EXHIBIT (C)
FINAL EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SILICON GRAPHICS, INC.
C ACQUISITION CORPORATION
AND
CRAY RESEARCH, INC.
DATED AS OF FEBRUARY 25, 1996
TABLE OF CONTENTS
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ARTICLE I
THE OFFER
SECTION 1.01. The Offer................................................................... 1
SECTION 1.02. Company Action.............................................................. 2
SECTION 1.03. Directors................................................................... 3
ARTICLE II
THE MERGER
SECTION 2.01. The Merger.................................................................. 3
SECTION 2.02. Effective Time.............................................................. 4
SECTION 2.03. Effect of the Merger........................................................ 4
SECTION 2.04. Certificate of Incorporation; By-Laws....................................... 4
SECTION 2.05. Directors and Officers...................................................... 4
SECTION 2.06. Effect on Capital Stock..................................................... 4
SECTION 2.07. Exchange of Certificates.................................................... 5
SECTION 2.08. Stock Transfer Books........................................................ 7
SECTION 2.09. Dissenting Shares........................................................... 7
SECTION 2.10. No Further Ownership Rights in Company Common Stock......................... 7
SECTION 2.11. Lost, Stolen or Destroyed Certificates...................................... 7
SECTION 2.12. Taking of Necessary Action; Further Action.................................. 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification; Subsidiaries................................ 8
SECTION 3.02. Certificate of Incorporation and By-Laws.................................... 8
SECTION 3.03. Capitalization.............................................................. 8
SECTION 3.04. Authority Relative to this Agreement........................................ 9
SECTION 3.05. No Conflict; Required Filings and Consents.................................. 10
SECTION 3.06. Compliance; Permits......................................................... 10
SECTION 3.07. SEC Filings; Financial Statements........................................... 11
SECTION 3.08. Absence of Certain Changes or Events........................................ 12
SECTION 3.09. No Undisclosed Liabilities.................................................. 12
SECTION 3.10. Absence of Litigation....................................................... 12
SECTION 3.11. Employee Benefit Plans; Employment Agreements............................... 12
SECTION 3.12. Labor Matters............................................................... 14
SECTION 3.13. Registration Statement; Proxy Statement..................................... 14
SECTION 3.14. Restrictions on Business Activities......................................... 14
SECTION 3.15. Title to Property........................................................... 15
SECTION 3.16. Taxes....................................................................... 15
SECTION 3.17. Environmental Matters....................................................... 16
SECTION 3.18. Brokers..................................................................... 17
SECTION 3.19. Intellectual Property....................................................... 17
SECTION 3.20. Vote Required............................................................... 18
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SECTION 3.21. Opinion of Financial Advisor................................................ 18
SECTION 3.22. Full Disclosure............................................................. 18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 4.01. Organization and Qualification.............................................. 18
SECTION 4.02. Authority Relative to This Agreement........................................ 18
SECTION 4.03. No Conflict; Required Filings and Consents.................................. 19
SECTION 4.04. Certificate of Incorporation and By-Laws.................................... 19
SECTION 4.05. Capitalization.............................................................. 19
SECTION 4.06. Compliance; Permits......................................................... 20
SECTION 4.07. SEC Filings; Financial Statements........................................... 20
SECTION 4.08. Absence of Certain Changes or Events........................................ 21
SECTION 4.09. Restrictions on Business Activities......................................... 21
SECTION 4.10. Title to Property........................................................... 21
SECTION 4.11. No Undisclosed Liabilities.................................................. 21
SECTION 4.12. Absence of Litigation....................................................... 21
SECTION 4.13. Registration Statement; Proxy Statement/Prospectus.......................... 21
SECTION 4.14. Brokers..................................................................... 22
SECTION 4.15. No Stockholder Vote......................................................... 22
SECTION 4.16. Financing................................................................... 22
SECTION 4.17. Full Disclosure............................................................. 22
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the Merger....................... 22
SECTION 5.02. No Solicitation............................................................. 24
SECTION 5.03. Conduct of Business by Parent Pending the Merger............................ 25
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Proxy Statement/Prospectus; Registration Statement.......................... 25
SECTION 6.02. Stockholders' Meeting....................................................... 26
SECTION 6.03. Access to Information; Confidentiality...................................... 26
SECTION 6.04. Consents; Approvals......................................................... 26
SECTION 6.05. Stock Options............................................................... 26
SECTION 6.06. Company Stock Purchase Plan................................................. 27
SECTION 6.07. Employment Matters.......................................................... 27
SECTION 6.08. Agreements of Affiliates.................................................... 27
SECTION 6.09. Indemnification............................................................. 27
SECTION 6.10. Notification of Certain Matters............................................. 28
SECTION 6.11. Further Action.............................................................. 28
SECTION 6.12. Public Announcements........................................................ 28
SECTION 6.13. Listing of Parent Common Shares............................................. 28
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to Obligation of Each Party to Effect the Merger................. 29
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SECTION 7.02. Additional Conditions to Obligations of Parent and Merger Sub............... 29
SECTION 7.03. Additional Conditions to Obligation of the Company.......................... 30
ARTICLE VIII
TERMINATION
SECTION 8.01. Termination................................................................. 30
SECTION 8.02. Effect of Termination....................................................... 31
SECTION 8.03. Fees and Expenses........................................................... 31
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of Representations, Warranties and Agreements................. 32
SECTION 9.02. Notices..................................................................... 32
SECTION 9.03. Certain Definitions......................................................... 33
SECTION 9.04. Amendment................................................................... 34
SECTION 9.05. Waiver...................................................................... 34
SECTION 9.06. Headings.................................................................... 34
SECTION 9.07. Severability................................................................ 34
SECTION 9.08. Entire Agreement............................................................ 34
SECTION 9.09. Assignment, Merger Sub...................................................... 34
SECTION 9.10. Parties in Interest......................................................... 34
SECTION 9.11. Failure or Indulgence Not Waiver; Remedies Cumulative....................... 35
SECTION 9.12. GOVERNING LAW............................................................... 35
SECTION 9.13. Counterparts................................................................ 35
SECTION 9.14. WAIVER OF JURY TRIAL........................................................ 35
Annexes:
Annex A: Conditions to the Offer
Annex B: Certain Employee Matters
Annex C: Form of Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 25, 1996 (this
"AGREEMENT"), among SILICON GRAPHICS, INC., a Delaware corporation ("PARENT"), C
ACQUISITION CORPORATION, a Delaware corporation and a wholly owned subsidiary of
Parent ("MERGER SUB"), and CRAY RESEARCH, INC., a Delaware corporation (the
"COMPANY"),
W I T N E S S E T H:
WHEREAS, the boards of directors of Parent, Merger Sub and the Company have
each determined that it is advisable and in the best interests of their
respective stockholders for Parent to enter into a business combination with the
Company upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, it is proposed that Merger Sub
shall make a cash tender offer (the "OFFER") to acquire 19,218,735 of the issued
and outstanding shares of common stock, par value $1.00 per share, of the
Company ("COMPANY COMMON STOCK") and the associated Common Share Purchase Rights
(the "RIGHTS") (shares of Company Common Stock together with the associated
Rights being hereinafter collectively referred to as "SHARES") for $30.00 per
Share (such amount, or any greater amount per Share paid pursuant to the Offer,
being hereinafter referred to as the "PER SHARE AMOUNT") net to the seller in
cash, upon the terms and subject to the conditions of this Agreement and the
Offer;
WHEREAS, the board of directors of the Company (the "BOARD") has approved
the making of the Offer and resolved and agreed to recommend that holders of
Shares tender their Shares pursuant to the Offer;
WHEREAS, also in furtherance of such combination, the boards of directors of
Parent, Merger Sub and the Company have each approved the merger (the "MERGER")
of Merger Sub with and into the Company in accordance with the applicable
provisions of the Delaware General Corporation Law ("DELAWARE LAW"), and upon
the terms and subject to the conditions set forth herein;
WHEREAS, pursuant to the Merger, each outstanding Share shall be converted
into the right to receive the Merger Consideration (as defined in Section
2.07(b)), consisting of shares of common stock, par value $0.001 per share, of
Parent ("PARENT COMMON STOCK") and, if applicable, cash upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 8.01 and none of the events set forth
in ANNEX A shall have occurred or be existing, Merger Sub shall commence the
Offer as promptly as reasonably practicable after the date hereof, but in no
event later than five business days after the initial public announcement of
Merger Sub's intention to commence the Offer. The obligation of Merger Sub to
accept for payment and pay for Shares tendered pursuant to the Offer shall only
be subject to (i) the condition (the "MINIMUM CONDITION") that at least the
number of Shares that when added to the Shares already owned by Parent shall
constitute a majority of the then outstanding Shares on a fully diluted basis
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer and (ii) the satisfaction or waiver of the other conditions set forth
in ANNEX A. Merger Sub expressly reserves the right to waive any such condition
(other than the Minimum Condition), to increase the price per Share payable in
the Offer and to make any other changes in the terms and conditions of the
Offer; PROVIDED, HOWEVER, that unless Parent and Merger Sub shall have obtained
the prior written approval of the Company, no change may be made in the Offer
which (i) decreases the price per Share payable in the Offer, (ii) changes the
form of consideration to be paid in the Offer, (iii) reduces the maximum number
of
Shares to be purchased in the Offer, (iv) changes or waives the Minimum
Condition, or (v) modifies the conditions to the Offer set forth in ANNEX A or
imposes conditions to the Offer in addition to those set forth in ANNEX A. The
Per Share Amount shall, subject to applicable withholding of taxes, be net to
the seller in cash, upon the terms and subject to the conditions of the Offer.
Subject to the terms and conditions of the Offer (including, without limitation,
the Minimum Condition), Merger Sub shall, and Parent shall cause Merger Sub to,
accept for payment and pay for, as promptly as practicable after expiration of
the Offer, all Shares validly tendered and not withdrawn; PROVIDED, HOWEVER,
that notwithstanding the foregoing Parent may, in its sole discretion, extend
the expiration date of the Offer for up to 15 business days, and agrees on a
one-time basis if all other conditions to the Offer have been met, to extend the
expiration date for the Offer for 10 business days if on the relevant date of
expiration at least 45% of the then outstanding Shares (calculated on a fully
diluted basis) have been tendered and not withdrawn from the Offer.
