state law in connection with the Merger.
2.4 AUTHORITY.
(a) Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby, subject only to the approval of the Merger and the approval and
adoption of this Agreement by the stockholders of Company. 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 Company, subject only to the approval and adoption of
this Agreement and the approval of the Merger by Company's stockholders and
the filing of the Certificate of Merger pursuant to Delaware Law. A vote of
the holders of a majority of the outstanding shares of the Company Common
Stock is sufficient for Company's stockholders to approve and adopt this
Agreement and approve the Merger. This Agreement has been duly executed and
delivered by Company and, assuming the due authorization, execution and
delivery by Parent and Merger Sub, constitutes a valid and binding obligation
of Company, enforceable against Company 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 Company do not, and the performance of this Agreement by Company will not,
(i) conflict with or violate the Certificate of Incorporation or Bylaws of
Company or the equivalent organizational documents of any of its material
subsidiaries, (ii) subject to obtaining the approval and adoption of this
Agreement and the approval of the Merger by Company'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 Company or any of its material
subsidiaries or by which Company or any of its material subsidiaries or 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
materially impair Company's material rights or alter the material rights or
material 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 Company or any of its subsidiaries pursuant to, any material
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Company or any of its
material subsidiaries is a party or by which Company or any of its material
subsidiaries or its
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or any of their respective properties are bound or affected. The Company
Schedules list all consents, waivers and approvals under any of Company's or
any of its material 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 a material loss of benefits to Company, Parent
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 ("GOVERNMENTAL ENTITY"), is required to be obtained or made by
Company or any of its material subsidiaries 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 Joint Proxy
Statement/Prospectus (as defined in Section 2.18) 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 Company
or have a material adverse effect on the ability of Company to consummate the
Merger.
2.5 SEC FILINGS; COMPANY FINANCIAL STATEMENTS.
(a) Company has filed all forms, reports and documents required to
be filed by Company with the SEC since September 1, 1994 and has made
available to Parent such forms, reports and documents in the form filed with
the SEC. All such required forms, reports and documents (including those
that Company may file subsequent to the date hereof) are referred to herein
as the "COMPANY SEC REPORTS." As of their respective dates, the Company SEC
Reports (i) were prepared in accordance 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 Company 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
-11-
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
Company'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 Company SEC Reports
(the "COMPANY FINANCIALS"), including each Company SEC Report filed after the
date hereof until the Closing, (i) complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, (ii) was prepared in accordance with United States 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 (iii) fairly
presented the consolidated financial position of Company and its subsidiaries
as at the respective dates thereof and the consolidated results of Company's
operations and cash flows for the periods indicated, except that the
unaudited interim financial statements may not contain footnotes and were or
are subject to customary year-end adjustments which will not have a Material
Adverse Effect (as defined in Section 8.3(c)) on Company. The balance sheet
of Company contained in Company SEC Reports as of June 30, 1997 is
hereinafter referred to as the "COMPANY BALANCE SHEET." Except as disclosed
in the Company Financials, since the date of the Company Balance Sheet
neither Company nor any of its subsidiaries has any liabilities required
under GAAP to be set forth on a balance sheet (absolute, accrued, contingent
or otherwise) which are, individually or in the aggregate, material to the
business, results of operations or financial condition of Company and its
subsidiaries taken as a whole, except for liabilities incurred since the date
of the Company Balance Sheet in the ordinary course of business consistent
with past practices.
2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
Company Balance Sheet there has not been: (i) any Material Adverse Effect on
Company, (ii) any declaration, setting aside or payment of any dividend on,
or other distribution (whether in cash, stock or property) in respect of, any
of Company's or any of its material subsidiaries' capital stock, or any
purchase, redemption or other acquisition by Company of any of Company's
capital stock or any other securities of Company or its material subsidiaries
or any options, warrants, calls or rights to acquire any such shares or other
securities except for repurchases from employees following their termination
pursuant to the terms of their pre-existing stock option or purchase
agreements, (iii) any split, combination or reclassification of any of
Company's or any of its material subsidiaries' capital stock, (iv) any
granting by Company or any of its subsidiaries of any increase in
compensation or fringe benefits, except for normal increases of cash
compensation in the ordinary course of business consistent with past
practice, or any payment by Company or any of its
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subsidiaries of any bonus, except for bonuses made in the ordinary course of
business consistent with past practice, or any granting by Company or any of
its subsidiaries of any increase in severance or termination pay or any entry
by Company or any of its subsidiaries into any currently effective
employment, severance, termination or indemnification agreement or any
agreement the benefits of which are contingent or the terms of which are
materially altered upon the occurrence of a transaction involving Company of
the nature contemplated hereby, (v) entry by Company or any of its
subsidiaries into any licensing or other agreement with regard to the
acquisition or disposition of any material Intellectual Property (as defined
in Section 2.9) other than licenses in the ordinary course of business
consistent with past practice or any amendment or consent with respect to any
licensing agreement filed or required to be filed by Company with the SEC,
(vi) any material change by Company in its accounting methods, principles or
practices, except as required by concurrent changes in GAAP, or (vii) any
material revaluation by Company 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.
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) Company 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
Company and each of its subsidiaries with any Tax authority, except such
Returns which are not material to Company, and have paid all Taxes shown to
be due on such Returns.
(ii) Company and each of its material subsidiaries as of
the Effective Time will have withheld with respect to its employees all
federal and state income taxes, Taxes pursuant to the Federal Insurance
Contribution Act ("FICA"), Taxes pursuant to the Federal Unemployment Tax Act
("FUTA") and other Taxes required to be withheld.
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(iii) Neither Company nor any of its material
subsidiaries has been delinquent in the payment of any Tax nor is there any
Tax deficiency outstanding, proposed or assessed against Company or any of
its material subsidiaries, nor has Company or any of its material
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
Company or any of its material subsidiaries by any Tax authority is presently
in progress, nor has Company or any of its material subsidiaries been
notified of any request for such an audit or other examination.
(v) No adjustment relating to any Returns filed by
Company or any of its material subsidiaries has been proposed in writing
formally or informally by any Tax authority to Company or any of its material
subsidiaries or any representative thereof.
(vi) Neither Company nor any of its subsidiaries has any
liability for unpaid Taxes which has not been accrued for or reserved on the
Company Balance Sheet, whether asserted or unasserted, contingent or
otherwise, which is material to Company, other than any liability for unpaid
Taxes that may have accrued since the date of the Company Balance Sheet in
connection with the operation of the business of Company and its subsidiaries
in the ordinary course.
(vii) There is no contract, agreement, plan or
arrangement to which Company 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 Company 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 Company 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 Company.
(ix) Neither Company nor any of its material subsidiaries
is party to or has any obligation under any tax-sharing, tax indemnity or tax
allocation agreement or arrangement.
(x) Except as may be required as a result of the Merger,
Company and its material subsidiaries have not been and will not be required
to
-14-
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 Company's or its subsidiaries' assets are
tax exempt use property within the meaning of Section 168(h) of the Code.
2.8 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
(a) The Company Schedules list the real property interests owned
by Company as of the date of this Agreement. The Company Schedules list all
real property leases to which Company is a party as of the date of this
Agreement and which provide for the lease, in each case, of not less than
10,000 square feet ("MATERIAL REAL PROPERTY LEASES"), and each amendment
thereto that is in effect as of the date of this Agreement. All such
Material Real Property Leases 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
give rise to a claim in an amount greater than $100,000.
(b) Company 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 Company 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 in, arising out of, or
associated therewith: (i) all United States,
international and foreign patents and applications
therefor and all reissues, divisions, renewals,
extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions
(whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information,
know how, technology, technical data and customer
lists, and all documentation relating to any of the
foregoing;
-15-
(iii) all copyrights, copyright registrations and applications
therefor, and all other rights corresponding thereto throughout
the world; (iv) all industrial designs and any registrations
and applications therefor throughout the world; (v) all
trade names, logos, common law trademarks and service
marks, trademark and service ▇▇▇▇ registrations and
applications therefor throughout the world; (vi) all
databases and data collections and all rights therein
throughout the world; (vii) all moral and economic
rights of authors and inventors, however denominated,
throughout the world, and (viii) any similar or
equivalent rights to any of the foregoing anywhere in
the world.
"COMPANY INTELLECTUAL PROPERTY" shall mean any
Intellectual Property that is owned by, or exclusively
licensed to, Company or any of its material
subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" means all United
States, international and foreign: (i) patents and
patent applications (including provisional
applications); (ii) registered trademarks, applications
to register trademarks, intent-to-use applications, or
other registrations or applications related to
trademarks; (iii) registered copyrights and
applications for copyright registration; and (iv) any
other Intellectual Property that is the subject of an
application, certificate, filing, registration or other
document issued, filed with, or recorded by any state,
government or other public legal authority.
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of
the Registered Intellectual Property owned by, or filed
in the name of, Company.
(a) No material Company Intellectual Property or product or
service of Company is subject to any proceeding or outstanding decree, order,
judgment, agreement, or stipulation restricting in any manner the use,
transfer, or licensing thereof by Company, or which may affect the validity,
use or enforceability of such Company Intellectual Property.
(b) Each material item of Company Registered Intellectual Property
is valid and subsisting, all necessary registration, maintenance and renewal
fees currently due in connection with such Registered Intellectual Property
have been made and all necessary documents, recordations and certificates in
connection with such Registered Intellectual Property have been filed with
the relevant patent, copyright, trademark or other authorities in the United
States or foreign jurisdictions,
-16-
as the case may be, for the purposes of maintaining such Registered
Intellectual Property.
(c) Company owns and has good and exclusive title to, or has
license (sufficient for the conduct of its business as currently conducted
and as proposed to be conducted) to, each material item of Company
Intellectual Property free and clear of any lien or encumbrance (excluding
licenses and related restrictions); and Company is the exclusive owner of all
trademarks and trade names used in connection with the operation or conduct
of the business of Company, including the sale of any products or the
provision of any services by Company.
(d) Company owns exclusively, and has good title to, all
copyrighted works that are Company products or which Company otherwise
expressly purports to own.
(e) To the extent that any material Intellectual Property has been
developed or created by a third party for Company, Company has a written
agreement with such third party with respect thereto and Company thereby
either (i) has obtained ownership of, and is the exclusive owner of, or (ii)
has obtained a license (sufficient for the conduct of its business as
currently conducted and as proposed to be conducted) to all such third
party's Intellectual Property in such Intellectual Property by operation of
law or by valid assignment.
(f) Company has not transferred ownership of, or granted any
exclusive license with respect to, any Intellectual Property that is or was
material Company Intellectual Property, to any third party.
(g) The Company Schedules list all material contracts, licenses
and agreements to which Company is a party (i) with respect to Company
Intellectual Property licensed or transferred to any third party (other than
end-user licenses in the ordinary course); or (ii) pursuant to which a third
party has licensed or transferred any material Intellectual Property to
Company.
(h) All material contracts, licenses and agreements relating to
the Company Intellectual Property are in full force and effect. The
consummation of the transactions contemplated by this Agreement will neither
violate nor result in the breach, modification, cancellation, termination, or
suspension of such contracts, licenses and agreements. Company is in
material compliance with, and has not materially breached any term any of
such contracts, licenses and agreements and, to the knowledge of Company, all
other parties to such contracts, licenses and agreements are in compliance
with, and have not materially breached any term of, such contracts, licenses
and agreements. Following the Closing Date, the Surviving
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Corporation will be permitted to exercise all of Company's rights under such
contracts, licenses and agreements to the same extent Company would have been
able to had the transactions contemplated by this Agreement not occurred and
without the payment of any additional amounts or consideration other than
ongoing fees, royalties or payments which Company would otherwise be required
to pay.