(b) As soon as practicable on the date of commencement of the Offer, Merger
Sub shall file with the Securities and Exchange Commission (the "SEC") a Tender
Offer Statement on Schedule 14D-1 (together with all amendments and supplements
thereto, the "SCHEDULE 14D-1") with respect to the Offer. The Schedule 14D-1
shall contain or shall incorporate by reference an offer to purchase (the "OFFER
TO PURCHASE") and forms of the related letter of transmittal and any related
summary advertisement (the Schedule 14D-1, the Offer to Purchase and such other
documents, together with all supplements and amendments thereto, being referred
to herein collectively as the "OFFER DOCUMENTS"). The Offer Documents will
comply in all material respects with the provisions of applicable federal
securities laws. Parent, Merger Sub and the Company agree to correct promptly
any information provided by any of them for use in the Offer Documents which
shall have become false or misleading, and Parent and Merger Sub further agree
to take all steps necessary to cause the Schedule 14D-1 as so corrected to be
filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. Parent and Merger Sub shall give the Company
and its counsel the opportunity to review and comment upon the Offer Documents
prior to their being filed with, or sent to, the SEC.
SECTION 1.02. COMPANY ACTION. (a) The Company hereby approves of and
consents to the Offer and represents that the Board, at a meeting duly called
and held on February 25, 1996, has (i) unanimously approved and adopted this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger (the "TRANSACTIONS"), and (ii) unanimously recommended that the
stockholders of the Company accept the Offer and approve and adopt this
Agreement and the Transactions. The Company hereby consents to the inclusion in
the Offer Documents of the recommendation of the Board described in the
immediately preceding sentence, subject to the second sentence of Section
5.02(a).
(b) As soon as practicable on the date of commencement of the Offer, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, the
"SCHEDULE 14D-9") containing the recommendation of the Board described in
Section 1.02(a) and shall disseminate the Schedule 14D-9 to the extent required
by Rule 14d-9 promulgated under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), and any other applicable federal securities laws. The
Schedule 14D-9 will comply in all other material respects with the provisions of
applicable federal securities laws. The Company, Parent and Merger Sub agree to
correct promptly any information provided by any of them for use in the Schedule
14D-9 which shall have become false or misleading, and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws.
(c) The Company shall promptly furnish Merger Sub with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company shall furnish Merger Sub with such
additional information, including, without
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limitation, updated listings and computer files of stockholders, mailing labels
and security position listings, and such other assistance as Parent, Merger Sub
or their agents may reasonably request. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer or the
Merger, Parent and Merger Sub shall, and each of Parent and Merger Sub shall
cause its affiliates, associates, agents and advisors to, (i) hold in confidence
the information contained in such labels, listings and files, (ii) use such
information only in connection with the Offer and the Merger, and (iii) if this
Agreement shall be terminated in accordance with Section 8.01, promptly deliver
to the Company all copies (whether in human or machine readable form) of such
information then in their possession.
SECTION 1.03. DIRECTORS. (a) Promptly upon the purchase by Merger Sub of a
majority of the outstanding Shares pursuant to the Offer, and from time to time
thereafter as Shares are acquired by Merger Sub, Merger Sub shall be entitled,
subject to compliance with Section 14(f) of the Exchange Act, to designate such
number of directors, rounded up to the next greatest whole number, on the Board
as will give Merger Sub representation on the Board equal to that number of
directors which equals the product of the total number of directors on the Board
(giving effect to the directors appointed or elected pursuant to this sentence
and including current directors serving as officers of the Company) multiplied
by the percentage that the aggregate number of Shares beneficially owned by
Merger Sub or any affiliate of Merger Sub (including for purposes of this
Section 1.03 such Shares as are accepted for payment pursuant to the Offer, but
excluding Shares held by the Company or any of its affiliates) bears to the
number of Shares outstanding. At such times, the Company will also cause (i)
each committee of the Board of Directors, (ii) if requested by Merger Sub, the
board of directors of each of the Company's subsidiaries and (iii) if requested
by Merger Sub, each committee of such board to include persons designated by
Merger Sub constituting the same percentage of each such committee or board as
Merger Sub's designees are of the Board. The Company shall, upon request by
Merger Sub, promptly increase the size of the Board or exercise its best efforts
to secure the resignations of such number of directors as is necessary to enable
Merger Sub designees to be elected to the Board and shall cause Merger Sub's
designees to be so elected.
(b) Subject to applicable law, the Company shall promptly take all action
necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.03 and shall include in the Schedule 14D-9 mailed to stockholders promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if Merger Sub has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.03. Parent and Merger Sub will supply the
Company and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1.
ARTICLE II
THE MERGER
SECTION 2.01. THE MERGER. (a) Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with Delaware Law, at the
Effective Time (as defined below) Merger Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Merger
Sub shall cease and the Company shall continue as the surviving corporation of
the Merger (the "SURVIVING CORPORATION").
(b) Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned pursuant to Section 8.01 and
subject to the satisfaction or waiver of the conditions set forth in Article
VII, the consummation of the Merger will take place as promptly as practicable
(and in any event within two business days) after satisfaction or waiver of the
conditions set forth in Article VII, at the offices of Shearman & Sterling, ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, unless another date,
time or place is agreed to in writing by the parties hereto.
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SECTION 2.02. EFFECTIVE TIME. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing this Agreement or a
certificate of merger or certificate of ownership and merger (in either case,
the "Certificate of Merger") with the Secretary of State of the State of
Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, Delaware Law (the date and time of such filing being the
"EFFECTIVE TIME").
SECTION 2.03. EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of Delaware Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 2.04. CERTIFICATE OF INCORPORATION; BY-LAWS. (a) CERTIFICATE OF
INCORPORATION. Unless otherwise determined by Parent prior to the Effective
Time, at the Effective Time the Certificate of Incorporation of Merger Sub, as
in effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by Delaware Law and such Certificate of Incorporation; PROVIDED, HOWEVER, that
Article I of the Certificate of Incorporation of the Surviving Corporation shall
be amended to read as follows: "FIRST: The name of the corporation is Cray
Research, Inc."
(b) BY-LAWS. The By-Laws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by Delaware Law, the Certificate of Incorporation
of the Surviving Corporation and such By-Laws.
SECTION 2.05. DIRECTORS AND OFFICERS. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 2.06. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Sub, the Company
or the holders of any of the following securities:
(a) CANCELLATION. Each Share held in the treasury of the Company and each
Share owned by Parent, Merger Sub or any direct or indirect wholly owned
subsidiary of the Company or Parent immediately prior to the Effective Time
("INELIGIBLE SHARES") shall, by virtue of the Merger and without any action on
the part of the holder thereof, cease to be outstanding, be canceled and retired
without payment of any consideration therefor and cease to exist.
(b) CONVERSION OF SECURITIES. Subject to Section 2.06(f), each remaining
outstanding Share (other than Dissenting Shares) shall be converted into the
right to receive (i) 1.00 fully paid and non-assessable share of Parent Common
Stock (the "EXCHANGE RATIO"); provided, however, that if Merger Sub accepts for
payment and pays for less than 19,218,735 (the "OFFERED NUMBER") Shares in the
Offer (the number of Shares so accepted for payment and paid for being referred
to herein as the "ACCEPTED SHARE NUMBER"), then the Exchange Ratio shall be
equal to a fraction (the "ADJUSTED EXCHANGE RATIO"), (A) the numerator of which
is equal to (x) the number of outstanding Shares immediately prior to the
Effective Time (excluding Ineligible Shares) (the "FINAL OUTSTANDING NUMBER")
PLUS (y) the Accepted Share Number MINUS (z) the Offered Number and (B) the
denominator of which is the Final Outstanding Number and (ii) if the Exchange
Ratio has been adjusted pursuant to the immediately preceding PROVISO, an amount
in cash equal to a fraction, (A) the numerator of which is the product of the
Per Share Amount and the amount by which the Offered Number exceeds the Accepted
Share Number and (B) the denominator of which is the Final Outstanding Number.
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(c) ASSUMPTION OF STOCK OPTIONS AND STOCK PURCHASE RIGHTS. All options to
purchase Company Common Stock granted under the Cray Research, Inc. 1985
Incentive Stock Option and Nonstatutory Option Plan (the "1985 EMPLOYEE PLAN"),
the Cray Research, Inc. 1989 Employee Benefit Stock Plan (the "EMPLOYEE STOCK
PLAN") and the Cray Research, Inc. 1989 Non-Employee Directors' Stock Option
Plan (the "DIRECTORS' PLAN" and, together with the 1985 Employee Plan and the
Employee Stock Plan, the "STOCK OPTION PLANS") or pursuant to any other
arrangement adopted by the Board to provide options to directors, officers or
employees of the Company (in any such case, an "OPTION") then outstanding shall
be assumed by Parent in accordance with Section 6.05. Immediately prior to the
Effective Time, all rights to purchase Company Common Stock then outstanding
under the Company's Qualified Stock Purchase Investment Plan (the "COMPANY STOCK
PURCHASE PLAN") shall be converted into shares of Company Common Stock in
accordance with Section 6.06.
(d) CAPITAL STOCK OF MERGER SUB. Each share of common stock, no par value,
of Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, no par value, of the Surviving Corporation.
Each stock certificate of Merger Sub evidencing ownership of any such shares
shall continue to evidence ownership of such shares of capital stock of the
Surviving Corporation.
(e) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be adjusted to
reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Parent
Common Stock or Company Common Stock), reorganization, recapitalization or other
like change with respect to Parent Common Stock or Company Common Stock the
record date for which shall occur 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, but in lieu thereof each holder of Company Common Stock who would
otherwise be entitled to a fraction of a share of Parent Common Stock (after
aggregating all fractional shares of Parent Common Stock to be received by such
holder) shall receive from Parent an amount of cash (rounded to the nearest
whole cent), without interest, equal to the product of (i) such fraction,
multiplied by (ii) the average of the closing price for trades of Parent Common
Stock as of each of the thirty (30) consecutive trading days immediately
preceding the Effective Time as quoted in the Wall Street Journal or other
reliable financial newspaper or publication. For the purposes of the preceding
sentence, a "trading day" means a day on which trading generally takes place on
the New York Stock Exchange (the "NYSE") and on which trading in Parent Common
Stock has occurred.
(g) CONVERTIBLE DEBENTURES. The 6 1/8% Convertible Subordinated Debentures
due 2011 of the Company (the "CONVERTIBLE DEBENTURES") shall, pursuant to the
terms of the Indenture between the Company and Manufacturers Hanover Trust
Company (the "TRUSTEE"), dated as of February 1, 1986 (the "INDENTURE"), become
thereafter convertible only into that number of shares of Parent Common Stock
and cash, if any, that the holder of any such Convertible Debentures would have
received if such holder had converted such Convertible Debentures immediately
prior to the Effective Time as provided in Section 15.06 of the Indenture.
Parent shall execute and deliver a supplemental indenture (the "SUPPLEMENTAL
INDENTURE"), which shall evidence Parent's assumption of the Convertible
Debentures and provide that the holder of each Convertible Debenture shall have
the right thereafter to convert such Convertible Debenture as described above,
in each case in accordance with the terms of the Indenture.
SECTION 2.07. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. Parent shall
deposit, or shall cause to be deposited, to or for the account of a bank or
trust company designated by Parent (the "EXCHANGE AGENT"), in trust for the
benefit of the holders of Company Common Stock (other than Dissenting Shares),
for exchange in accordance with this Section 2.07, through the Exchange Agent,
certificates evidencing the Parent Common Stock and, if applicable, the cash
portion of the Merger Consideration, issuable pursuant to Section 2.06 in
exchange for outstanding Shares.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, Parent will instruct the Exchange Agent to mail to each holder
of record of a certificate or certificates which
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immediately prior to the Effective Time evidenced outstanding Shares (other than
Dissenting Shares) (the "CERTIFICATES") (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions to effect the surrender of
the Certificates in exchange for the certificates evidencing shares of Parent
Common Stock and, in lieu of any fractional shares thereof, cash, and, if
applicable, the cash portion of the Merger Consideration payable pursuant to
Section 2.06(b). Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, and such
other customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor (A)
certificates evidencing that number of whole shares of Parent Common Stock which
such holder has the right to receive in accordance with the Exchange Ratio in
respect of the Shares formerly evidenced by such Certificate, (B) the amount of
cash, if any, payable with respect to such shares pursuant to Section 2.06(b),
(C) any dividends or other distributions to which such holder is entitled
pursuant to Section 2.07(c), and (D) cash in lieu of fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section 2.06(f) (the
Parent Common Stock, cash, dividends and distributions described in clauses (A),
(B), (C) and (D) being, collectively, the "MERGER CONSIDERATION"), and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares which is not registered in the transfer records
of the Company as of the Effective Time, the Merger Consideration may be issued
and paid in accordance with this Article II to a transferee if the Certificate
evidencing such Shares is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer pursuant to this Section
2.07(b) and by evidence that any applicable stock transfer taxes have been paid.
Until so surrendered, each outstanding Certificate that, prior to the Effective
Time, represented shares of the Company Common Stock will be deemed from and
after the Effective Time, for all corporate purposes, other than the payment of
dividends, to evidence the ownership of the number of full shares of Parent
Common Stock into which such shares of the Company Common Stock shall have been
so converted, the right to receive the cash portion of the Merger Consideration
payable with respect thereto pursuant to Section 2.06(b) and the right to
receive an amount in cash in lieu of the issuance of any fractional shares in
accordance with Section 2.06(f).
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate until the holder of such Certificate
shall surrender such Certificate. Subject to applicable law, following surrender
of any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock.
(d) TRANSFERS OF OWNERSHIP. If any certificate for shares of Parent Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the Certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Parent or any person designated by it any transfer or
other taxes required by reason of the issuance of a certificate for shares of
Parent Common Stock in any name other than that of the registered holder of the
certificate surrendered, or established to the satisfaction of Parent or any
agent designated by it that such tax has been paid or is not payable.
(e) NO LIABILITY. Neither Parent, Merger Sub nor the Company shall be
liable to any holder of Company Common Stock for any Merger Consideration (or
dividends or distributions with respect thereto) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
6
(f) WITHHOLDING RIGHTS. Parent, the Surviving Corporation and the Exchange
Agent shall be entitled to deduct and withhold from the Merger Consideration
otherwise payable pursuant to this Agreement to any holder of Company Common
Stock such amounts as Parent, the Surviving Corporation or the Exchange Agent is
required to deduct and withhold with respect to the making of such payment under
the Internal Revenue Code of 1986, as amended (the "CODE") or any provision of
state, local, provincial or foreign tax law. To the extent that amounts are so
withheld, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made.
SECTION 2.08. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of the Company Common Stock thereafter on the records
of the Company.
SECTION 2.09. DISSENTING SHARES. (a) Notwithstanding any provision of this
Agreement to the contrary, Shares that are outstanding immediately prior to the
Effective Time and which are held by stockholders who shall have not voted in
favor of the Merger or consented thereto in writing and who shall have available
to them and who shall have demanded properly in writing appraisal for such
Shares in accordance with Section 262 of Delaware Law (collectively, the
"DISSENTING SHARES') shall not be converted into or represent the right to
receive the Merger Consideration. Such stockholders shall be entitled to receive
payment of the appraised value of such Shares held by them in accordance with
the provisions of such Section 262, except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under such Section
262 shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive the Merger
Consideration, without any interest thereon, upon surrender, in the manner
provided in Section 2.07, of the certificate or certificates that formerly
evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal received by the Company, withdrawals of such demands, and any other
instruments served pursuant to Delaware Law and received by the Company and (ii)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under Delaware Law. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any demands
for appraisal or offer to settle or settle any such demands.
SECTION 2.10. NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The
Merger Consideration delivered upon the surrender for exchange of Shares in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
Shares which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article II.
SECTION 2.11. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such Merger
Consideration as may be required pursuant to Section 2.06; provided, however,
that Parent may, in its discretion and as a condition precedent to the issuance
and delivery thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Parent or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
SECTION 2.12. TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of Parent,
Merger Sub and the Company in good faith will take all such commercially
reasonable and lawful action as may be necessary or appropriate in order to
effectuate the Merger in accordance with this Agreement as promptly as possible.
If, at any time after the Effective Time, any such further action is necessary
or desirable to carry out the purposes of this Agreement and to vest the
Surviving Corporation with full
7
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub that:
SECTION 3.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has the requisite corporate power and authority and is in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders ("APPROVALS") necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority and
Approvals would not have a Material Adverse Effect. Each of the Company and its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing that would not have a
Material Adverse Effect. A true and complete list of all of the Company's
subsidiaries, together with the jurisdiction of incorporation of each subsidiary
and the percentage of each subsidiary's outstanding capital stock owned by the
Company or another subsidiary, is set forth in Section 3.01 of the written
disclosure schedule previously delivered by the Company to Parent (the "COMPANY
DISCLOSURE SCHEDULE"). Except as set forth in Section 3.01 of the Company
Disclosure Schedule, the Company does not directly or indirectly own any equity
or similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
SECTION 3.02. CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company has
heretofore furnished to Parent a complete and correct copy of its Certificate of
Incorporation and By-Laws, as amended to date. Within 14 days after the date
hereof, the Company will provide Parent a complete and correct copy of the
equivalent organizational documents of each of its subsidiaries. Such
Certificate of Incorporation, By-Laws and equivalent organizational documents of
each of its subsidiaries are in full force and effect. The Company is not in
violation of any of the provisions of its Certificate of Incorporation or
By-Laws. None of the Company's subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or By-Laws or equivalent
organizational documents, except for any such violations as would not have a
Material Adverse Effect.
SECTION 3.03. CAPITALIZATION. The authorized capital stock of the Company
consists of 100,000,000 Shares. As of February 22, 1996, (i) 25,624,980 Shares
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) 5,886,041 Shares were held in the treasury of the Company,
(iii) 5,530,573 Shares were reserved for future issuance pursuant to outstanding
Options granted under the Employee Stock Plan, (iv) 1,622,638 Shares were
reserved for future issuance pursuant to future option grants under the Employee
Stock Plan, (v) 90,000 Shares were reserved for future issuance pursuant to
outstanding Options granted under the Directors' Plan, (vi) 107,500 Shares were
reserved for future issuance pursuant to future option grants under the
Directors' Plan, (vii) 663,304 Shares were reserved for future issuance pursuant
to option grants under the Company Stock Purchase Plan, (viii) 1,051,282 Shares
were reserved for future issuance with respect to the Convertible Debentures and
(ix) 500,000 Shares were reserved for issuance pursuant to the Company's
Performance Incentive Plan. No change in such capitalization has occurred
between February 22, 1996 and the date hereof other than any change associated
with the
8
exercise of vested Options or purchases under the Company Stock Purchase Plan.
Except for the Convertible Debentures and as set forth in this Section 3.03 or
Section 3.11 hereof or in Section 3.03 or Section 3.11 of the Company Disclosure
Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue or sell any shares of capital stock
of, or other equity interests in, the Company or any of its subsidiaries. All
Shares subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be duly authorized, validly issued, fully paid and nonassessable. Except
as is set forth in Section 3.03 of the Company Disclosure Schedule, there are no
obligations, contingent or otherwise, of the Company or any of its subsidiaries
to repurchase, redeem or otherwise acquire any shares of Company capital stock
or the capital stock of any subsidiary or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity other than guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business. All of the
outstanding shares of capital stock of each of the Company's subsidiaries are
duly authorized, validly issued, fully paid and nonassessable, and, other than
directors' or similar DE MINIMIS statutory qualifying shares, all such shares
are owned by the Company or another subsidiary free and clear of all security
interests, liens, claims, pledges, agreements, limitations in the Company's
voting rights, charges or other encumbrances of any nature whatsoever.
SECTION 3.04. AUTHORITY RELATIVE TO THIS AGREEMENT. (a) The Company has
all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than the approval and adoption of the Merger by the holders
of at least a majority of the outstanding shares of the Company Common Stock
entitled to vote in accordance with Delaware Law and the Company's Certificate
of Incorporation and By-Laws). The Board of Directors of the Company has
determined that it is advisable and in the best interest of the Company's
stockholders for the Company to enter into a business combination with Parent
upon the terms and subject to the conditions of this Agreement. This Agreement
has been duly and validly executed and delivered by the Company and, assuming
the due authorization, execution and delivery by Parent and Merger Sub, as
applicable, constitutes the legal, valid and binding obligation of the Company.
(b) The Board has taken all necessary action to amend the Rights Agreement,
dated as of May 15, 1989, between the Company and Norwest Bank Minnesota, N.A.,
as Rights Agent (the "RIGHTS AGREEMENT"), so that (A) none of the execution or
delivery of this Agreement or the making of the Offer will cause (i) the Rights
(as defined in the Rights Agreement) to become exercisable under the Rights
Agreement, (ii) Parent or Merger Sub or any of their affiliates to be deemed an
"Acquiring Person" (as defined in the Rights Agreement) or (iii) the "Shares
Acquisition Date" (as defined in the Rights Agreement) to occur upon any such
event, (B) none of the acceptance for payment or payment for Shares by Merger
Sub pursuant to the Offer or the consummation of the Merger will cause (i) the
Rights to become exercisable under the Rights Agreement, (ii) Parent or Merger
Sub or any of their affiliates to be deemed an Acquiring Person or (iii) the
Shares Acquisition Date to occur upon any such event, and (C) the "Expiration
Date" (as defined in the Rights Agreement) shall occur no later than immediately
prior to the purchase of Shares pursuant to the Offer. The "Distribution Date"
(as defined in the Rights Agreement) has not occurred.
(c) As of the date hereof and pursuant to Section 203(a)(1) of the Delaware
Law, the restrictions contained in Section 203 of the Delaware Law are, and at
all times on or prior to the Effective Time such restrictions shall be,
inapplicable to the Offer, the Merger and the transactions contemplated by this
Agreement. The Company has heretofore delivered to Parent a complete and correct
copy of the
9
resolutions of the Board of Directors of the Company to the effect that pursuant
to Section 203(a)(1) of the Delaware Law, the restrictions contained in Section
203 of the Delaware Law are and shall be inapplicable to the Offer, the Merger
and the transactions contemplated by this Agreement.