(i) The operation of the business of Company as such business
currently is conducted, including Company's design, development, manufacture,
marketing and sale of the products or services of Company (including with
respect to products currently under development) has not, does not and will
not infringe or misappropriate the Intellectual Property of any third party
(provided that with respect to patent rights, such representation is limited
to Company's knowledge) or, to its knowledge, constitute unfair competition
or trade practices under the laws of any jurisdiction.
(j) Company has not received notice from any third party that the
operation of the business of Company or any act, product or service of
Company, infringes or misappropriates the Intellectual Property of any third
party or constitutes unfair competition or trade practices under the laws of
any jurisdiction.
(k) To the knowledge of Company, no Person has or is infringing or
misappropriating any Company Intellectual Property.
(l) Company has taken reasonable steps to protect Company's rights
in Company's confidential information and trade secrets that it wishes to
protect or any trade secrets or confidential information of third parties
provided to Company, and, without limiting the foregoing, Company has and
enforces a policy requiring each employee and contractor to execute a
proprietary information/confidentiality agreement substantially in the form
provided to Parent and all current and former employees and contractors of
Company have executed such an agreement, except where the failure to do so is
not reasonably expected to be material to Company.
2.10 COMPLIANCE; PERMITS; RESTRICTIONS.
(a) Neither Company nor any of its subsidiaries is, in any
material respect, in conflict with, or in default or in violation of (i) any
law, rule, regulation, order, judgment or decree applicable to Company or any
of its subsidiaries or by which Company or any of its subsidiaries or any of
their respective properties is bound or affected, or (ii) any material note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Company or any of its
subsidiaries is a party or by which Company or any of its
-18-
subsidiaries or its or any of their respective properties is bound or
affected, except for conflicts, violations and defaults that (individually or
in the aggregate) would not cause Company to lose any material benefit or
incur any material liability. No investigation or review by any Governmental
Entity is pending or, to Company's knowledge, has been threatened in a
writing delivered to Company against Company or any of its subsidiaries, nor,
to Company's knowledge, has any Governmental Entity indicated an intention to
conduct an investigation of Company or any of its subsidiaries. There is no
material agreement, judgment, injunction, order or decree binding upon
Company or any of its material subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any
business practice of Company or any of its material subsidiaries, any
acquisition of material property by Company or any of its subsidiaries or the
conduct of business by Company as currently conducted.
(b) Company and its subsidiaries hold, to the extent legally
required, all permits, licenses, variances, exemptions, orders and approvals
from governmental authorities that are material to and required for the
operation of the business of Company as currently conducted (collectively,
the "COMPANY PERMITS"). Company and its subsidiaries are in compliance in
all material respects with the terms of the Company Permits, except where the
failure to obtain any Company Permits or to be in compliance with the terms
of the Company Permits would not be material to Company.
2.11 LITIGATION. There is no action, suit, proceeding, claim,
arbitration or investigation pending, and to Company's knowledge, no person
has threatened in a writing delivered to Company to commence any action,
suit, proceeding, claim, arbitration or investigation against Company or any
of its subsidiaries which would be likely to be material to Company. No
Governmental Entity has at any time challenged or questioned in a writing
delivered to Company the legal right of Company to design, manufacture, offer
or sell any of its products in the present manner or style thereof.
2.12 BROKERS' AND FINDERS' FEES. Except for fees payable to ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇ LLC pursuant to an engagement letter dated September 22, 1997, a copy
of which has been provided to Parent, Company has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
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2.13 EMPLOYMENT MATTERS.
(a) DEFINITIONS. With the exception of the definition of
"Affiliate" set forth in Section 2.13(a)(i) below (which definition shall
apply only to this Section 2.13), for purposes of this Agreement, the
following terms shall have the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity under
common control with Company within the meaning of Section 414(b), (c), (m) or
(o) of the Code and the regulations issued thereunder;
(ii) "COMPANY EMPLOYEE PLAN" shall mean (x) all employee
benefit plans (as defined in Section 3(3) of ERISA), (y) all bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar employee benefit plans, and (z) all
unexpired severance agreements and arrangements, written or otherwise, for
the benefit of, or relating to, any current or former employee of Company or
any trade or business (whether or not incorporated) which is an Affiliate or
any subsidiary of Company;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended
(iv) "DOL" shall mean the Department of Labor;
(v) "EMPLOYEE" shall mean any current, former, or retired
employee, officer, or director of Company or any Affiliate;
(vi) "EMPLOYEE AGREEMENT" shall mean each management,
employment, severance, consulting, relocation, repatriation, expatriation,
visas, work permit or similar agreement or contract between Company or any
Affiliate and any individual entitled to receive annual compensation from
Company or any Affiliate with value equal to or greater than $75,000;
(vii) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of
1993, as amended;
(ix) "INTERNATIONAL EMPLOYEE PLAN" shall mean each Company
Employee Plan that has been adopted or maintained by Company, whether
informally or formally, for the benefit of Employees outside the United
States;
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(x) "IRS" shall mean the Internal Revenue Service;
(xi) "MULTIEMPLOYER PLAN" shall mean any "Pension Plan" (as
defined below) which is a "multiemployer plan," as defined in Section 3(37)
of ERISA;
(xii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation; and
(xiii) "PENSION PLAN" shall mean each Company Employee Plan
which is an "employee pension benefit plan," within the meaning of Section
3(2) of ERISA.
(b) SCHEDULE. The Company Schedules contain an accurate and
complete list of each Company Employee Plan and each material Employee
Agreement. Company does not have any plan or commitment to establish any new
Company Employee Plan, to modify any Company Employee Plan or Employee
Agreement (except to the extent required by law or to conform any such
Company Employee Plan or Employee Agreement to the requirements of any
applicable law, in each case as previously disclosed to Parent in writing, or
as required by this Agreement), or to enter into any Company Employee Plan or
material Employee Agreement, nor does it have any intention or commitment to
do any of the foregoing.
(c) DOCUMENTS. Company has provided to Parent: (i) correct and
complete copies of each Company Employee Plan and each Employee Agreement
including all amendments thereto; (ii) the most recent annual actuarial
valuations, if any, prepared for each Company Employee Plan; (iii) the three
(3) most recent annual reports (Form Series 5500 and all schedules and
financial statements attached thereto), if any, required under ERISA or the
Code in connection with each Company Employee Plan or related trust; (iv) if
the Company Employee Plan is funded, the most recent annual and periodic
accounting of Company Employee Plan assets; (v) the most recent summary plan
description together with the summary of material modifications thereto, if
any, required under ERISA with respect to each Company Employee Plan; (vi)
all IRS determination, opinion, notification and advisory letters, and
rulings relating to Company Employee Plans and copies of all applications and
correspondence to or from the IRS or the DOL with respect to any Company
Employee Plan (and to the extent not delivered are not material); (vii) all
material written agreements and contracts relating to each Company Employee
Plan, including, but not limited to, administrative service agreements, group
annuity contracts and group insurance contracts; (viii) forms of all COBRA
forms and related
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notices; and (ix) all registration statements and prospectuses prepared in
connection with each Company Employee Plan.
(d) EMPLOYEE PLAN COMPLIANCE. (i) Company has performed in all
material 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 Company Employee Plan, and each Company
Employee Plan has been established and maintained in all material respects in
accordance with its terms and in compliance with all applicable laws,
statutes, orders, rules and regulations, including but not limited to ERISA
or the Code; (ii) each Company 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 from
the IRS with respect to each such Plan as to its qualified status under the
Code, including all amendments to the Code effected by the Tax Reform Act of
1986 and subsequent legislation, 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; (iii) no "prohibited transaction," within the
meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not
otherwise exempt under Section 408 of ERISA, has occurred with respect to any
Company Employee Plan; (iv) there are no actions, suits or claims pending,
or, to the knowledge of Company, threatened or reasonably anticipated (other
than routine claims for benefits) against any Company Employee Plan or
against the assets of any Company Employee Plan; (v) each Company Employee
Plan can be amended, terminated or otherwise discontinued after the Effective
Time in accordance with its terms, without material (in each case relative to
the liabilities under such Plan) liability to Parent, Company or any of its
Affiliates (other than ordinary administration expenses typically incurred in
a termination event); (vi) there are no audits, inquiries or proceedings
pending or, to the knowledge of Company or any Affiliates, threatened by the
IRS or DOL with respect to any Company Employee Plan; and (vii) neither
Company nor any Affiliate is subject to any penalty or tax with respect to
any Company Employee Plan under Section 502(i) of ERISA or Sections 4975
through 4980 of the Code.
(e) PENSION PLANS. Company 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.
(f) MULTIEMPLOYER PLANS. At no time has Company contributed to or
been requested to contribute to any Multiemployer Plan.
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(g) NO POST-EMPLOYMENT OBLIGATIONS. No Company Employee Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any
reason, except as may be required by COBRA or other applicable statute, and
Company has never represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees as a
group) or any other person that such Employee(s) or other person would be
provided with retiree life insurance, retiree health or other retiree
employee welfare benefit, except to the extent required by statute.
(h) Neither Company nor any Affiliate has, prior to the Effective
Time, and in any material respect, violated any of the health care
continuation requirements of COBRA, the requirements of FMLA or any similar
provisions of state law applicable to its Employees.
(i) EFFECT OF TRANSACTION
(i) The execution of this Agreement and the consummation of
the transactions contemplated hereby will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under
any Company Employee Plan, Employee Agreement, 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 Employee.
(ii) No payment or benefit which will or may be made by
Company or 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.
(j) EMPLOYMENT MATTERS. Company and each of its material
subsidiaries: (i) is in compliance in all material respects with the
applicable foreign, federal, state and local laws, rules and regulations
respecting employment, employment practices and wages and hours, in each
case, in each location in which Company or any of its material subsidiaries
employs persons; (ii) has withheld all amounts required by law or by
agreement to be withheld from the wages, salaries and other payments to
Employees; (iii) is not liable for any material arrears of wages or any taxes
or any penalty for failure to comply with any of the foregoing; and (iv) is
not liable for any material payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of
business and consistent with past
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practice). There are no pending, threatened or reasonably anticipated claims
or actions for benefits under Company's worker's compensation policy or
long-term disability policy that would not be covered by such policy. To
Company's knowledge, no employee of Company has violated any employment
contract, nondisclosure agreement or noncompetition agreement by which such
employee is bound due to such employee being employed by Company and
disclosing to Company or using trade secrets or proprietary information of
any other person or entity.
(k) LABOR. No work stoppage or labor strike against Company is
pending, threatened or reasonably anticipated. Company does not know of any
activities or proceedings of any labor union to organize any Employees.
There are no actions, suits, claims, labor disputes or grievances pending,
or, to the knowledge of Company, threatened or reasonably anticipated
relating to any labor, safety or discrimination matters involving any
Employee, including, without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would,
individually or in the aggregate, result in any material liability to
Company. Neither Company nor any of its subsidiaries has engaged in any
unfair labor practices within the meaning of the National Labor Relations
Act. Company is not presently, nor has it been in the past, a party to, or
bound by, any collective bargaining agreement or union contract with respect
to Employees and no collective bargaining agreement is being negotiated by
Company.