(d) The Board has taken all necessary action to amend the Cray Research,
Inc. Executives Severance Compensation Plan, the Cray Research, Inc. Key
Management/Professional Severance Compensation Plan and the Cray Research, Inc.
General Employee Severance Compensation Plan (collectively, the "PARACHUTE
PLANS") so that none of the execution, delivery or performance of this
Agreement, including, without limitation, consummation of the Offer and the
Merger shall constitute a "Change of Control" for the purposes of such Parachute
Plans.
SECTION 3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) Section
3.05(a) of the Company Disclosure Schedule includes a list as of the date hereof
(i) all contracts of the Company and its subsidiaries the loss of which would
have a Material Adverse Effect on the Company, (ii) all contracts pursuant to
which the Company expects or is scheduled to receive (assuming full performance
by the Company pursuant to the terms thereof) revenue of $5,000,000 or more
during the eighteen (18) month period following the date hereof, and (iii) all
agreements which, as of the date hereof, will be required to be filed, with the
Securities Exchange Commission (the "SEC") pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, and the SEC's rules thereunder
(collectively, the "EXCHANGE ACT") as "material contracts" ((i), (ii) and (iii)
being, collectively, the "MATERIAL CONTRACTS") of the Company and its
subsidiaries).
(b) Except as set forth in Section 3.05(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not, (i) conflict with
or violate the Certificate of Incorporation or By-Laws or equivalent
organizational documents of the Company or any of its subsidiaries, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its subsidiaries or by which its or any of
their respective properties is bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default), or impair the Company's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any Material Contract, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective properties
is bound or affected.
(c) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Securities Act of 1933, as amended
(the "SECURITIES ACT"), the Exchange Act, state securities laws ("BLUE SKY
LAWS"), the pre-merger notification requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), any non-United
States competition, antitrust and investment laws and the filing and recordation
of appropriate merger or other documents as required by Delaware Law and (ii)
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent or delay the Company from
performing its obligations under this Agreement, or would not otherwise have a
Material Adverse Effect.
SECTION 3.06. COMPLIANCE; PERMITS. (a) Except as disclosed in Section
3.06(a) of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties is bound
or affected or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit,
10
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties is bound or affected, except where
such conflicts, defaults and violations would not have a Material Adverse Effect
on the Company.
(b) The Company and its subsidiaries hold all permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
governmental authorities which are material to the operation of the business of
the Company and its subsidiaries taken as a whole (collectively, the "COMPANY
PERMITS"). The Company and its subsidiaries are in compliance with the terms of
the Company Permits, except where the failure to so comply would not have a
Material Adverse Effect.
SECTION 3.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) The Company has filed
all forms, reports and documents required to be filed with the SEC since
December 31, 1993 and has made available to Parent (i) its Quarterly Reports on
Form 10-Q for the periods ended June 30 and September 30, 1995, respectively,
(ii) all proxy statements relating to the Company's meetings of stockholders
(whether annual or special) held since December 31, 1993, (iii) all other
reports or registration statements filed by the Company with the SEC (other than
Reports on Form 10-Q, Reports on Forms 3, 4 or 5 and Schedule 13G filed on
behalf of affiliates of the Company) since December 31, 1993, and (iv) all
amendments and supplements to all such reports and registration statements filed
by the Company with the SEC (collectively, the "COMPANY SEC REPORTS"). The
Company SEC Reports (i) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. None of the
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 and contained in
Section 3.09 of the Company Disclosure Schedule 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
therein or in the notes thereto) and each fairly presented the consolidated
financial position of the Company and its subsidiaries as at the respective
dates thereof and the consolidated results of its operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount.
(c) The Company has heretofore furnished to Parent a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by the Company with the SEC pursuant
to the Securities Act or the Exchange Act.
11
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 3.08 of the Company Disclosure Schedule and the Company SEC Reports,
since December 31, 1995, the Company has conducted its business in the ordinary
course and there has not occurred: (i) any amendments or changes in the Articles
of Incorporation or Bylaws of the Company; (ii) any damage to, destruction or
loss of any assets of the Company (whether or not covered by insurance) that had
a Material Adverse Effect; (iii) any change by the Company in its accounting
methods, principles or practices; (iv) any revaluation by the Company of any of
its assets, including, without limitation, writing down the value of capitalized
software or inventory or writing off notes or accounts receivable other than in
the ordinary course of business; (v) any other action or event that would have
required the consent of Parent pursuant to Section 5.01 had such action or event
occurred after the date of this Agreement; or (vi) any sale of a material amount
of assets of the Company, except for the sale of inventory in the ordinary
course of business.
SECTION 3.09. NO UNDISCLOSED LIABILITIES. Except as is disclosed in
Section 3.09 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise) which are, in the aggregate, material to the business, operations or
financial condition of the Company and its subsidiaries taken as a whole, except
liabilities (a) adequately provided for in the Company's balance sheet
(including any related notes thereto) for the fiscal year ended December 31,
1995 included in Section 3.09 of the Company Disclosure Schedule (the "1995
BALANCE SHEET"), (b) incurred in the ordinary course of business and not
required under GAAP to be reflected on the 1995 Balance Sheet, or (c) incurred
since December 31, 1995 in the ordinary course of business and consistent with
past practice, and liabilities incurred in connection with this Agreement.
SECTION 3.10. ABSENCE OF LITIGATION. Except for routine litigation that
individually and in the aggregate if determined adversely to the Company would
not result in the Company paying damages net of insurance in excess of $250,000
and except as is set forth in Section 3.10 of the Company Disclosure Schedule or
in the Company SEC Reports filed prior to the date of this Agreement, there are
no claims, actions, suits, proceedings or investigations pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries, or any properties or rights of the Company or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign.
SECTION 3.11. EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS. (a) Section
3.11(a) of the Company Disclosure Schedule lists all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), all other bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance or termination pay,
medical or life insurance, supplemental unemployment benefits, profit-sharing,
pension or retirement plans, agreements or arrangements and other similar
material fringe or employee benefit plans, programs or arrangements, and any
current or former employment or executive compensation or severance agreements,
regardless of whether ERISA is applicable thereto, for the benefit of, or
relating to, any employee or former employee of the Company or any trade or
business (whether or not incorporated) which is a member of a controlled group
including the Company or which is under common control with the Company (an
"ERISA AFFILIATE") within the meaning of Section 414 of the Code (the "EMPLOYEE
PLANS"), and a copy of each such written Employee Plan has been made available
to Parent (other than Foreign Employee Plans (as defined herein), which shall be
made available to the Parent prior to the Effective Time to the extent
practicable).
(b) Except as set forth in Section 3.11(b) of the Company Disclosure
Schedule, and except as any inaccuracy in the following statements, individually
or in the aggregate, would not have a Material Adverse Effect on the Company,
(i) none of the Employee Plans provides retiree medical or other retiree welfare
benefits to any person and none of the Employee Plans is a "multiemployer plan"
as such term is defined in Section 3(37) of ERISA; (ii) all Employee Plans are
in compliance in all material respects with the requirements prescribed by any
and all applicable statutes, orders, or governmental rules and regulations
currently in effect with respect thereto, and the Company and
12
each of its subsidiaries have performed all material obligations required to be
performed by them under, are not in any material respect in default under or
violation of, and have no knowledge of any default or violation by any other
party to, any of the Employee Plans; (iii) each Employee Plan intended to
qualify under Section 401(a) of the Code is the subject of a favorable
determination letter from the IRS, and nothing has occurred which could
reasonably be expected to impair such determination; (iv) all contributions
required to be made to any Employee Plan under the terms of the Employee Plan or
any collective bargaining agreement or as required by law, have been made on or
before their due dates and, to the extent required by GAAP, a reasonable amount
has been accrued for contributions to each Employee Plan for the current plan
years; (v) none of the Employee Plans are, or are expected to become, subject to
the provisions of Title IV of ERISA or Section 412 of the Code and (vi) neither
the Company nor any ERISA Affiliate has incurred, nor reasonably expects to
incur, any liability under Title IV of ERISA (other than liability for premium
payments to the Pension Benefit Guaranty Corporation arising in the ordinary
course).
(c) To the knowledge of the Company, there are no pending material
investigations, litigation or other enforcement actions against the Company with
respect to any of the Employee Plans.
(d) Other than as set forth in Section 3.11(d) of the Company Disclosure
Schedule, there are no material actions, suits or claims pending or, to the best
knowledge of the Company, threatened by former or present employees of the
Company (or their beneficiaries) with respect to Employee Plans or the assets or
fiduciaries thereof (other than routine claims for benefits).
(e) Other than as described in Section 3.11(e) of the Company Disclosure
Schedule, to the knowledge of the Company, no condition or event has occurred
with respect to the Employee Plans which has or could reasonably be expected to
result in a material liability to the Company.
(f) Section 3.11(f)(1) of the Company Disclosure Schedule sets forth a true
and complete list of each current or former employee, officer or director of the
Company or any of its subsidiaries who holds an Option as of the date hereof,
together with the number of shares of Company Common Stock subject to such
Option, the date of grant of such Option, the exercise price of such Option (to
the extent determined as of the date hereof), whether such Option is intended to
qualify as an "incentive stock option" within the meaning of Section 422(b) of
the Code (an "ISO"), and the expiration date of such Option. Section 3.11(f)(2)
of the Company Disclosure Schedule also sets forth the total number of Options.
(g) With respect to each scheme or arrangement mandated by a government
other than the United States (a "FOREIGN GOVERNMENT SCHEME OR ARRANGEMENT") and
with respect to each Employee Plan maintained or contributed to by any
subsidiary of the Company that is not subject to United States law (a "FOREIGN
EMPLOYEE PLAN"), except as any inaccuracy in the following statements,
individually or in the aggregate, would not have a Material Adverse Effect:
(i) Any employer and employee contributions required by law or by the
terms of any Foreign Government Scheme or Arrangement or any Foreign
Employee Plan have been made, or, if applicable, accrued, in accordance with
normal accounting practices.
(ii) Except as disclosed in Section 3.11(g) of the Company Disclosure
Schedule, the fair market value of the assets of each funded Foreign
Employee Plan, the liability of each insurer for any Foreign Employee Plan
funded through insurance or the book reserve established for any Foreign
Employee Plan, together with any accrued contributions, is sufficient to
procure or provide for the accrued benefit obligations, as of the date of
this Agreement, with respect to all current and former participants in such
Foreign Employee Plan according to the actuarial assumptions and valuations
most recently used to determine employer contributions to such Foreign
Employee Plan and no transaction contemplated by this Agreement shall cause
such assets or insurance obligations to be less than such benefit
obligations.