(l) INTERNATIONAL EMPLOYEE PLAN. Each International Employee Plan
has been established, maintained and administered in material compliance with
its terms and conditions and with the requirements prescribed by any and all
statutory or regulatory laws that are applicable to such International
Employee Plan. Furthermore, no International Employee Plan has unfunded
liabilities, that as of the Effective Time, will not be offset by insurance
or fully accrued. Except as required by law, no condition exists that would
prevent Company or Parent from terminating or amending any International
Employee Plan at any time for any reason.
2.14 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIAL. Except as reasonably would not be likely
to result in material liability to Company, 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
-▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇ 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 Company or any of its subsidiaries or any affiliate of Company,
or, to Company'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 Company or any of
its subsidiaries has at any time owned, operated, occupied or leased.
(b) HAZARDOUS MATERIALS ACTIVITIES. Except as reasonably would not
be likely to result in a material liability to Company (in any individual
case or in the aggregate) (i) neither Company 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 in effect
on or before the Closing Date, and (ii) neither Company 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. Company and its subsidiaries currently hold all
material environmental approvals, permits, licenses, clearances and consents
(the "COMPANY ENVIRONMENTAL PERMITS") necessary for the conduct of Company's
and its subsidiaries' Hazardous Material Activities and other businesses of
Company and its material subsidiaries as such activities and businesses are
currently being conducted.
(d) ENVIRONMENTAL LIABILITIES. No action, proceeding, revocation
proceeding, amendment procedure, writ or injunction is pending, and to
Company's knowledge, no action, proceeding, revocation proceeding, amendment
procedure, writ or injunction has been threatened by any Governmental Entity
against Company or any of its subsidiaries in a writing delivered to Company
concerning any Company Environmental Permit, Hazardous Material or any
Hazardous Materials Activity of Company or any of its subsidiaries. Company
is not aware of any fact or circumstance which could involve Company or any
of its subsidiaries in any environmental litigation or impose upon Company
any material environmental liability.
2.15 AGREEMENTS, CONTRACTS AND COMMITMENTS. Neither Company nor any of
its material subsidiaries is a party to or is bound by:
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(a) any employment or consulting agreement, contract or commitment
with any officer or director or higher level employee or member of Company's
Board of Directors, other than those that are terminable by Company or any of
its subsidiaries on no more than thirty days notice without liability or
financial obligation, except to the extent general principles of wrongful
termination law may limit Company'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
any agreement of indemnification entered into in connection with the sale or
license of software products in the ordinary course of business;
(d) any agreement, contract or commitment containing any covenant
limiting in any material respect the right of Company or any of its material
subsidiaries to engage in any line of business or to compete with any person
or granting any exclusive distribution rights;
(e) any material agreement, contract or commitment currently in
force relating to the disposition or acquisition by Company 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 Company has any
material ownership interest in any corporation, partnership, joint venture or
other business enterprise other than Company's subsidiaries;
(f) any material joint marketing or development agreement
currently in force under which Company 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 90 days
or less, or any material agreement pursuant to which Company 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 Company
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 Company and its subsidiaries taken as a whole; or
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(h) any agreement, contract or commitment currently in force to
license any third party to manufacture or reproduce any Company product,
service or technology except as a distributor in the normal course of
business.
Neither Company nor any of its material subsidiaries, nor to Company's
knowledge any other party to a Company Contract (as defined below), is in
breach, violation or default under, and neither Company nor any of its
subsidiaries has received written notice that it has breached, violated or
defaulted under, any of the material terms or conditions of any of the
agreements, contracts or commitments to which Company or any of its
subsidiaries is a party or by which it is bound that are required to be
disclosed in the Company Schedules pursuant to clauses (a) through (h) above
or pursuant to Section 2.9 hereof (any such agreement, contract or
commitment, a "COMPANY CONTRACT") in such a manner as would permit any other
party to cancel or terminate any such Company Contract, or would permit any
other party to seek material damages or other remedies (for any or all of
such breaches, violations or defaults, in the aggregate).
2.16 POOLING OF INTERESTS. To the knowledge of Company, based on
consultation with its independent accountants, neither Company nor any of its
directors, officers, affiliates or stockholders has taken any action which
would preclude Parent's ability to account for the Merger as a pooling of
interests.
2.17 CERTAIN PAYMENTS. The Company Schedules set forth each plan or
agreement pursuant to which any amounts may become payable (whether currently
or in the future) to current or former officers and directors of Company as a
result of or in connection with the Merger.
2.18 REGISTRATION STATEMENT; JOINT PROXY STATEMENT/PROSPECTUS. The
information supplied by Company 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 Company for
inclusion in the joint proxy statement/prospectus to be sent to (a) the
stockholders of Company in connection with the meeting of Company's
stockholders to consider the approval and adoption of this Agreement and the
approval of the Merger (the "COMPANY STOCKHOLDERS' MEETING") and (b) the
stockholders of Parent in connection with the meeting of Parent's
stockholders to consider the approval of the issuance of shares of Parent
Common Stock pursuant to the Merger (the "PARENT STOCKHOLDERS' MEETING")
(such joint proxy statement/prospectus as amended or supplemented is referred
to herein as the "JOINT PROXY STATEMENT/PROSPECTUS") shall
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not, on the date the Joint Proxy Statement/Prospectus is first mailed to
Company's stockholders and Parent's stockholders or at the time of the
Company Stockholders' Meeting or the Parent 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 Company Stockholders' Meeting or the Parent Stockholders'
Meeting which has become false or misleading. If at any time prior to the
Effective Time any event relating to Company or any of its affiliates,
officers or directors should be discovered by Company which is required to be
set forth in an amendment to the Registration Statement or a supplement to
the Joint Proxy Statement/Prospectus, Company shall promptly inform Parent.
Notwithstanding the foregoing, Company makes no representation or warranty
with respect to any information supplied by Parent or Merger Sub which is
contained in any of the foregoing documents.
2.19 BOARD APPROVAL. The Board of Directors of Company has, as of the
date of this Agreement, determined (i) that the Merger is fair to, and in the
best interests of Company and its stockholders, and, (ii) subject to the
terms and conditions set forth in this Agreement, to recommend that the
stockholders of Company approve and adopt this Agreement and approve the
Merger.
2.20 FAIRNESS OPINION. Company's Board of Directors has received an
opinion from ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC dated as of the date hereof, to the effect
that as of the date hereof, the Merger and the Exchange Ratio are fair to
Company's stockholders from a financial point of view and has delivered or
will promptly deliver to Parent a copy of such opinion.
2.21 SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW NOT APPLICABLE;
COMPANY RIGHTS PLAN. The Board of Directors of Company has taken all actions
so that (a) 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 and (b) the execution, delivery and
performance of this Agreement and the consummation of the Merger will not
cause any change, effect or result under the Company Rights Plan which is
adverse to the interests of Parent. Without limiting the generality of the
foregoing, if necessary to accomplish the foregoing, the Company Rights Plan
has been amended to (i) render the Company Rights Plan inapplicable to the
Merger and the other transactions contemplated by this Agreement, (ii) ensure
that (x) none of Parent or its subsidiaries
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is an Acquiring Person (as defined in the Company Rights Plan) pursuant to
the Company Rights Plan by virtue of the execution of this Agreement or the
consummation of the Merger or the other transactions contemplated hereby and
(y) a Distribution Date, Flip-In Event, Triggering Event or Flip-Over Event
(as such terms are defined in the Company Rights Plan) does not occur by
reason of the execution of this Agreement, the consummation of the Merger, or
the consummation of the transactions contemplated hereby, and such amendment
may not be further amended by Company without the prior consent of Parent in
its sole discretion.
2.22 CUSTOMS. Company has acted with reasonable care to properly value
and classify, in accordance with applicable tariff laws, rules and
regulations, all goods that Company or any of its subsidiaries import into
the United States or into any other country (the "IMPORTED GOODS"). To
Company's knowledge, there are currently no material claims pending against
Company by the U.S. Customs Service (or other foreign customs authorities)
relating to the valuation, classification or marking of the Imported Goods.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to Company, subject to the
exceptions specifically disclosed in writing in the disclosure letter and
referencing a specific representation supplied by Parent to Company dated as
of the date hereof and certified by a duly authorized officer of Parent (the
"PARENT SCHEDULES"), as follows:
3.1 ORGANIZATION OF PARENT.
(a) Each of Parent, Merger Sub and the material subsidiaries of
Parent (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized; (ii)
has the corporate or other power and authority to own, lease and operate its
assets and property and to carry on its business as now being conducted; and
(iii), except as would not be material to Parent, is duly qualified or
licensed to do business 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.
(b) Parent has delivered or made available to Company a true and
correct copy of the Certificate of Incorporation and Bylaws of Parent, each
as amended to date, and each such instrument is in full force and effect.
Neither Parent
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nor any of its material subsidiaries is in violation of any of the provisions
of its Certificate of Incorporation or Bylaws or equivalent governing
instruments.
3.2 PARENT AND MERGER SUB CAPITAL STRUCTURE. The authorized capital
stock of Parent consists of 100,000,000 shares of Common Stock, of which
there were 51,259,448 shares issued and outstanding as of September 30, 1997,
and 5,000,000 shares of Preferred Stock, of which one share of Series A
Preferred Stock is issued and outstanding. As of September 30, 1997, Parent
had reserved an aggregate of 10,317,588 shares of Parent Common Stock, net of
exercises, for issuance pursuant to Parent's 1997 Stock Incentive Plan, the
FSA Stock Option Plan, Parent's Outside Director Stock Option Plan, the SA93
Stock Option Plan, the SAII Stock Option Plan, Parent's Non-Officer Stock
Option Plan and Parent's 1992 Stock Option Plan. As of September 30, 1997,
there were options outstanding to purchase an aggregate of 8,016,938 shares
of Parent Common Stock pursuant to such plans. As of September 30, 1997,
Parent had reserved an aggregate of 354,181 shares of Parent Common Stock,
net of purchases, for issuance pursuant to Parent's Employee Stock Purchase
Plan. All outstanding shares of Parent 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 Parent or any agreement or document to which Parent is a party or by which
it is bound. The authorized capital stock of Merger Sub consists of 1000
shares of Common Stock, $0.001 par value, all of which, as of the date
hereof, are issued and outstanding and are held by Parent. Merger Sub was
formed on or about October 10, 1997, for the purpose of consummating the
Merger and has no material assets or liabilities except as necessary for such
purpose.
3.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth in
Section 3.2, there are no equity securities, partnership interests or similar
ownership interests of any class of Parent, 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 Parent owns free and clear of all claims
and encumbrances, directly or indirectly through one or more subsidiaries,
and except for shares of capital stock or other similar ownership interests
of certain subsidiaries of Parent 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 material subsidiary of Parent, 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 3.2, there are no options,
warrants, equity securities, partnership interests or similar ownership
interests, calls, rights (including preemptive rights), commitments
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or agreements of any character to which Parent is a party or by which it is
bound obligating Parent 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 Company or obligating
Company 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, the
Parent Voting Agreement and the Parent Affiliate Agreement, there are no
voting trusts, proxies or other agreements or understandings to which Parent
is a party or by which it is bound with respect to any equity security of any
class of Parent or with respect to any equity security, partnership interest
or similar ownership interest of any class of any of its material
subsidiaries.
3.4 AUTHORITY.
(a) Each of Parent and Merger Sub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby, subject only to the approval of the
issuance of Parent Common Stock pursuant to the Merger by Parent's
stockholders. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, subject only to the approval of the issuance of Parent Common Stock
pursuant to the Merger by Parent's stockholders and the filing of the
Certificate of Merger pursuant to Delaware Law. Approval by the stockholders
of Parent of the issuance of Parent Common Stock pursuant to the Merger may
be obtained by the vote of a majority of the total votes cast regarding such
proposal at a duly called and noticed meeting of Parent's stockholders at
which a quorum is present. This Agreement has been duly executed and
delivered by each of Parent and Merger Sub and, assuming the due
authorization, execution and delivery by Company, constitutes the valid and
binding obligation of Parent and Merger Sub, enforceable against Parent 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 Parent and
Merger Sub does not, and the performance of this Agreement by each of Parent
and Merger Sub will not, (i) conflict with or violate the Certificate of
Incorporation or Bylaws of Parent or Merger Sub, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Parent 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 materially impair Parent's material
rights or alter the material rights or material obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the
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creation of a material lien or encumbrance on any of the material properties
or assets of Parent or Merger Sub pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which Parent or Merger Sub is a party or
by which Parent or Merger Sub or any of their respective properties are bound
or affected. The Parent Schedules list all consents, waivers and approvals
under any of Parent's or any of its material 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 a material loss of benefits
to Parent as a result of the Merger.
(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 Parent, Merger Sub, or any material subsidiary of
Parent in connection with the execution and delivery of this Agreement or the
consummation of the Merger, except for (i) the filing of a Form S-4 (or any
similar successor form thereto) Registration Statement (the "REGISTRATION
STATEMENT") with 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 Parent or have a material adverse
effect on the ability of Parent or Merger Sub to consummate the Merger.
(c) The Board of Directors of Parent has all requisite corporate
power and authority to take the actions described in Section 5.14 hereof.
3.5 SEC FILINGS; PARENT FINANCIAL STATEMENTS.
(a) Parent has filed all forms, reports and documents required to
be filed by Parent with the SEC since September 1, 1994, and has made
available to Company such forms, reports and documents in the form filed with
the SEC. All such required forms, reports and documents (including those
that Parent may file subsequent to the date hereof) are referred to herein as
the "PARENT SEC REPORTS." As of their respective dates, the Parent SEC
Reports (i) were prepared in accordance 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 Parent 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
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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 Parent'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 Parent SEC Reports
(the "PARENT FINANCIALS"), including any Parent SEC Reports filed after the
date hereof until the Closing, (i) complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, (ii) 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 (iii)
fairly presented the consolidated financial position of Parent and its
subsidiaries as at the respective dates thereof and the consolidated results
of Parent's operations and cash flows for the periods indicated, except that
the unaudited interim financial statements may not contain footnotes and were
or are subject to normal and recurring year-end adjustments. The balance
sheet of Parent contained in Parent SEC Reports as of June 30, 1997 is
hereinafter referred to as the "PARENT BALANCE SHEET." Except as disclosed
in the Parent Financials, since the date of the Parent Balance Sheet neither
Parent nor any of its subsidiaries has any liabilities required under GAAP to
be set forth on a balance sheet (absolute, accrued, contingent or otherwise)
which are, individually or in the aggregate, material to the business,
results of operations or financial condition of Parent and its subsidiaries
taken as a whole, except for liabilities incurred since the date of the
Parent Balance Sheet in the ordinary course of business consistent with past
practices.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Parent
Balance Sheet there has not been: (i) any Material Adverse Effect on Parent,
(ii) any declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, any of
Parent's capital stock, or any purchase, redemption or other acquisition by
Parent of any of Parent's capital stock or any other securities of Parent or
any options, warrants, calls or rights to acquire any such shares or other
securities except for repurchases from employees following their termination
pursuant to the terms of their pre-existing stock option or purchase
agreements, (iii) any split, combination or reclassification of any of
Parent's capital stock, (iv) entry by Parent or any of its subsidiaries into
any licensing or other agreement with regard to the acquisition or
disposition of any material Intellectual Property other than licenses in the
ordinary course of business consistent with past practice or any amendment or
consent with respect to any licensing agreement filed or required to be filed
by Parent with the SEC, (v) any material change by Parent in its accounting
methods, principles or practices, except as required by concurrent changes in
GAAP, or (vi) any material revaluation by Parent of any of its assets,
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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.
3.7 TAXES.
(a) Parent and each of its subsidiaries have timely filed all
Returns relating to Taxes required to be filed by Parent and each of its
subsidiaries with any Tax authority, except such Returns which are not
material to Parent, and have paid all Taxes shown to be due on such Returns.
(b) Neither Parent nor any of its material subsidiaries has been
delinquent in the payment of any Tax nor is there any Tax deficiency
outstanding, proposed or assessed against Parent or any of its material
subsidiaries, nor has Parent or any of its material subsidiaries executed any
unexpired waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax.
(c) Neither Parent nor any of its subsidiaries has any liability
for unpaid Taxes which has not been accrued for or reserved on the Parent
Balance Sheet, whether asserted or unasserted, contingent or otherwise, which
is material to Parent, other than any liability for unpaid Taxes that may
have accrued since the date of the Parent Balance Sheet in connection with
the operation of the business of Parent and its subsidiaries in the ordinary
course.
3.8 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES. Parent 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, except as reflected in the Parent 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.
3.9 INTELLECTUAL PROPERTY. For the purposes of this Agreement, the
following terms have the following definitions:
"PARENT INTELLECTUAL PROPERTY" shall mean any
Intellectual Property that is owned by, or exclusively
licensed to, Parent or any of its material
subsidiaries.
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"PARENT REGISTERED INTELLECTUAL PROPERTY" means all of
the Registered Intellectual Property owned by, or filed
in the name of, Parent.
(a) No material Parent Intellectual Property or product or service
of Parent is subject to any proceeding or outstanding decree, order,
judgment, agreement, or stipulation restricting in any manner the use,
transfer, or licensing thereof by Parent, or which may affect the validity,
use or enforceability of such Parent Intellectual Property.
(b) Each material item of Parent Registered Intellectual Property
is valid and subsisting, all necessary registration, maintenance and renewal
fees currently due in connection with such Registered Intellectual Property
have been made and all necessary documents, recordations and certificates in
connection with such Registered Intellectual Property have been filed with
the relevant patent, copyright, trademark or other authorities in the United
States or foreign jurisdictions, as the case may be, for the purposes of
maintaining such Registered Intellectual Property.
(c) Parent owns and has good and exclusive title to, or has
license (sufficient for the conduct of its business as currently conducted
and as proposed to be conducted) to, each material item of Parent
Intellectual Property free and clear of any lien or encumbrance (excluding
licenses and related restrictions); and Parent is the exclusive owner of all
trademarks and trade names used in connection with the operation or conduct
of the business of Parent, including the sale of any products or the
provision of any services by Parent.
(d) Parent owns exclusively, and has good title to, all
copyrighted works that are Parent products or which Parent otherwise
expressly purports to own.
(e) To the extent that any material Intellectual Property has been
developed or created by a third party for Parent, Parent has a written
agreement with such third party with respect thereto and Parent thereby
either (i) has obtained ownership of, and is the exclusive owner of, or (ii)
has obtained a license (sufficient for the conduct of its business as
currently conducted and as proposed to be conducted) to all such third
party's Intellectual Property in such Intellectual Property by operation of
law or by valid assignment.
(f) All material contracts, licenses and agreements relating to
the Parent Intellectual Property are in full force and effect. The
consummation of the transactions contemplated by this Agreement will neither
violate nor result in the breach, modification, cancellation, termination, or
suspension of such contracts,
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licenses and agreements. Parent is in material compliance with, and has not
materially breached any term any of such contracts, licenses and agreements
and, to the knowledge of Parent, all other parties to such contracts,
licenses and agreements are in compliance with, and have not materially
breached any term of, such contracts, licenses and agreements.
(g) The operation of the business of Parent as such business
currently is conducted, including Parent's design, development, manufacture,
marketing and sale of the products or services of Parent (including with
respect to products currently under development) has not, does not and will
not infringe or misappropriate the Intellectual Property of any third party
(provided that with respect to patent rights, such representation is limited
to Parent's knowledge) or, to its knowledge, constitute unfair competition or
trade practices under the laws of any jurisdiction.
(h) Parent has not received notice from any third party that the
operation of the business of Parent or any act, product or service of Parent,
infringes or misappropriates the Intellectual Property of any third party or
constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(i) To the knowledge of Parent, no Person has or is infringing or
misappropriating any Parent Intellectual Property.
(j) Parent has taken reasonable steps to protect Parent's rights
in Parent's confidential information and trade secrets that it wishes to
protect or any trade secrets or confidential information of third parties
provided to Parent, and, without limiting the foregoing, Parent has and
enforces a policy requiring each employee and contractor to execute a
proprietary information/confidentiality agreement substantially in the form
provided to Parent and all current and former employees and contractors of
Parent have executed such an agreement, except where the failure to do so is
not reasonably expected to be material to Parent.
3.10 COMPLIANCE; PERMITS; RESTRICTIONS.
(a) Neither Parent nor any of its subsidiaries is, in any material
respect, in conflict with, or in default or in violation of (i) any law,
rule, regulation, order, judgment or decree applicable to Parent or any of
its subsidiaries or by which Parent or any of its subsidiaries or any of
their respective properties is bound or affected, or (ii) any material note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries or its
or any of their respective properties is bound or affected, except for
conflicts, violations
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and defaults that (individually or in the aggregate) would not cause Parent
to lose any material benefit or incur any material liability. No
investigation or review by any Governmental Entity is pending or, to Parent's
knowledge, has been threatened in a writing delivered to Parent against
Parent or any of its subsidiaries, nor, to Parent's knowledge, has any
Governmental Entity indicated an intention to conduct an investigation of
Parent or any of its subsidiaries. There is no material agreement, judgment,
injunction, order or decree binding upon Parent 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 Parent, any acquisition of
material property by Parent or the conduct of business by Parent as currently
conducted.
(b) Parent and its subsidiaries hold, to the extent legally
required, all permits, licenses, variances, exemptions, orders and approvals
from governmental authorities that are material to and required for the
operation of the business of Parent as currently conducted (collectively, the
"PARENT PERMITS"). Parent and its subsidiaries are in compliance in all
material respects with the terms of the Parent Permits, except where the
failure to be in compliance with the terms of the Parent Permits would not be
material to Parent.
3.11 LITIGATION. There is no action, suit, proceeding, claim,
arbitration or investigation pending, and to Parent's knowledge, no person
has threatened in a writing delivered to Parent to commence any action, suit,
proceeding, claim, arbitration or investigation against Parent or any of its
subsidiaries which would be likely to be material to Parent. No Governmental
Entity has at any time challenged or questioned in a writing delivered to
Parent the legal right of Parent to design, manufacture, offer or sell any of
its products in the present manner or style thereof.
3.12 BROKERS' AND FINDERS' FEES. Except for fees payable to ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. pursuant to an engagement letter dated September 9, 1997, a
copy of which has been made available to Company, Parent 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 thereby.
3.13 STATEMENTS; JOINT PROXY STATEMENT/PROSPECTUS. The information
supplied by Parent 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 Parent for inclusion in the Joint Proxy Statement/Prospectus
shall not, on the date the Joint Proxy Statement/Prospectus is
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first mailed to Company's stockholders or Parent's stockholders or at the
time of the Company Stockholders' Meeting or the Parent 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 Company Stockholders' Meeting or the Parent
Stockholders' Meeting which has become false or misleading. If at any time
prior to the Effective Time, any event relating to Parent or any of its
affiliates, officers or directors should be discovered by Parent which is
required to be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement/Prospectus, Parent shall promptly
inform Company. Notwithstanding the foregoing, Parent makes no representation
or warranty with respect to any information supplied by Company which is
contained in any of the foregoing documents.