(iii) Each Foreign Employee Plan required to be registered has been
registered and has been maintained in good standing with applicable
regulatory authorities.
13
(h) Section 3.11(h) of the Company Disclosure Schedule sets forth the wage
review and compensation guidelines for employees adopted by the Company in 1996.
(i) The Company has made available to Parent (i) copies of all employment
agreements with officers of the Company; (ii) copies of all agreements with
consultants who are individuals obligating the Company to make annual cash
payments in an amount exceeding $100,000 and which are not terminable on less
than 60 days' notice without penalty; (iii) copies of all plans, programs,
agreements and other arrangements of the Company with or relating to its
employees which contain change in control provisions; and (iv) the various forms
of employment agreement, if any, of the Company for its non-executive employees.
SECTION 3.12. LABOR MATTERS. (i) There are no controversies pending or, to
the knowledge of the Company or any of its subsidiaries, threatened, between the
Company or any of its subsidiaries and any of their respective employees, which
controversies are reasonably likely to have a Material Adverse Effect; (ii)
neither the Company nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or its subsidiaries nor does the Company or any of its
subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (iii) neither the Company nor any of its
subsidiaries has any knowledge of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the Company
or any of its subsidiaries.
SECTION 3.13. REGISTRATION STATEMENT; PROXY STATEMENT. Neither the
Schedule 14D-9 nor any of the information supplied or to be supplied by the
Company in writing for inclusion or incorporation by reference in (i) the Offer
Documents, (ii) the Registration Statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of Parent Common Stock in the Merger
(together with any amendments thereof or supplements thereto, the "REGISTRATION
STATEMENT") or (iii) the proxy and/or information statement relating to the
meeting of the Company's stockholders (the "COMPANY STOCKHOLDERS' MEETING") to
be held in connection with the Merger (the "PROXY STATEMENT" and, together with
the Registration Statement, the "PROXY STATEMENT/PROSPECTUS") will, at the
respective times filed with the SEC or other regulatory agency and, in addition,
(A) in the case of the Offer Documents, at the date they or any amendments or
supplements thereto are mailed to Stockholders, (B) in the case of the Proxy
Statement/Prospectus, at the date it or any amendments or supplements thereto
are mailed to stockholders, at the time of the Company Stockholders' Meeting and
at the Effective Time and (C) in the case of the Registration Statement, when it
becomes effective under the Securities Act and at the Effective Time, 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 Proxy Statement and Schedule 14D-9 will comply as to form in all
material respects with the applicable provisions of the Exchange Act and the
rules and regulations thereunder. If at any time prior to the Effective Time any
event relating to the Company or any of its respective affiliates, officers or
directors should be discovered by the Company which should be set forth in an
amendment or supplement to the Registration Statement, Offer Documents or the
Proxy Statement/Prospectus, the Company shall promptly inform Parent and Merger
Sub. Notwithstanding the foregoing, the 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.
SECTION 3.14. RESTRICTIONS ON BUSINESS ACTIVITIES. Except for this
Agreement, there is no material agreement, judgment, injunction, order or decree
binding upon the Company or any of its subsidiaries which has or could
reasonably be expected to have (after giving effect to the consummation of the
Offer and the Merger) the effect of prohibiting or impairing any material
business operations of the Company or any of its subsidiaries, acquisition of
property by the Company or any of its subsidiaries or the conduct of business by
the Company or any of its subsidiaries as currently conducted or as proposed to
be conducted by the Company.
14
SECTION 3.15. TITLE TO PROPERTY. The Company and each of its subsidiaries
have good, marketable and defensible title to all of their properties and
assets, free and clear of all liens, charges and encumbrances except liens for
taxes not yet due and payable and such liens or other imperfections of title, if
any, as do not materially detract from the value of or interfere with the
present use of the property affected thereby or which would not have a Material
Adverse Effect on the Company.
SECTION 3.16. TAXES. (a) For purposes of this Agreement, "TAX" or "TAXES"
shall mean taxes, fees, levies, duties, tariffs, imposts and governmental
impositions or charges of any kind in the nature of (or similar to) taxes,
payable to any federal, state, provincial, local or foreign taxing authority,
including (without limitation) (i) income, franchise, profits, gross receipts,
AD VALOREM, net worth, value added, sales, use, service, real or personal
property, special assessments, capital stock, license, payroll, withholding,
employment, social security, workers' compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes and (ii) interest, penalties, additional taxes
and additions to tax imposed with respect thereto; and "TAX RETURNS" shall mean
returns, reports and information statements with respect to Taxes required to be
filed with the United States Internal Revenue Service (the "IRS") or any other
taxing authority, domestic or foreign, including, without limitation,
consolidated, combined and unitary tax returns.
(b) Other than as disclosed on Section 3.16(b) of the Company Disclosure
Schedule, the Company and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which the Company or
any of its subsidiaries is or has been a member, have filed all United States
federal income Tax Returns and all other material Tax Returns required to be
filed by them or any of them, and have paid and discharged all Taxes shown
therein to be due and there are no other Taxes that would be due if asserted by
a taxing authority, except such as are being contested in good faith by
appropriate proceedings (to the extent that any such proceedings are required)
or with respect to which the Company is maintaining reserves in accordance with
GAAP in its financial statements to the extent currently required in all
material respects adequate for their payment, except, in each instance, to the
extent the failure to do so would not have a Material Adverse Effect. To the
best of the Company's knowledge, the Company and each of its subsidiaries have
disclosed to the relevant taxing authority any position taken where the failure
to make such disclosure would enable the taxing authority to subject such person
to penalties or additions to Tax that would have a Material Adverse Effect.
Neither the IRS nor any other taxing authority or agency is now asserting or, to
the best of the Company's knowledge, threatening to assert against the Company
or any of its subsidiaries any deficiency or claim for additional Taxes other
than additional Taxes with respect to which the Company is maintaining reserves
in accordance with GAAP in its financial statements which are in all material
respects adequate for their payment. There are no requests for information from
the IRS or any other taxing authority or agency currently outstanding that could
have a Material Adverse Effect imposed on the Company or any subsidiaries.
Except as disclosed in Section 3.16(b) of the Company Disclosure Schedule, no
material Tax Return of either the Company or any of its subsidiaries is
currently being audited by any taxing authority. No material tax claim has
become a lien on any assets of the Company or any subsidiary thereof and neither
the Company nor any of its subsidiaries has granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any federal income tax (except as disclosed in Section 3.16(b) of the Company
Disclosure Schedule) or material state corporate income or franchise tax (except
as the Company has advised Parent's representatives). Neither the Company nor
any of its subsidiaries is required to include in income (i) any material items
in respect of any change in accounting principles or any deferred intercompany
transactions, or (ii) any installment sale gain, where the inclusion in income
would result in a tax liability materially in excess of the reserves therefor.
(c) The Company on behalf of itself and all its subsidiaries hereby
represents that, other than as disclosed on Section 3.16(c) of the Company
Disclosure Schedule, and other than with respect to items the inaccuracy of
which would not have a Material Adverse Effect: (i) to the best of the Company's
knowledge, neither the Company nor any of its subsidiaries is a party to any
agreement, contract or
15
arrangement, or maintains or sponsors any Employee Plans, that will reasonably
be expected to result, separately or in the aggregate, in the payment of any
"excess parachute payment" within the meaning of Section 280G(b)(1) of the Code,
determined without regard to Section 280G(b)(4) of the Code; (ii) since January
1, 1989, neither the Company nor any of its subsidiaries has been subject or is
likely to be subject to any accumulated earnings tax or personal holding company
tax; (iii) except for its subsidiaries organized in Germany, France and the
Netherlands, none of the Company's foreign subsidiaries have material "excess
passive assets" as defined in section 956A(c) of the Code; (iv) neither the
Company nor any of its subsidiaries is obligated under any agreement with
respect to industrial development bonds or other obligations with respect to
which the excludability from gross income of the holder for United States
federal or state income tax purposes could be affected by the transactions
contemplated hereunder; (v) neither the Company nor any of its subsidiaries has
entered into any deferred intercompany transaction within the meaning of section
1.1502-13(a)(2) of the United States Treasury Regulations as to which material
items of deferred gain or loss has not been restored; and (vi) no material
excess loss account within the meaning of section 1.1502-31T(a)(2)(v) of the
United States Treasury Regulations exists with respect to the stock of any of
its subsidiaries.
(d) Except as set forth in Section 3.16(d) of the Company Disclosure
Schedule, no power of attorney has been granted by the Company or any of its
subsidiaries with respect to any material matter relating to Taxes which is
currently in force.
(e) Neither the Company nor any of its subsidiaries is a party to any
material agreement or arrangement (written or oral) providing for the allocation
or sharing of Taxes.
(f) The Company and each of its subsidiaries have withheld from each payment
made to any of their respective past or present employees, officers or directors
the amount of all Taxes and other deductions required to be withheld therefrom
and paid the same to the proper tax or other receiving officers within the time
required by law, except where the failure to do so would not have a Material
Adverse Effect.
SECTION 3.17. ENVIRONMENTAL MATTERS. Except as set forth in Section 3.17
of the Company Disclosure Schedule, and except in all cases, in the aggregate,
as have not had and would not reasonably be expected to have a Material Adverse
Effect, the Company and each of its subsidiaries (i) have obtained all
applicable permits, licenses and other authorization which are required under
federal, state or local laws relating to pollution or protection of the
environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous or toxic materials
or wastes into ambient air, surface water, ground water or land or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants or hazardous or
toxic materials or wastes by the Company or its subsidiaries (or their
respective agents) (the "ENVIRONMENTAL LAWS"); (ii) are in compliance with all
terms and conditions of such required permits, licenses and authorization, and
also are in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any regulation, code, plan,
order, decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder; (iii) as of the date hereof, are not aware of nor have
received notice of any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with the
Company's operations, or prevent continued compliance with the Environmental
Laws, or which would reasonably be likely to give rise to any common law or
statutory liability of, or otherwise form the basis of any claim, action, suit
or proceeding against, the Company or any of its subsidiaries (or any of their
respective agent's) based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste; and (iv) have taken all
actions necessary under applicable requirements of federal, state or local laws,
rules or regulations to register any products or materials required to be
registered by the Company or its subsidiaries (or any of their respective
agents) thereunder.
16
SECTION 3.18. BROKERS. No broker, finder or investment banker (other than
Salomon Brothers Inc) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and Salomon Brothers Inc pursuant to which such firm would
be entitled to any payment relating to the transactions contemplated hereunder.