3.14 VALID ISSUANCE. The Parent Common Stock to be issued in the
Merger, when issued in accordance with the provisions of this Agreement: (a)
will be validly issued, fully paid and nonassessable; and (b) will not be
subject to any restrictions on resale under the Securities Act, other than
restrictions imposed by Rule 145 promulgated under the Securities Act.
3.15 NO OWNERSHIP OF COMPANY COMMON STOCK. Parent does not own,
beneficially or of record, any shares of Company Common Stock.
3.16 POOLING OF INTERESTS. To the knowledge of Parent, based on
consultation with its independent accountants, neither Parent nor any of its
directors, officers, affiliates or stockholders has taken any action which
would preclude Parent's ability to account for the Merger as a pooling of
interests.
3.17 BOARD APPROVAL. The Board of Directors of Parent has, as of the
date of this Agreement, determined (i) that the Merger is fair to, and in the
best interests of Parent and its stockholders, and, (ii) subject to the terms
and conditions set forth in this Agreement, to recommend that the
stockholders of Parent approve the issuance of shares of Parent Common Stock
pursuant to the Merger.
3.18 FAIRNESS OPINION. Parent's Board of Directors has received an
opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. dated as of on or about the date hereof, to
the effect that as of the date hereof, the Merger and the Exchange Ratio are
fair to Parent's stockholders from a financial point of view and has
delivered or will promptly deliver to Company a copy of such opinion.
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ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS BY COMPANY. 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, Company and each of
its subsidiaries shall, except to the extent that Parent shall otherwise
consent in writing, carry on its business, in all material respects, in the
usual, regular and ordinary course, in substantially the same manner as
heretofore conducted and in compliance in all material respects 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 commercially reasonable 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, Company will promptly notify Parent of any material
event involving its business or operations.
In addition, except as permitted by the terms of this Agreement, and
except as provided in Article 4 of the Company Schedules, without the prior
written consent of Parent, 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, Company shall not do any of the
following and shall not permit its subsidiaries to do any of the following:
(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, director or other 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 pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in writing or made
available to Parent, or adopt any new severance plan;
(c) Transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the Company
Intellectual Property, or enter into grants to future patent rights, other
than non-exclusive licenses in the ordinary course of business and consistent
with past practice;
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(d) Declare, set aside 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) Purchase, redeem or otherwise acquire, directly or indirectly,
any shares of capital stock of Company or its subsidiaries, except
repurchases of unvested shares at cost in connection with the termination of
the employment relationship with any employee, consultant or director
pursuant to stock option or purchase agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber
or propose any of the foregoing 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) options pursuant to any of the Company Stock Option Plans with
strike prices equal to fair market value at the time of grant or options
pursuant to the ESPP, in each case, in the ordinary course of business,
consistent with past practice, and subject to and in compliance with the
restrictions of Section 4.1(p), (ii) shares of Company Common Stock pursuant
to the exercise of stock options therefor outstanding as of the date of this
Agreement and (iii) shares of Company Common Stock issuable to participants
in the ESPP consistent with the terms thereof;
(g) Cause, permit or propose any amendments to its Certificate of
Incorporation, Bylaws or other charter documents (or similar governing
instruments of any of its material 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,
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 Company 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 Company, except sales of product and inventory in the
ordinary course of business consistent with past practice;
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(j) Incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
Company, enter into any "keep well" or other agreement to maintain any
financial statement condition or enter into any arrangement having the
economic effect of any of the foregoing other than (i) in connection with the
financing of ordinary course trade payables consistent with past practice or
(ii) pursuant to existing credit facilities in the ordinary course of
business;
(k) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, or enter into any employment contract
or collective bargaining agreement (other than offer letters and letter
agreements entered into in the ordinary course of business consistent with
past practice with employees who are terminable "at will,"), pay any special
bonus or special remuneration to any director or employee, or increase the
salaries or wage rates or fringe benefits (including rights to severance or
indemnification) of its directors, officers, employees or consultants other
than in the ordinary course of business, consistent with past practice, or
change in any material respect any management policies or procedures;
(l) Make any payments outside of the ordinary course of business
in excess of $1 million;
(m) except in the ordinary course of business, modify, amend or
terminate any material contract or agreement to which Company or any
subsidiary thereof is a party or waive, release or assign any material rights
or claims thereunder;
(n) enter into any contracts, agreements, or obligations relating
to the distribution, sale, license or marketing by third parties of Company's
products or products licensed by Company other than in the ordinary course of
business consistent with past practice;
(o) revalue any of its material assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(p) Take any action that would be reasonably likely to interfere
with Parent's ability to account for the Merger as a pooling of interests
whether or not otherwise permitted by the provisions of this Article IV; or
(q) Agree in writing or otherwise to take any of the actions
described in Section 4.1(a) through (p) above.
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4.2 CONDUCT OF BUSINESS BY PARENT. 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, (i) Parent shall
consult with Company prior to taking any material action outside of the
ordinary course of business and (ii) Parent shall consult with and seek the
advice of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇. ▇▇▇▇ (to the extent such persons continue as directors of Company and are
reasonably available for such consultation), regarding its intention to
effect any material acquisition described in Section 4.2(c) (and will share
the material terms of such acquisition with such persons) prior to the
earlier of the public announcement of such acquisition, the consummation
thereof or the execution by Parent of a definitive written agreement
obligating Parent (subject to customary conditions) to consummate such
acquisition. In addition, 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, except as permitted by the terms
of this Agreement and except as provided in Section 4.2 of the Parent
Schedules, without the prior written consent of Company, 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,
Parent shall not do any of the following:
(a) Declare, set aside 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;
(b) Take any action that would be reasonably likely to interfere
with Parent's ability to account for the Merger as a pooling of interests; or
(c) Acquire or enter into any agreement to acquire a majority of
the voting securities or all or substantially all of the assets of any
corporation or other business entity (other than Company), whether by merger,
consolidation, stock tender or otherwise, unless the Board of Directors of
Parent determines in good faith that consummation of such transaction and
subsequent integration of the business proposed to be acquired, when
considered in light of the integration of operations of Parent and Company
following the Merger, would be in the best interests of Parent and the
stockholders of Parent following the Merger;
(d) Cause, permit or propose any amendments to its Certificate of
Incorporation, Bylaws or other charter documents; or
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(e) Agree in writing or otherwise to take any of the actions
described in Section 4.1(a) through (d) above.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT; OTHER
FILINGS; BOARD RECOMMENDATIONS.
(a) As promptly as practicable after the execution of this
Agreement, Company and Parent will prepare, and file with the SEC, the Joint
Proxy Statement/Prospectus and Parent will prepare and file with the SEC the
Registration Statement in which the Joint Proxy Statement/Prospectus will be
included as a prospectus. Each of Company and Parent will respond to any
comments of the SEC, will use its respective commercially reasonable efforts
to have the Registration Statement declared effective under the Securities
Act as promptly as practicable after such filing and each of Company and
Parent will cause the Joint Proxy Statement/Prospectus to be mailed to its
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 Company and Parent 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 Company and Parent 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 Joint Proxy Statement/Prospectus 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 Joint Proxy
Statement/Prospectus, the Merger or any Other Filing. Each of Company and
Parent 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 any event occurs which is
required to be set forth in an amendment or supplement to the Joint Proxy
Statement/Prospectus, the Registration Statement or any Other Filing, Company
or Parent, 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 Company, such
amendment or supplement.
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(b) The Joint Proxy Statement/Prospectus will include
the recommendation of the Board of Directors of Company in favor
of adoption and approval of this Agreement and approval of the
Merger, except to the extent that the Board of Directors of
Company shall have withdrawn or modified its approval of this
Agreement or the Merger in accordance with Section 5.4(a)(ii).
(c) The Joint Proxy Statement/Prospectus will include the
recommendation of the Board of Directors of Parent in favor of approval of
issuance of shares of Parent Common Stock pursuant to the Merger, except that
the Board of Directors of Parent may withdraw, modify or refrain from making
such recommendation to the extent that such Board determines, in good faith,
after consultation with outside legal counsel, that compliance with the
Board's fiduciary duties would require it to do so.
5.2 MEETINGS OF STOCKHOLDERS. Promptly after the date hereof, each of
Company and Parent will take all action necessary in accordance with the
Delaware Law and its Certificate of Incorporation and Bylaws to convene the
Company Stockholders' Meeting or the Parent Stockholders' Meeting,
respectively, to be held as promptly as practicable, 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 or the issuance of shares of Parent Common
Stock pursuant to the Merger, respectively. Company will use its
commercially reasonable efforts to solicit from its stockholders proxies in
favor of the adoption and approval of this Agreement and the approval of the
Merger and will take all other action necessary or advisable to secure the
vote or consent of its stockholders required by the rules of Nasdaq or
Delaware Law to obtain such approvals, except to the extent that the Board of
Directors of Company shall have withdrawn or modified its approval of this
Agreement or the Merger in accordance with Section 5.4(a)(ii). Parent will
use its commercially reasonable efforts to solicit from its stockholders
proxies in favor of approval of issuance of shares of Parent Common Stock
pursuant to the Merger and will take all other action necessary or advisable
to secure the vote or consent of its stockholders required by the rules of
Nasdaq or Delaware Law to obtain such approvals, except to the extent that
the Board of Directors of Parent shall have withdrawn or modified its
approval of such matters in accordance with Section 5.1(c). Company will
consult with Parent and use its commercially reasonable efforts to hold the
Company Stockholders' Meeting on the same day and at the same time as the
Parent Stockholders' Meeting.
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5.3 CONFIDENTIALITY; ACCESS TO INFORMATION.
(a) The parties acknowledge that Company and Parent have
previously executed a Confidentiality Agreement], dated as of on or about
September 12, 1997 (the "CONFIDENTIALITY AGREEMENT"), which Confidentiality
Agreement will continue in full force and effect in accordance with its terms.
(b) ACCESS TO INFORMATION. Each of Company and Parent will afford
the other and the other's accountants, counsel and other representatives
reasonable access during normal business hours to its properties, books,
records and personnel during the period prior to the Effective Time to obtain
all information concerning its business, including the status of product
development efforts, properties, results of operations and personnel, as such
other party may reasonably request. No information or knowledge obtained by
any party hereto 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) OBLIGATIONS OF COMPANY.
(i) From and after the date of this Agreement until the
earlier of the Effective Time or termination of this Agreement pursuant to
its terms Company and its subsidiaries will not, nor will they authorize or
permit any of their respective officers, directors or employees or any
investment banker, attorney or other advisor or representative retained by
any of them to, directly or indirectly, (x) solicit, initiate or encourage
the submission of any Alternative Proposal (as hereinafter defined) or (y)
participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to, or take any other action
to facilitate any inquiries or the making of any proposal that constitutes or
would reasonably be expected to lead to, any Alternative Proposal; PROVIDED,
HOWEVER, that if, at any time prior to obtaining the approval of the
stockholders of Company of this Agreement and the Merger by the requisite
vote under applicable law (the "STOCKHOLDER APPROVAL") the Board of Directors
of Company determines in good faith, after consultation with outside legal
counsel, that it is necessary to do so in order to comply with its fiduciary
duties to Company's stockholders under applicable law, Company may, in
response to an Alternative Proposal that was unsolicited or that did not
otherwise result from a breach of this Section 5.4(a), and subject to
compliance with Section 5.4(a)(iii) and Section 5.4(a)(v), furnish
information with respect to Company and participate in negotiations regarding
such Alternative Proposal. Company and its subsidiaries will immediately
cease any and
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all existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any Alternative Proposal. Without
limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding two sentences by any officer,
director or employee of Company or any of its subsidiaries or any investment
banker, attorney or other advisor or representative of Company or any of its
subsidiaries shall be deemed to be a breach of this Section 5.4(a) by
Company. For purposes of this Agreement, "ALTERNATIVE PROPOSAL" means any
inquiry, proposal or offer from any person or "group" (as defined under
Section 13(d) of the Exchange Act and the rules and regulations thereunder)
relating to any direct or indirect acquisition or purchase of a substantial
amount of assets of Company or any of its subsidiaries (other than the
purchase of Company's products in the ordinary course of business) or more
than a 10% interest in the total outstanding voting securities of Company or
any of its subsidiaries or any tender offer or exchange offer that if
consummated would result in any person or "group" (as defined under Section
13(d) of the Exchange Act and the rules and regulations thereunder)
beneficially owning 10% or more of the total outstanding voting securities of
Company or any of its subsidiaries or any merger, consolidation, business
combination, sale of substantially all the assets, recapitalization,
liquidation, dissolution or similar transaction involving Company or any of
its subsidiaries, other than the transactions contemplated by this Agreement.
(ii) Neither the Board of Directors of Company nor any
committee thereof shall (x) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to Parent or Merger Sub, the approval
or recommendation by such Board of Directors or any such committee of this
Agreement or the Merger or (y) cause Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement (an "ACQUISITION AGREEMENT") with respect to any Alternative
Proposal. In addition, subject to the other provisions of this Section
5.4(a), from and after the date of this Agreement until the earlier of the
Effective Time and termination of this Agreement pursuant to its terms,
Company and its subsidiaries will not, nor will they authorize or permit any
of their respective officers, directors or employees or any investment
banker, attorney or other advisor or representative retained by any of them
to, directly or indirectly, make or authorize any public statement,
recommendation or solicitation in support of any Alternative Proposal.
Notwithstanding the foregoing or anything else contained in this Agreement,
prior to obtaining the Stockholder Approval, the Board of Directors of
Company, to the extent it determines in good faith, after consultation with
outside legal counsel, that it is necessary to do so in order to comply with
its fiduciary duties to Company's stockholders under applicable law, may
withdraw or modify its approval or recommendation of this Agreement or the
Merger (and, to the extent it does so, Company may refrain from soliciting
proxies to secure the vote of its stockholders as may otherwise be required
by Section
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5.2) or approve or recommend any Superior Proposal (as hereinafter defined),
in each case at any time after the third business day following Parent's
receipt of bona fide written notice (a "NOTICE OF SUPERIOR PROPOSAL")
advising Parent that the Board of Directors of Company has received a
Superior Proposal, specifying the material terms and conditions of the
Superior Proposal and identifying the person making such Superior Proposal
(it being understood that any amendment to the price or material terms of a
Superior Proposal shall require an additional Notice of Superior Proposal and
an additional three business day period thereafter to the extent permitted
under applicable law); PROVIDED, that unless this Agreement is terminated
pursuant to Section 7.1, nothing contained in this Section shall limit
Company's obligation to hold and convene the Company Stockholders' Meeting
(regardless of whether the recommendation of the Board of Directors of
Company shall have been withdrawn, modified or not yet made) or to provide
Company stockholders with material information relating to such meeting. For
purposes of this Agreement, a "SUPERIOR PROPOSAL" means any bona fide
proposal made by a third party to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction, for consideration consisting of cash and/or securities, more
than 50% of the voting power of Company Common Stock or all or substantially
all the assets of Company and otherwise on terms which the Board of Directors
of Company determines in its good faith judgment (after consultation with a
financial advisor of nationally recognized reputation) to be more favorable
to Company's stockholders than the Merger and for which financing, to the
extent required, is then committed or which, in the good faith judgment of
the Board of Directors of Company, is capable of being obtained by such third
party.
(iii) In addition to the obligations of Company set forth
in paragraphs (i) and (ii) of this Section 5.4(a), Company as promptly as
practicable shall advise Parent orally and in writing of any request for
non-public information which Company reasonably believes would lead to an
Alternative Proposal or of any Alternative Proposal, the material terms and
conditions of such request or Alternative Proposal, and the identity of the
person making any such request, Alternative Proposal or inquiry. Company
will keep Parent informed in all material respects of the status and details
(including material amendments) of any such request or Alternative Proposal.
(iv) Nothing contained in this Section 5.4(a) or elsewhere in
this Agreement shall prohibit Company from (x) taking and disclosing to its
stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act or (y) making any disclosure to Company's stockholders
if, in the good faith judgment of the majority of the members of the Board of
Directors of Company, after consultation with independent legal counsel,
failure to so disclose
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would be inconsistent with applicable laws; PROVIDED that none of Company nor
its Board of Directors nor any committee thereof shall, except in accordance
with the provisions of Section 5.4(a)(ii), withdraw or modify, or publicly
propose to withdraw or modify, its position with respect to this Agreement or
the Merger or approve or recommend, or propose to approve or recommend, an
Alternative Proposal.
(v) Notwithstanding anything to the contrary in this Section
5.4(a), Company will not provide any non-public information to a third party
unless: (x) Company 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 (y) such non-public information has been previously or is
contemporaneously delivered to Parent.
(b) OBLIGATIONS OF PARENT. From and after the date of this
Agreement until the earlier of the Effective Time or termination of this
Agreement pursuant to its terms, Parent and its subsidiaries will not, nor
will they authorize or permit any of their respective officers, directors or
employees or any investment banker, attorney or other advisor or
representative retained by any of them to, directly or indirectly, (x)
solicit, initiate or encourage the submission of any Parent Proposal (as
hereinafter defined) or (y) participate in any discussions or negotiations
regarding, or furnish to any person any non-public information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes or would reasonably be expected to lead to, any
Parent Proposal; PROVIDED, HOWEVER, that if the Board of Directors of Parent
determines in good faith, after consultation with outside legal counsel, that
it is necessary to do so in order to comply with its fiduciary duties to
Parent's stockholders under applicable law, Parent may, in response to a
Parent Proposal that was unsolicited or that did not otherwise result from a
breach of this Section 5.4(b), furnish information with respect to Parent and
participate in negotiations regarding such Parent Proposal. Parent and its
subsidiaries will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any Parent Proposal. In addition, nothing contained in this
Section 5.4(b) or elsewhere in this Agreement shall prohibit Parent from (x)
taking and disclosing to its stockholders a position contemplated by Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act or (y) making any
disclosure to Parent's stockholders if, in the good faith judgment of the
majority of the members of the Board of Directors of Parent, after
consultation with independent legal counsel, failure to so disclose would be
inconsistent with applicable laws. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the first two
sentences of this Section 5.4(b) by any officer, director or employee of
Parent or any of its subsidiaries or any investment banker, attorney or other
advisor or representative of Parent or any of its
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subsidiaries shall be deemed to be a breach of this Section 5.4(b) by Parent.
For purposes of this Agreement, "PARENT PROPOSAL" means any proposal made by
a third party to consummate any of the following transactions or series of
related transactions (other than the Merger): (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Parent pursuant to which the stockholders of Parent
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 (without respect to any overlap in the
companies' stockholder bases); (ii) a sale or other disposition by Parent of
assets (excluding inventory and used equipment sold in the ordinary course of
business) representing in excess of 40% of the fair market value of Parent's
business immediately prior to such sale; or (iii) the acquisition by any
person or group (including by way of a tender offer or an exchange offer or
issuance by Parent), directly or indirectly, of beneficial ownership or a
right to acquire beneficial ownership of 40% or more of the then outstanding
shares of capital stock of Parent.
5.5 PUBLIC DISCLOSURE. Parent and Company will consult with each
other, and to the extent practicable, agree, before issuing any press release
or otherwise making any public statement with respect to the Merger, this
Agreement or an Alternative 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. The parties have agreed to the text of the joint press release
announcing the signing of this Agreement.
5.6 REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use reasonable efforts to take, or
cause to be taken, such actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, such things as are
necessary, proper or advisable to consummate and make effective, as
expeditiously as reasonably practicable, the Merger and the other
transactions contemplated by this Agreement, including using reasonable
efforts to accomplish the following: (i) the taking of such reasonable acts
as are necessary to cause the conditions precedent set forth in Article VI to
be satisfied, (ii) the obtaining of all necessary actions or nonactions,
waivers, consents, approvals, orders and authorizations from Governmental
Entities and the making of all necessary registrations, declarations and
filings (including registrations, declarations and filings with Governmental
Entities, if any) and the taking of such reasonable steps as may be necessary
to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity, (iii) the obtaining of all necessary consents, approvals
or waivers from third parties, (iv) the defending of any suits, claims,
actions, investigations or proceedings, whether judicial or administrative,
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challenging this Agreement or the consummation of the transactions
contemplated hereby, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated
or reversed and (v) the execution or delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry
out the purposes of, this Agreement. In connection with and without limiting
the foregoing, Company and its Board of Directors shall, if any state
takeover statute or similar statute or regulation is or becomes applicable to
the Merger, this Agreement or any of the transactions contemplated by this
Agreement, use reasonable efforts to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger, this
Agreement and the transactions contemplated hereby. Notwithstanding anything
herein to the contrary, nothing in this Agreement shall be deemed to require
Parent or Company or any subsidiary or affiliate thereof 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.
(b) Company shall give prompt notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate, or any failure of Company 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, in each case, such that the
conditions set forth in Section 6.3(a) or 6.3(b) would not be satisfied,
PROVIDED, HOWEVER, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
(c) Parent shall give prompt notice to Company of any
representation or warranty made by it or Merger Sub contained in this
Agreement becoming untrue or inaccurate, or any failure of Parent or Merger
Sub 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, in
each case, such that the conditions set forth in Section 6.2(a) or 6.2(b)
would not be satisfied, PROVIDED, HOWEVER, that no such notification shall
affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
5.7 THIRD PARTY CONSENTS. As soon as reasonably practicable following
the date hereof, Parent and Company will each use its commercially reasonable
efforts to obtain any material consents, waivers and approvals under any of
its or its subsidiaries' respective agreements, contracts, licenses or leases
required to be
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obtained in connection with the consummation of the transactions contemplated
hereby.
5.8 STOCK OPTIONS AND EMPLOYEE BENEFITS.
(a) At the Effective Time, each outstanding option to purchase
shares of Company Common Stock (each a "COMPANY STOCK OPTION") under the
Company Stock Option Plans, whether or not exercisable, will be assumed by
Parent. Each Company Stock Option so assumed by Parent under this Agreement
will continue to have, and be subject to, the same terms and conditions set
forth in the applicable Company Stock Option Plan immediately prior to the
Effective Time (including, without limitation, any repurchase rights or
vesting provisions), except that (i) each Company Stock Option will be
exercisable (or will become exercisable in accordance with its terms) for
that number of whole shares of Parent Common Stock equal to the product of
the number of shares of Company Common Stock that were issuable upon exercise
of such Company Stock Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of Parent Common Stock and (ii) the per share exercise price for the
shares of Parent Common Stock issuable upon exercise of such assumed Company
Stock Option will be equal to the quotient determined by dividing the
exercise price per share of Company Common Stock at which such Company Stock
Option was exercisable immediately prior to the Effective Time by the
Exchange Ratio, rounded up to the nearest whole cent.