SECTION 3.19. INTELLECTUAL PROPERTY. (a) The Company owns, or is licensed
or otherwise possesses legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how, computer software programs or applications (in
both source code and object code form) and tangible or intangible proprietary
information or material that are used or proposed to be used in the business of
the Company, each of which, where applicable, is to the Company's knowledge
valid and subsisting. Section 3.19(a) of the Company Disclosure Schedule lists
all current patents, registered and material unregistered trademarks and service
marks, registered and material unregistered copyrights, trade names and any
applications therefor owned by the Company (the "COMPANY INTELLECTUAL PROPERTY
RIGHTS"), and specifies the jurisdictions in which each such Company
Intellectual Property Right has been issued or registered or in which an
application for such issuance and registration has been filed, including the
respective registration or application numbers and the names of all registered
owners, together with a list of all of the Company's currently marketed software
products and an indication as to which, if any, of such software products have
been registered for copyright protection with the United States Copyright Office
and any foreign offices and by whom such items have been registered. Section
3.19(a) of the Company Disclosure Schedule (as supplemented during the 14 day
period following the date hereof) includes and specifically identifies all
material third-party patents, trademarks or copyrights (the "THIRD PARTY
INTELLECTUAL PROPERTY RIGHTS"), to the knowledge of the Company, which are
incorporated in, are, or form a part of, any Company product. Section 3.19(a) of
the Company Disclosure Schedule (as supplemented during the 14 day period
following the date hereof (in the case of clause (iii))) lists (i) any requests
the Company has received since December 31, 1993 to make any such registration,
including the identity of the requestor and the item requested to be so
registered, and the jurisdiction for which such request has been made; (ii)
except for object code and source code license agreements for the Company's
products executed in the ordinary course of business and in accordance with the
Company's past practices, all material licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which any person
is authorized to use any Company Intellectual Property Right, or any trade
secret material to the Company; and (iii) all material licenses, sublicenses and
other agreements as to which the Company is a party and pursuant to which the
Company is authorized to use any Third Party Intellectual Property Rights, or
other trade secret of a third party in or as any product, and includes the
identity of all parties thereto, a description of the nature and subject matter
thereof, the applicable royalty and the term thereof.
(b) Except as set forth in Section 3.19(b) of the Company Disclosure
Schedule, the Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations hereunder, in
violation of any Third Party Intellectual Property Rights license, sublicense or
agreement described in Section 3.19(a) of the Company Disclosure Schedule. No
claims with respect to the Company Intellectual Property Rights, any trade
secret material to the Company, or Third Party Intellectual Property Rights to
the extent arising out of any use, reproduction or distribution of such Third
Party Intellectual Property Rights by or through the Company, are currently
pending or, to the knowledge of the Company, are threatened by any person, nor,
to the Company's knowledge, do any valid grounds for any bona fide claims exist
(i) to the effect that the manufacture, sale, licensing or use of any product as
now used, sold or licensed or proposed for use, sale or license by the Company
infringes on any copyright, patent, trademark, service ▇▇▇▇ or trade secret;
(ii) against the use by the Company of any trademarks, trade names, trade
secrets, copyrights, patents, technology, know-how or computer software programs
and applications used in the Company's business as currently conducted or as
proposed to be conducted by the Company; (iii) challenging the ownership,
validity or effectiveness of any of the Company Intellectual Property Rights or
other trade secret material to the
17
Company; or (iv) challenging the Company's license or legally enforceable right
to use of the Third Party Intellectual Rights. Except as set forth in Section
3.19(b) of the Company Disclosure Schedule, to the Company's knowledge, there is
no material unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property by any third party. Except as set forth in Section
3.19(b) of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries (i) has been sued or charged in writing as a defendant in any
claim, suit, action or proceeding which involves a claim or infringement of
trade secrets, any patents, trademarks, service marks, maskworks or copyrights
and which has not been finally terminated prior to the date hereof or been
informed or notified by any third party that the Company may be engaged in such
infringement or (ii) has knowledge of any infringement liability with respect
to, or infringement by, the Company or any of its subsidiaries of any trade
secret, patent, trademark, service ▇▇▇▇, maskwork or copyright of another.
(c) Substantially all employees of the Company have executed a
confidentiality and invention agreement containing terms substantially similar
to the form previously delivered to Parent.
SECTION 3.20. VOTE REQUIRED. The affirmative vote of the holders of at
least a majority of the outstanding shares of the Company Common Stock is the
only vote of the holders of any class or series of the Company's capital stock
necessary to approve the Merger.
SECTION 3.21. OPINION OF FINANCIAL ADVISOR. The Company has been advised
by its financial advisor, Salomon Brothers Inc, that in its opinion, as of the
date hereof, the consideration to be received by holders of the Company Common
Stock in the Offer and the Merger is fair from a financial point of view to such
holders, and has delivered a written copy of such opinion to Parent.
SECTION 3.22. FULL DISCLOSURE. No statement contained in any certificate
or schedule furnished or to be furnished by the Company or its subsidiaries to
Parent or Merger Sub in, or pursuant to the provisions of, this Agreement
contains or shall contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in the light of the
circumstances under which it was made, to make the statements herein or therein
not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and warrant
to the Company that:
SECTION 4.01. ORGANIZATION AND QUALIFICATION. Each of Parent and each of
its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority and is in possession of all Approvals
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power, authority and Approvals would not have a Material Adverse Effect. Each of
Parent and each of its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would not
have a Material Adverse Effect.
SECTION 4.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. The Boards of Directors of Parent and Merger Sub have determined
that it is advisable and in the best interest of their respective stockholders
for each to enter into a business
18
combination with the Company upon the terms and subject to the conditions of
this Agreement. This Agreement has been duly and validly executed and delivered
by Parent and Merger Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
Parent and Merger Sub.
SECTION 4.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) Section
4.03(a) of the written disclosure schedule previously delivered by Parent and
Merger Sub to the Company (the "PARENT DISCLOSURE SCHEDULE") includes a list of
all contracts material to the business of Parent and its subsidiaries taken on a
whole ("PARENT MATERIAL CONTRACT").
(b) Except as set forth in Section 4.03(b) of the Parent Disclosure
Schedule, the execution and delivery of this Agreement by Parent and Merger Sub
do not, and the performance of this Agreement by Parent and Merger Sub shall
not, (i) conflict with or violate the Certificate of Incorporation or By-Laws of
Parent or the Articles of Incorporation or By-Laws of Merger Sub, (ii) conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to Parent or any of it subsidiaries or by which its or their respective
properties are bound or affected, or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or impair Parent's or any of its subsidiaries' rights or alter
the rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, any Parent Material
Contract or result in the creation of a lien or encumbrance on any of the
properties or assets of Parent or any of it subsidiaries pursuant to, 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 are bound or affected, except in any such
case for any such breaches, defaults or other occurrences that would not have a
Material Adverse Effect.
(c) The execution and delivery of this Agreement by Parent and Merger Sub
will not require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Securities Act,
the Exchange Act, the Blue Sky Laws and the pre-merger notification requirements
of the HSR Act, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Merger, or otherwise prevent Parent or
Merger Sub from performing their respective obligations under this Agreement,
and would not have a Material Adverse Effect.
SECTION 4.04. CERTIFICATE OF INCORPORATION AND BY-LAWS. Parent has
heretofore furnished to the Company a complete and correct copy of its
Certificate of Incorporation and the By-Laws, as amended to date. Such
Certificate of Incorporation and By-Laws are in full force and effect. Neither
Parent nor Merger Sub is in violation of any of the provisions of its
Certificate of Incorporation or By-Laws.
SECTION 4.05. CAPITALIZATION. As of January 31, 1996, the authorized
capital stock of Parent consisted of (i) 500,000,000 shares of Parent Common
Stock of which: 162,025,947 shares were issued and outstanding, 342,489 shares
were held by subsidiaries of the Company or in its treasury, 38,459,745 shares
were reserved for issuance pursuant to option grants under Parent's stock option
plans, 1,774,574 were reserved for future issuance pursuant to option grants
under Parent's employee stock purchase plan, 589,266 were reserved for future
issue on exchange of shares issued by a subsidiary, 619,469 shares were reserved
for future issuance with respect to Parent's outstanding Series A Convertible
Preferred Stock, 7,402,395 shares were reserved for issuance with respect to
Zero Coupon Convertible Subordinated Debentures due 2013 and 49,659 shares were
reserved for issuance with respect to a convertible debenture due November 11,
1997; and (ii) 2,000,000 shares of Preferred Stock, no par value ("PARENT
PREFERRED STOCK"), of which: 17,500 shares of Series A Convertible Preferred
Stock and one share of Series E Preferred Stock were issued and outstanding. No
material change in such capitalization has occurred between January 31, 1996 and
the date hereof. The authorized capital stock of Merger Sub consists of 1,000
shares of common stock, no par value, 100
19
shares of which, as of the date hereof, are issued and outstanding. All of the
outstanding shares of Parent's and Merger Sub's respective capital stock have
been duly authorized and validly issued and are fully paid and nonassessable.
The issuance of shares of Parent Common Stock in connection with the Merger,
upon exercise of Options assumed and upon conversion of the Convertible
Debentures have been duly authorized, and, when issued in connection with the
Merger or upon such exercise or conversion, will be validly issued, fully paid
and nonassessable.
SECTION 4.06. COMPLIANCE; PERMITS. (a) Neither Parent, nor any of its
subsidiaries is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to Parent or any of its
subsidiaries or by which its or any of their respective properties is bound or
affected or (ii) any 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 is or any of their respective properties is bound or affected,
except for any such conflicts, defaults or violations which would not have a
Material Adverse Effect.
(b) Parent and its subsidiaries hold all permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
governmental authorities which are material to the operation of the business of
the Company and its subsidiaries taken as a whole as it is now being conducted
(collectively, the "PARENT PERMITS"). Parent and its subsidiaries are in
compliance with the terms of the Parent Permits, except where the failure to so
comply would not have a Material Adverse Effect.
SECTION 4.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) Parent has filed all
forms, reports and documents required to be filed with the SEC since June 30,
1993, and has heretofore delivered to the Company, in the form filed with the
SEC, (i) its Annual Report on Form 10-K for the fiscal year ended June 30, 1995
and its Quarterly Reports on Form 10-Q for the fiscal quarters ended September
30, 1995 and December 31, 1995, (ii) all proxy statements relating to Parent's
meetings of stockholders (whether annual or special) held since June 30, 1995,
(iii) all other reports or registration statements (other than Reports on Form
10-Q and Reports on Form 3, 4 or 5 filed on behalf of affiliates of the Parent)
filed by Parent with the SEC since June 30, 1995 and (iv) all amendments and
supplements to all such reports and registration statements filed by Parent with
the SEC (collectively, the "PARENT SEC REPORTS"). 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 (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. None of 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 has been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each fairly
presents the consolidated financial position of Parent and its subsidiaries as
at the respective dates thereof and the consolidated results of its operations
and cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
(c) Parent has heretofore furnished to the Company a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by Parent with the SEC pursuant to
the Securities Act or the Exchange Act.