(b) It is intended that Company Stock Options assumed by Parent
shall qualify following the Effective Time as incentive stock options as
defined in Section 422 of the Code to the extent Company Stock Options
qualified as incentive stock options immediately prior to the Effective Time
and the provisions of this Section 5.8 shall be applied consistent with such
intent.
(c) Rights outstanding under the ESPP shall be treated in a manner
reasonably acceptable to Parent and Company, provided that in no event shall
any such treatment interfere with Parent's ability to account for the Merger
as a pooling of interests.
(d) Parent will reserve sufficient shares of Parent Common Stock
for issuance under Section 5.8 and under Section 1.6(c) hereof.
5.9 FORM S-8. Parent agrees to file a registration statement on Form
S-8 for the shares of Parent Common Stock issuable with respect to assumed
Company Stock Options within five days after the Effective Time and shall use
its commercially reasonable efforts to maintain the effectiveness of such
registration
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statement thereafter for as long as any of such options or other rights
remain outstanding.
5.10 INDEMNIFICATION.
(a) From and after the Effective Time, Parent will fulfill and
honor and will cause the Surviving Corporation to fulfill and honor in all
respects the obligations of Company pursuant to any indemnification
agreements between Company and its directors and officers as of the Effective
Time (the "INDEMNIFIED PARTIES") and any indemnification provisions under
Company'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 Company as
in effect on the date hereof, which provisions will not be amended, repealed
or otherwise modified for a period of six years from the Effective Time in
any manner that would adversely affect the rights thereunder of individuals
who, immediately prior to the Effective Time, were directors, officers,
employees or agents of Company, unless such modification is required by law.
(b) For a period of six years after the Effective Time, Parent
will maintain or cause the Surviving Corporation to maintain in effect, if
available, directors' and officers' liability insurance covering those
persons who are currently covered by Company's directors' and officers'
liability insurance policy on terms comparable to those applicable to the
current directors and officers of Company; PROVIDED, HOWEVER, that in no
event will Parent or the Surviving Corporation be required to expend in
excess of 150% of the annual premium currently paid by Company for such
coverage (or such coverage as is available for such 150% of such annual
premium).
5.11 NASDAQ LISTING. Parent agrees to use its commercially reasonable
efforts to cause to be authorized for listing on Nasdaq prior to the
Effective Time the shares of Parent Common Stock issuable, and those required
to be reserved for issuance, in connection with the Merger, upon official
notice of issuance.
5.12 AFFILIATE AGREEMENTS.
(a) Set forth on the Company Schedules is a list of those persons
who may be deemed to be, in Company's reasonable judgment, affiliates of
Company within the meaning of Rule 145 promulgated under the Securities Act
(each a "COMPANY AFFILIATE"). Company will provide Parent with such
information and documents as Parent reasonably requests for purposes of
reviewing such list.
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Company will use its commercially reasonable efforts to deliver or cause to
be delivered to Parent, as promptly as practicable on or following the date
hereof, from each Company Affiliate an executed affiliate agreement in
substantially the form attached hereto as EXHIBIT B-1 (the "COMPANY AFFILIATE
AGREEMENT"), each of which will be in full force and effect as of the
Effective Time. Parent will be entitled to place appropriate legends on the
certificates evidencing any Parent Common Stock to be received by a Company
Affiliate pursuant to the terms of this Agreement, and to issue appropriate
stop transfer instructions to the transfer agent for the Parent Common Stock,
consistent with the terms of the Company Affiliate Agreement.
(b) Set forth on the Parent Schedules is a list of those persons
who may be deemed to be, in Parent's reasonable judgment, affiliates of
Parent (each a "PARENT AFFILIATE"). Parent will provide Company with such
information and documents as Parent reasonably requests for purposes of
reviewing such list. Parent will use its commercially reasonable efforts to
deliver or cause to be delivered to Company, as promptly as practicable on or
following the date hereof, from each Parent Affiliate an executed affiliate
agreement in substantially the form attached hereto as EXHIBIT B-2 (the
"PARENT AFFILIATE AGREEMENT"), each of which will be in full force and effect
as of the Effective Time.
5.13 REGULATORY FILINGS; REASONABLE EFFORTS. As soon as may be
reasonably practicable, Company and Parent 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 reasonably agreed to by the parties. Company and Parent 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.
5.14 BOARD OF DIRECTORS OF PARENT FOLLOWING THE MERGER. The Board of
Directors of Parent will take all actions within its power to cause the Board
of Directors of Parent, effective no later than one day following the
Effective Time, to consist of five persons, one of whom shall be ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ (who shall retain his present position as a Class II director), one of
whom will be ▇▇▇▇▇ ▇. ▇▇▇▇ (who shall be offered a position as a Class II
director) and the remaining three of whom shall have served on the Board of
Directors of Parent immediately prior to the Effective Time. If, prior to
the Effective Time, any of the foregoing designees shall decline or be unable
to serve as a director, Company (if such person is ▇▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇
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Saal) or Parent (in all other cases) shall designate another person to serve
in such person's stead, which person shall be reasonably acceptable to the
other party.
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) COMPANY 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 Company.
(b) PARENT STOCKHOLDER APPROVAL. The issuance of shares of Parent
Common Stock pursuant to the Merger shall have been duly approved by the
requisite vote under applicable law by the stockholders of Parent.
(c) 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 Joint Proxy Statement/Prospectus, shall
have been initiated or threatened in writing by the SEC.
(d) 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 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 and
all material foreign antitrust approvals required to be obtained prior to the
Merger in connection with the transactions contemplated hereby shall have
been obtained.
(e) TAX OPINIONS. Parent and Company shall each have received
written opinions from their respective tax counsel (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, Professional Corporation, and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich, a
Professional Corporation, 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;
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PROVIDED, HOWEVER, that if the counsel to either Parent or Company 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 and
use their commercially reasonable efforts to cause their shareholders to make
such reasonable representations as requested by such counsel for the purpose
of rendering such opinions.
(f) OPINION OF ACCOUNTANTS. Each of Parent and Company shall have
received letters from each of Coopers & ▇▇▇▇▇▇▇ L.L.P. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP, respectively, dated within two (2) business days prior to the Effective
Time, regarding that firm's concurrence with Parent's management's and
Company's management's conclusions as to the appropriateness of pooling of
interest accounting for the Merger under Accounting Principles Board Opinion
No. 16, if the Merger is consummated in accordance with this Agreement.
(g) NASDAQ LISTING. The shares of Parent Common Stock to be
issued to Company stockholders pursuant to the Merger shall have been
approved for listing on Nasdaq upon notice of issuance.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY. The obligation of
Company 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 Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Merger Sub contained in this Agreement (i) shall
have been true and correct in all material respects as of the date of this
Agreement and (ii) shall be true and correct in all material respects 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 a particular date (which shall have been true and correct as of such
particular date), with the same force and effect as if made on and as of the
Closing Date, except, with regard to the foregoing clauses (i) and (ii), in
such cases (other than the representations in Sections 3.2, 3.3, 3.16 and
3.18) where the failure to be so true and correct would not have or be
reasonably likely to have a Material Adverse Effect on Parent. Company shall
have received a certificate with respect to the foregoing signed on behalf of
Parent by an authorized officer of Parent.
(b) AGREEMENTS AND COVENANTS. Parent 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
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the Closing Date, and Company shall have received a certificate to such
effect signed on behalf of Parent by an authorized officer of Parent.
(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with
respect to Parent shall have occurred since the date of this Agreement or be
reasonably likely to occur.
(d) AFFILIATE AGREEMENTS. Each of the Parent Affiliates shall
have entered into the Parent Affiliate Agreement and each of such agreements
will be in full force and effect as of the Effective Time.
(e) CERTAIN ACTIONS. The Board of Directors of Parent shall have
complied in all material respects with the provisions of Section 5.14 hereof.
(f) CONSENTS. Parent shall have obtained all consents, waivers
and approvals required in connection with the consummation of the
transactions contemplated hereby in connection with the agreements,
contracts, licenses or leases set forth on Section 6.2 of the Company
Schedules.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent 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 Parent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Company contained in this Agreement (i) shall have been true
and correct in all material respects as of the date of this Agreement and
(ii) shall be true and correct in all material respects 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 a
particular date (which shall have been true and correct as of such particular
date), with the same force and effect as if made on and as of the Closing
Date, except, with regard to the foregoing clauses (i) and (ii), in such
cases (other than the representations in Sections 2.2, 2.3, 2.20 and 2.21)
where the failure to be so true and correct would not have or be reasonably
likely to have a Material Adverse Effect on Company. Parent shall have
received a certificate with respect to the foregoing signed on behalf of
Company by an authorized officer of Company.
(b) AGREEMENTS AND COVENANTS. Company 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 at or prior to the
Closing Date, and Parent shall have received a certificate to such effect
signed on behalf of
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Company by the Chief Executive Officer and the Chief Financial Officer of
Company.
(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with
respect to Company shall have occurred since the date of this Agreement or be
reasonably likely to occur.
(d) AFFILIATE AGREEMENTS. Each of the Company Affiliates shall
have entered into the Company Affiliate Agreement and each of such agreements
will be in full force and effect as of the Effective Time.
(e) CONSENTS. Company shall have obtained all consents, waivers
and approvals required in connection with the consummation of the
transactions contemplated hereby in connection with the agreements,
contracts, licenses or leases set forth on Section 6.3(e) of the Parent
Schedules.
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 the requisite approvals of the
stockholders of Company or Parent:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and Company;
(b) by either Company or Parent if the Merger shall not have been
consummated by March 31, 1998 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 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 Company or Parent 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 Company or Parent if the required approvals of the
stockholders of Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Company
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stockholders duly convened therefor or at any adjournment thereof (PROVIDED
that the right to terminate this Agreement under this Section 7.1(d) shall
not be available to Company where the failure to obtain Company stockholder
approval shall have been caused by the action or failure to act of Company
and such action or failure to act constitutes a breach by Company of this
Agreement);
(e) by either Company or Parent if the required approval of the
stockholders of Parent contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Parent stockholders duly convened therefor or at any adjournment thereof
(PROVIDED that the right to terminate this Agreement under this Section
7.1(e) shall not be available to Parent where the failure to obtain Parent
stockholder approval shall have been caused by the action or failure to act
of Parent and such action or failure to act constitutes a material breach by
Parent of this Agreement);
(f) by Parent if (i) the Board of Directors of Company or any
committee thereof shall have withdrawn or modified in a manner adverse to
Parent its approval or recommendation of the Merger or this Agreement, (ii)
Company shall have failed to include in the Joint/Proxy Statement/Prospectus
the recommendation of the Board of Directors of Company in favor of approval
of the Merger and this Agreement, (iii) the Board of Directors of Company
shall have failed to reconfirm such recommendation within ten business days
after a written request to do so at any time following the public
announcement or disclosure of an Alternative Proposal (iv) the Board of
Directors of Company or any committee thereof shall have recommended any
Alternative Proposal or (v) the Board of Directors of Company or any
committee thereof shall have resolved to do any of the foregoing;
(g) by Company if (i) the Board of Directors of Parent or any
committee thereof shall have withdrawn or modified in a manner adverse to
Company its recommendation of approval of the issuance of shares of Parent
Common Stock pursuant to the Merger, (ii) Parent shall have failed to include
in the Joint/Proxy Statement/Prospectus the recommendation of the Board of
Directors of Parent in favor of approval of the issuance of shares of Parent
Common Stock pursuant to the Merger, (iii) the Board of Directors of Parent
shall have failed to reconfirm such recommendation within ten business days
after a written request to do so at any time following the public
announcement or disclosure of a Parent Contingent Proposal (as defined in
Section 7.3(d)) or (iv) the Board of Directors of Parent or any committee
thereof shall have resolved to do any of the foregoing;
(h) by Company at any time prior to the approval of the Merger by
Company's stockholders and following the earlier of (i) three days following
the date the Registration Statement is declared effective pursuant to the
Securities Act
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by the SEC or (ii) sixty days following the date hereof, if the Board of
Directors of Company recommends a Superior Proposal to the stockholders of
Company;
(i) by Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or
if any representation or warranty of Parent shall have become untrue, 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 untrue, PROVIDED that
Company may not terminate this Agreement under this Section 7.1(i) if such
inaccuracy in Parent's representations and warranties or breach by Parent is
curable by Parent through the exercise of its commercially reasonable efforts
prior to March 31, 1998, provided Parent continues to exercise commercially
reasonable efforts to cure such breach (it being understood that Company may
not terminate this Agreement pursuant to this paragraph (i) if it shall have
materially breached this Agreement or if such breach by Parent is cured prior
to March 31, 1998); or
(j) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of Company set forth in this Agreement, or
if any representation or warranty of Company shall have become untrue, 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 untrue, PROVIDED, that
Parent may not terminate this Agreement under this Section 7.1(j) if such
inaccuracy in Company's representations and warranties or breach by Company
is curable by Company through the exercise of its commercially reasonable
efforts prior to March 31, 1998, provided Company continues to exercise
commercially reasonable efforts to cure such breach (it being understood that
Parent may not terminate this Agreement pursuant to this paragraph (j) if it
shall have materially breached this Agreement or if such breach by Company is
cured prior to March 31, 1998).
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, and (ii) nothing herein shall relieve any party from liability for
any willful breach of this Agreement. 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.
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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 Parent and
Company 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 Joint Proxy Statement/Prospectus (including any
preliminary materials related thereto) and the Registration Statement
(including financial statements and exhibits) and any amendments or
supplements thereto.
(b) COMPANY PAYMENTS. In the event that this Agreement is
terminated by Parent pursuant to Section 7.1(f) or Company pursuant to
Section 7.1(h), Company shall promptly, but in no event later than two days
after the date of such termination, pay Parent a fee equal to $30 million in
immediately available funds (the "COMPANY TERMINATION FEE"). If this
Agreement shall be terminated by any party hereto pursuant to Section 7.1(d)
and prior to such termination an Alternative Proposal shall have been
publicly announced or otherwise publicly disclosed, and prior to the date 12
months following the date of the termination of this Agreement either (i) a
Company Acquisition (as hereinafter defined) shall be consummated or (ii)
Company shall enter into an Acquisition Agreement providing for a Company
Acquisition, then Company shall pay to Parent the Company Termination Fee in
immediately available funds in the case of clause (i) concurrently with the
consummation of such Company Acquisition or in the case of clause (ii) one
half of the Company Termination Fee concurrently with the execution of such
Acquisition Agreement and the remaining half of the Company Termination Fee
upon the consummation of any Company Acquisition occurring with twelve months
following such execution. Company acknowledges that the agreements contained
in this Section 7.3(b) are an integral part of the transactions contemplated
by this Agreement, and that, without these agreements, Parent would not enter
into this Agreement; accordingly, if Company fails promptly to pay the
amounts due pursuant to this Section 7.3(b), and, in order to obtain such
payment, Parent commences a suit which results in a judgment against Company
for the amounts set forth in this Section 7.3(b) and such judgment is not set
aside or reversed, Company shall pay to Parent its reasonable costs and
expenses (including attorneys' fees and expenses) in connection with such
suit, together with interest on the amounts set forth in this Section 7.3(b)
at the prime rate of The Chase Manhattan Bank in effect on the date such
payment was required to be made. "COMPANY ACQUISITION" shall mean any of the
following transactions or series of related transactions: (i) a merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Company pursuant to which the
stockholders of
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Company 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 (without respect to any
overlap in the companies' stockholder bases) (other than the transactions
contemplated by this Agreement); (ii) a sale or other disposition by Company
of assets (excluding inventory and used equipment sold in the ordinary course
of business) representing in excess of 40% of the fair market value of
Company's business immediately prior to such sale; or (iii) the acquisition
by any person or group (including by way of a tender offer or an exchange
offer or issuance by Company), directly or indirectly, of beneficial
ownership or a right to acquire beneficial ownership of 40% or more of the
then outstanding shares of capital stock of Company.
(c) Payment of the fees described in Section 7.3(b) above shall
not be in lieu of damages incurred in the event of material and willful
breach of this Agreement.
(d) PARENT PAYMENTS. In the event that this Agreement is
terminated by Company pursuant to Section 7.1(g), Parent shall promptly, but
in no event later than two days after the date of such termination, pay
Company a fee equal to $30 million in immediately available funds (the
"PARENT TERMINATION FEE"). If this Agreement shall be terminated by any
party hereto pursuant to Section 7.1(e) and prior to the time of the
occurrence of the event entitling such party to terminate this Agreement
pursuant to such provision a Parent Contingent Proposal shall have been
publicly announced or otherwise publicly disclosed, and prior to the date 12
months following the date of the termination of this Agreement either (i) the
transaction contemplated by such Parent Contingent Proposal shall be
consummated or (ii) Parent shall enter into a written agreement providing for
the consummation of the transaction contemplated by such Parent Contingent
Proposal, then Parent shall pay to Company the Parent Termination Fee in
immediately available funds, in the case of clause (i) concurrently with the
consummation of the transaction contemplated by such Parent Contingent
Proposal and in the case of clause (ii) one half of the Parent Termination
Fee concurrently with the execution of such agreement and the remaining half
of the Parent Termination Fee upon the consummation of the transaction
contemplated by such agreement. Parent acknowledges that the agreements
contained in this Section 7.3(d) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Company
would not enter into this Agreement; accordingly, if Parent fails promptly to
pay the amounts due pursuant to this Section 7.3(d), and, in order to obtain
such payment, Company commences a suit which results in a judgment against
Parent for the amounts set forth in this Section 7.3(d) and such judgment is
not set aside or reversed, Parent shall pay to Company its reasonable costs
and expenses (including attorneys' fees and expenses) in connection with such
suit, together with interest on
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the amounts set forth in this Section 7.3(d) at the prime rate of The Chase
Manhattan Bank in effect on the date such payment was required to be made.
Payment of the fees described in this Section 7.3(d) shall not be in lieu of
damages incurred in the event of material and willful breach of this
Agreement. "PARENT CONTINGENT PROPOSAL" shall mean a Parent Proposal, which
proposal is and is publicly disclosed to be contingent upon the issuance of
shares of Parent Common Stock pursuant to the Merger not being approved by
the stockholders of Parent or the Merger otherwise not being consummated.
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 Parent and Company.
7.5 EXTENSION; WAIVER. At any time prior to the Effective Time any
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
made to such party contained herein or in any document delivered pursuant
hereto and (iii) waive compliance with any of the agreements or conditions
for the benefit of such party contained herein. Any agreement on the part of
a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. 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 Company, Parent 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 (such as those set forth in
Section 5.10) 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):
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(a) if to Parent or Merger Sub, to:
McAfee Associates, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Company, to:
Network General Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich
A Professional Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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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.
(b) For purposes of this Agreement the term "KNOWLEDGE" means with
respect to a party hereto, with respect to any matter in question, that any
of the Chief Executive Officer, Chief Financial Officer, General Counsel,
Director of Legal Affairs or Controller of such party, has actual knowledge
of such matter.
(c) For purposes of this Agreement, the term "MATERIAL ADVERSE
EFFECT" when used in connection with an entity means any change, event or
effect that is materially adverse to the business, assets (including
intangible assets), financial condition or results of operations of such
entity and its subsidiaries taken as a whole, except for those changes,
events and effects that (i) are directly and primarily caused by conditions
affecting the United States economy as a whole or affecting the industry in
which such entity competes as a whole, which conditions do not affect such
entity in a disproportionate manner, or (ii) are directly and primarily
related to or result from announcement or pendency of the Merger.
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 the Company Schedules and
the Parent 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
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being understood that the 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 5.10.
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. Each of the parties hereto irrevocably consents to the jurisdiction
of any state or federal court within the Northern District of California or
the State of Delaware, in connection with any matter based upon or arising
out of this Agreement or the matters contemplated herein, agrees that process
may be served upon them in any manner authorized by the laws of the State of
California or the State of Delaware, as is appropriate, for such persons and
waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction and such process.
8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation,
holding or rule of
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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.
8.11 WAIVER OF JURY TRIAL. EACH OF PARENT, COMPANY 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 PARENT,
COMPANY OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT HEREOF.
*****
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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.
McAFEE ASSOCIATES, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Title: CHAIRMAN AND CHIEF EXECUTIVE OFFICER
---------------------------------------
MYSTERY ACQUISITION CORP.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Title: PRESIDENT
---------------------------------------
NETWORK GENERAL CORPORATION
By: /S/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Title: DIRECTOR
---------------------------------------
**** REORGANIZATION AGREEMENT ****
FIRST AMENDMENT, dated as of October 22, 1997 (the "First
Amendment"), to the Agreement and Plan of Reorganization dated as
of October 13, 1997 (the "Reorganization Agreement") among McAfee
Associates, Inc., a Delaware corporation ("Parent"), Mystery
Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), and Network General
Corporation, a Delaware corporation (the "Company").
WHEREAS Parent, Merger Sub and the Company each desire to amend the
Reorganization Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Section 5.14 of the Reorganization Agreement is hereby amended and
restated to read in its entirety as follows:
Section 5.14 BOARD OF DIRECTORS OF PARENT FOLLOWING THE MERGER.
The Board of Directors of Parent shall take all actions within its
power to cause the Board of Directors of Parent, effective no later
than one day following the Effective Time, to consist of six persons,
one of whom shall be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (who shall retain his present
position as a Class II director), one of whom shall be ▇▇▇▇▇ ▇. ▇▇▇▇
(who shall be offered a position as a Class II director) and the
remaining four of whom shall have served on the Board of Directors of
Parent immediately prior to the Effective Time (each a "Parent
Designee"). If, prior to the Effective Time, any of the foregoing
designees shall decline or be unable to serve as a director, Company
(if such person is ▇▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇) or Parent (in all
other cases) shall designate another person to serve in such person's
stead, which person shall be reasonably acceptable to the other party;
provided, however, that the Board of Directors of McAfee shall take
all actions within its power to ensure the Board of Directors of
Parent will be reduced to five directors in the event any Parent
Designee shall resign or decline or be unable to serve as a director.
2. The First Amendment 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 laws thereof.
3. This First Amendment may be executed in one or more counterparts, all
of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties.
4. Except as expressly modified and amended by this First Amendment, the
Reorganization Agreement shall continue in full force and effect and is hereby
ratified and confirmed in all respects.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
the Reorganization Agreement to be executed by their duly authorized respective
officers as of the date first written above.
McAFEE ASSOCIATES, INC.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Title: Chairman and Chief Executive Officer
-----------------------------------------
MYSTERY ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Title: President
-----------------------------------------
NETWORK GENERAL CORPORATION
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Title: Vice President
-----------------------------------------
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****FIRST AMENDMENT TO REORGANIZATION AGREEMENT****
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