20
SECTION 4.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
Section 4.08 of the Parent Disclosure Schedule or the Parent SEC Reports, since
June 30, 1995, Parent has conducted its business in the ordinary course and
there has not occurred: (i) any Material Adverse Effect; (ii) any amendments or
changes in the Certificate of Incorporation or By-Laws of Parent; (iii) any
damage to, destruction or loss of any assets of the Parent (whether or not
covered by insurance) that could have a Material Adverse Effect; (iv) any
revaluation by Parent of any of its assets, including, without limitation,
writing down the value of capitalized software or inventory or writing off notes
or accounts receivable other than in the ordinary course of business; (v) except
as disclosed in Section 4.08 of the Parent Disclosure Schedule, any other action
or event that would have required the consent of the Company pursuant to Section
5.03 had such action or event occurred after the date of this Agreement; or (vi)
any sale of a material amount of assets of Parent, except in the ordinary course
of business.
SECTION 4.09. RESTRICTIONS ON BUSINESS ACTIVITIES. Except for this
Agreement, 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 or any of its subsidiaries, any acquisition of property by
Parent or any of its subsidiaries or the conduct of business by Parent or any of
its subsidiaries as currently conducted or as proposed to be conducted by
Parent.
SECTION 4.10. TITLE TO PROPERTY. Except as is disclosed in the Parent SEC
Reports, Parent and each of its subsidiaries have good, marketable and
defensible title to all of their properties and assets, free and clear of all
liens, charges and encumbrances except liens for taxes not yet due and payable
and such liens or other imperfections of title, if any, as do not materially
detract from the value of or interfere with the present use of the property
affected thereby or which would not have a Material Adverse Effect. Except as is
disclosed in the Parent SEC Reports, Parent owns, or is licensed or otherwise
possesses legally enforceable rights to use, all patents, trademarks, trade
names, service marks, copyrights and any applications therefor, technology,
know-how, computer software programs or applications (in both source code and
object code form) and tangible or intangible proprietary information or material
that are used or proposed to be used in the business of Parent, each of which,
where applicable, is to Parent's knowledge valid and subsisting.
SECTION 4.11. NO UNDISCLOSED LIABILITIES. Except as is disclosed in
Section 4.11 of the Parent Disclosure Schedule or the Parent SEC Reports,
neither Parent nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise) which are, in the aggregate, material to the
business, operations or financial condition of Parent and its subsidiaries taken
as a whole, except liabilities (a) adequately provided for in Parent's balance
sheet (including any related notes thereto) as of June 30, 1995 included in the
Parent SEC Reports (the "JUNE 30 BALANCE SHEET"), (b) incurred in the ordinary
course of business and not required under GAAP to be reflected on the June 30
Balance Sheet, or (c) incurred since June 30, 1995 in the ordinary course of
business and consistent with past practice, and liabilities incurred in
connection with this Agreement.
SECTION 4.12. ABSENCE OF LITIGATION. Except as set forth in Section 4.12
of the Parent Disclosure Schedule or as reflected in the Parent SEC Reports,
there are no claims, actions, suits, proceedings or investigations pending or,
to the knowledge of Parent, threatened against Parent or any of its
subsidiaries, or any properties or rights of Parent or any of its subsidiaries,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, that could have a Material Adverse
Effect.
SECTION 4.13. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. Subject
to the accuracy of the representations of the Company in Section 3.13, neither
(i) the Offer Documents, at the time the Offer Documents are filed with the SEC
or are first published, sent or given to stockholders of the Company, as the
case may be, nor (ii) the Registration Statement pursuant to which the Parent
Common Shares to be issued in the Merger will be registered with the SEC, at the
time the Registration Statement (including any amendments or supplements
thereto) is declared effective by the SEC, shall contain any untrue statement of
a material fact or omit to state any material fact necessary in
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order to make the statements included therein, in light of the circumstances
under which they were made, not misleading. Subject to the accuracy of the
representations of the Company in Section 3.13, the information supplied by
Parent for inclusion in the Proxy Statement/Prospectus will not, on the date the
Proxy Statement/Prospectus is first mailed to stockholders, at the time of the
Company Stockholders' Meeting and at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it shall be
made, is false or misleading with respect to any material fact, or will omit to
state any material fact necessary in order to make the statements therein not
false or misleading. If at any time prior to the Effective Time any event
relating to Parent, Merger Sub or any of their respective affiliates, officers
or directors should be discovered by Parent or Merger Sub which should be set
forth in an amendment to the Registration Statement or a supplement to the Proxy
Statement/Prospectus, Parent or Merger Sub will promptly inform the Company.
Notwithstanding the foregoing, Parent makes no representation or warranty with
respect to any information supplied by the Company which is contained in, or
furnished in connection with the preparation of, any of the foregoing. The Offer
Documents and the Registration Statement shall comply in all material respects
as to form with the requirements of the Exchange Act and the Securities Act,
respectively, and the rules and regulations thereunder.
SECTION 4.14. BROKERS. No broker, finder or investment banker (other than
Unterberg ▇▇▇▇▇▇ ▇.▇.) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or Merger Sub.
SECTION 4.15. NO STOCKHOLDER VOTE. No vote of the stockholders of Parent
is necessary to approve the Offer or the Merger or the issuance of Parent Common
Shares therein.
SECTION 4.16. FINANCING. Parent has, or will have, sufficient funds to
permit Merger Sub to acquire Shares pursuant to the Offer and the Merger.
SECTION 4.17. FULL DISCLOSURE. No statement contained in any certificate
or schedule furnished or to be furnished by Parent or Merger Sub to the Company
in, or pursuant to the provisions of, this Agreement contains or will contain
any untrue statement of a material fact or omits or shall omit to state any
material fact necessary, in the light of the circumstances under which it was
made, to make the statements herein or therein not misleading.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER. Except as may be otherwise expressly indicated as permitted in Section
5.01 of the Company Disclosure Schedule, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, the Company covenants and agrees that, unless Parent
shall otherwise agree in writing, the Company shall conduct its business and
shall cause the businesses of its subsidiaries to be conducted only in, and the
Company and its subsidiaries shall not take any action except in the ordinary
course of business and in a manner consistent with past practice; and the
Company shall use reasonable commercial efforts to preserve substantially intact
the business organization of the Company and its subsidiaries, to keep available
the services of the present officers, employees and consultants of the Company
and its subsidiaries, to take all reasonable action necessary to prevent the
loss, cancellation, abandonment, forfeiture or expiration of any Company
Intellectual Property, Third Party Intellectual Property Rights, and Material
Contracts and to preserve the present relationships of the Company and its
subsidiaries with customers, suppliers and other persons with which the Company
or any of its subsidiaries has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement and
Section 5.01 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries shall, during the
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period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, directly or indirectly do,
or propose to do, any of the following without the prior written consent of
Parent:
(a) amend or otherwise change the Company's Certificate of Incorporation
or By-Laws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of capital stock, or any
other ownership interest (including, without limitation, any phantom
interest) of the Company, any of its subsidiaries or affiliates (except for
the issuance of shares of the Company Common Stock issuable pursuant to the
exercise of Options under the Stock Option Plans (as defined in Section
2.06(c)) or pursuant to rights to purchase such shares under the Company
Stock Purchase Plan (as defined in Section 2.06(c)), which Options or
rights, as the case may be, are outstanding on the date hereof or with
respect to the Convertible Debentures);
(c) sell, pledge, dispose of or encumber any assets of the Company or
any of its subsidiaries (except for (i) sales of assets in the ordinary
course of business and in a manner consistent with past practice on which
individually and in the aggregate do not exceed $1,000,000 and (ii)
dispositions of obsolete or worthless assets);
(d) amend or change the period (or permit any acceleration, amendment or
change) of exercisability of Options or restricted stock granted under the
Stock Option Plans or authorize cash payments in exchange for any such
Options or restricted stock;
(e) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof)
in respect of any of its capital stock, except that a wholly owned
subsidiary of the Company may declare and pay a dividend to its parent, (ii)
split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock or (iii) amend the terms of,
repurchase, redeem or otherwise acquire, or permit any subsidiary to
repurchase, redeem or otherwise acquire, any of its securities or any
securities of its subsidiaries, or propose to do any of the foregoing;
(f) sell, transfer, license, sublicense or otherwise dispose of any
Company Intellectual Property (other than in the ordinary course of
business, consistent with past practice, in connection with systems sales
and software developer programs), or amend or modify any existing agreements
with respect to any Company Intellectual Property or Third Party
Intellectual Property Rights;
(g) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any person, or make
any loans or advances except to employees in the ordinary course consistent
with past practice; (iii) enter into or amend any contract or agreement
other than in the ordinary course of business; (iv) authorize or make any
capital expenditures or purchase of fixed assets which are, in the
aggregate, in excess of the amount specified in Section 3.08(g) of the
Company Disclosure Schedule for the Company and its subsidiaries, taken as a
whole; PROVIDED, HOWEVER, that no more than one half of such amount shall be
made or firmly committed prior to June 30, 1996, and, PROVIDED, FURTHER that
the Company will give Parent prior notice of the making or the firm
commitment of more than $5 million of capital expenditure in any calendar
quarter; (v) terminate any Material Contract or amend any of its material
terms (other than amendments to existing credit arrangements designed to
remedy defaults thereunder); or (vi) enter into or amend any contract,
agreement, commitment or arrangement to effect any of the matters prohibited
by this Section 5.01(g);
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(h) increase the compensation payable or to become payable to its
officers or employees, or grant any severance or termination pay to, or
enter into any employment or severance agreement with any director, officer
or other employee of the Company or any of its subsidiaries except in
accordance with the policies and procedures described in ANNEX B, or
establish, adopt, enter into or amend any Employee Plan (other than
amendments required pursuant to Section 6.06);
(i) take any action, other than as required by GAAP, to change
accounting policies or procedures or cash maintenance policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, capitalization of development costs, payments of accounts
payable and collection of accounts receivable);
(j) make any material Tax election inconsistent with past practices or
settle or compromise any material federal, state, local or foreign tax
liability or agree to an extension of a statute of limitations for any
assessment of federal income tax or material state corporate income or
franchise tax, except to the extent the amount of any such settlement has
been reserved for on the Company's most recent SEC Report;
(k) pay, discharge, settle, or satisfy any lawsuits, claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of liabilities
reflected or reserved against in the financial statements of the Company or
incurred in the ordinary course of business and consistent with past
practice;
(l) except as may be required by law, take any action to terminate or
amend any Employee Plan (other than amendments required pursuant to Section
6.06);
(m) permit any increase in the number of employees of the Company
employed by the Company on the date hereof other than pursuant to an
employee plan to be agreed to by the Company and Parent as promptly as
practicable after the date hereof acting reasonably and in good faith; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.01(a) through (m) above, or any action which would
make any of the representations or warranties of the Company contained in
this Agreement untrue or incorrect or prevent the Company from performing or
cause the Company not to perform its covenants hereunder or result in any of
the conditions to the Merger set forth herein not being satisfied.
SECTION 5.02. NO SOLICITATION. (a) The Company shall not, directly or
indirectly, through any officer, director, employee, representative or agent of
the Company or any of its subsidiaries, solicit or encourage (including by way
of furnishing information) the initiation of any inquiries or proposals
regarding any merger, take-over bid, sale of substantial assets, sale of shares
of capital stock (including without limitation by way of a tender or exchange
offer) or similar transactions involving the Company or any subsidiaries of the
Company (any of the foregoing inquiries or proposals being referred to herein as
an "ACQUISITION PROPOSAL"); PROVIDED, HOWEVER, that nothing contained in this
Agreement shall prevent the Board from referring any third party that contacts
the Company on an unsolicited basis after the date hereof concerning an
Alternative Transaction (as defined in Section 8.03(c)) to this Section 5.02(a)
(provided that Parent is concurrently notified of such contact and referral).
Nothing contained in this Section 5.02(a) or any other provision of this
Agreement shall prevent the Board, after receiving an opinion of outside counsel
to the effect that the Board is required to do so in order to discharge properly
its fiduciary duties, from considering, negotiating, approving and recommending
to the stockholders of the Company an unsolicited bona fide written Acquisition
Proposal which the Board of Directors of the Company determines in good faith
(after consultation with its financial advisors) (i) would result in a
transaction more favorable to the Company's stockholders than the transaction
contemplated by this Agreement and (ii) is made by a person financially capable
of consummating such Acquisition Proposal (any such Acquisition Proposal being
referred to herein as a "SUPERIOR PROPOSAL").
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(b) The Company shall immediately notify Parent after receipt of any
Acquisition Proposal or any request for nonpublic information relating to the
Company or any of its subsidiaries in connection with an Acquisition Proposal or
for access to the properties, books or records of the Company or any subsidiary
by any person or entity that informs the Board that it is considering making, or
has made, an Acquisition Proposal. Such notice to Parent shall be made orally
and in writing and shall indicate in reasonable detail the identity of the
offeror and the terms and conditions of such proposal, inquiry or contact.
(c) If the Board receives a request for material nonpublic information by a
party who makes a bone fide Acquisition Proposal and the Board determines that
such proposal, if consummated pursuant to its terms is a Superior Proposal,
then, and only in such case, the Company may, subject to the execution of a
confidentiality agreement substantially similar to that then in effect between
the Company and Parent, provide such party with access to information regarding
the Company.
(d) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any parties (other than Parent and
Merger Sub) conducted heretofore with respect to any of the foregoing. The
Company agrees not to release any third party from any confidentiality or
standstill agreement to which the Company is a party.
(e) The Company shall ensure that the officers, directors and employees of
the Company and its subsidiaries and any investment banker or other advisor or
representative retained by the Company are aware of the restrictions described
in this Section; and shall be responsible for any breach of this Section 5.02 by
such bankers, advisors and representatives (PROVIDED, HOWEVER, that the Company
shall not be liable for any consequential damages with respect to such
breaches).
SECTION 5.03. CONDUCT OF BUSINESS BY PARENT PENDING THE MERGER. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, Parent covenants and agrees
that, unless the Company shall otherwise agree in writing, Parent shall conduct
its business, and cause the businesses of its subsidiaries to be conducted, in
the ordinary course of business and consistent with past practice, other than
actions taken by Parent or its subsidiaries in contemplation of the Merger, and
shall not directly or indirectly do, or propose to do, any of the following
without the prior written consent of the Company:
(a) amend or otherwise change Parent's Certificate of Incorporation
(other than with respect to immaterial changes thereto), or amend the terms
of the Parent Common Stock;
(b) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a 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 of any other person, which, in each case, would
materially delay or prevent the consummation of the transactions
contemplated by this Agreement;
(c) sell, transfer, license, sublicense or otherwise dispose of any
material assets; or
(d) take, or agree in writing or otherwise to take, any of the actions
described in Section 5.03(a) through (c) above, or any action which would
make any of the representations or warranties of Parent contained in this
Agreement untrue or incorrect or prevent Parent from performing or cause
Parent not to perform its covenants hereunder or would result in any of the
conditions to the Merger to be satisfied by Parent not being satisfied.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT. As
promptly as practicable after the execution of this Agreement, the Company and
Parent shall prepare and file with the SEC preliminary proxy materials which
shall constitute the Proxy Statement of the Company and the
25
prospectus of Parent with respect to the Parent Common Stock to be issued in
connection with the Merger. As promptly as practicable after comments are
received from the SEC thereon and after the furnishing by the Company and Parent
of all information required to be contained therein, the Company and Parent
shall file with the SEC a combined proxy and registration statement on Form S-4
(or on such other form as shall be appropriate) relating to the approval of the
Merger by the stockholders of the Company and shall use all reasonable efforts
to cause the Registration Statement to become effective as soon thereafter as
practicable. The Proxy Statement shall include the recommendation of the Board
in favor of the Merger, subject to the second sentence of Section 5.02(a).
SECTION 6.02. STOCKHOLDERS' MEETING. The Company shall in accordance with
Delaware Law and the Company's Certificate of Incorporation and Bylaws call and
hold the Company Stockholders' Meeting as promptly as practicable for the
purpose of voting upon the approval of the Merger, PROVIDED that the Company
shall not be required to call or hold a stockholders meeting while the Offer
remains outstanding. The Company shall use its reasonable best efforts to hold
the Company Stockholders' Meeting as soon as practicable after the date on which
the Registration Statement becomes effective. Subject to the second sentence of
Section 5.02(a), the Company shall use its reasonable best efforts to solicit
from its stockholders proxies in favor of the approval of the Merger, and shall
take all other action necessary or advisable to secure the vote or consent of
stockholders required by Delaware Law to obtain such approvals.
SECTION 6.03. ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable
notice and subject to restrictions contained in confidentiality agreements to
which such party is subject, the Company and Parent shall each (and shall cause
each of their subsidiaries to) afford to the officers, employees, accountants,
counsel and other representatives of the other, reasonable access, during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, the Company and Parent each
shall (and shall cause each of their subsidiaries to) furnish promptly to the
other all information concerning its business, properties and personnel as such
other party may reasonably request, and each shall make available to the other
the appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the other's business, properties and personnel
as either party may reasonably request. Each party shall keep such information
confidential in accordance with the terms of the confidentiality agreement dated
December 15, 1996 (the "CONFIDENTIALITY AGREEMENT") between Parent and the
Company.
SECTION 6.04. CONSENTS; APPROVALS. The Company and Parent shall each use
their best efforts to obtain all consents, waivers, approvals, authorizations or
orders (including, without limitation, all United States and foreign
governmental and regulatory rulings and approvals), and the Company and Parent
shall make all filings (including, without limitation, all filings with United
States and foreign governmental or regulatory agencies) required in connection
with the authorization, execution and delivery of this Agreement by the Company
and Parent and the consummation by them of the transactions contemplated hereby.
SECTION 6.05. STOCK OPTIONS. At the Effective Time, the Company's
obligations with respect to each outstanding Option, whether vested or unvested,
shall, by virtue of this Agreement and without any further action of the
Company, Parent or the holder of any Option, be assumed by Parent. Unless
otherwise elected by Parent prior to the Effective Time, Parent shall make such
assumption in such manner that Parent (i) is a corporation "assuming a stock
option in a transaction to which Section 424(a) applies" within the meaning of
Section 424 of the Code or (ii) to the extent that Section 424 of the Code does
not apply to such Option, would be such a corporation were Section 424 of the
Code applicable to such Option; and, if not so otherwise elected, after the
Effective Time, all references to the Company in the Stock Option Plans and the
applicable stock option agreements shall be deemed to refer to Parent, which
shall have assumed the Stock Option Plans as of the Effective Time by virtue of
this Agreement and without any further action. Each Option so assumed by Parent
under this Agreement shall continue to have, and be subject to, the same terms
and conditions set forth in the applicable Stock Option Plan and the applicable
stock option agreement as in effect immediately prior to the Effective Time,
except that (i) such Option will be exercisable for that number of shares of
26
Parent Common Stock equal to the product of the number of shares of Company
Common Stock that were purchasable under such Option immediately prior to the
Effective Time multiplied by 1.0, subject to adjustment in the manner provided
for in Section 2.06(e), rounded up to the nearest whole number of shares of
Parent Common Stock, and (ii) the per share exercise price for the shares of
Parent Common Stock issuable upon exercise of such assumed Option will be equal
to the quotient determined by dividing the exercise price per share of Company
Common Stock at which such Option was exercisable immediately prior to the
Effective Time by 1.0, subject to adjustment in the manner provided for in
Section 2.06(e), and rounding the resulting exercise price up to the nearest
whole cent. Parent shall use its best efforts to ensure, that Options intended
to qualify as incentive stock options under Section 422 of the Code prior to the
Effective Time continue to so qualify after the Effective Time.
SECTION 6.06. COMPANY STOCK PURCHASE PLAN. (a) The Company shall take such
actions as are necessary to cause the "exercise date" (referred to as the last
day of the "Purchase Period", as such term is used in the Company Stock Purchase
Plan) applicable to the then current Purchase Period to be the last trading day
on which the Company Common Stock is traded on the New York Stock Exchange
immediately prior to the Effective Time (the "FINAL COMPANY PURCHASE DATE");
PROVIDED, THAT, such change in the "exercise date" shall be conditioned upon the
consummation of the Merger. On the Final Company Purchase Date, the Company
shall apply the funds credited as of such date under the Company Stock Purchase
Plan within each participant's payroll withholdings account to the purchase of
whole shares of Company Common Stock in accordance with the terms of the Company
Stock Purchase Plan. The cost to each participant in the Company Stock Purchase
Plan for shares of Company Common Stock shall be the lower of 85% of the closing
sale price of Company Common Stock, as reported on the New York Stock Exchange
composite tape (as published in THE WALL STREET JOURNAL) on (i) the first day of
the then current Purchase Period or (ii) the last trading day on or prior to the
Final Company Purchase Date.
(b) Employees of the Company as of the Effective Time shall be permitted to
participate in Parent's Employee Stock Purchase Plan commencing on the first
enrollment date following the Effective Time, subject to compliance with the
eligibility provisions of such plan (with employees receiving credit, for
purposes of such eligibility provisions, for service with the Company).
SECTION 6.07. EMPLOYMENT MATTERS. (a) The Surviving Corporation and Parent
shall honor the terms and provisions in the Employment Agreement, dated May 27,
1995, between J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Company.
(b) As contemplated by Section 3.04(d), the Parachute Plans shall not be
applicable to the Surviving Corporation or Parent after consummation of the
transactions contemplated hereby. Parent currently intends to employ,
immediately after the Offer, a substantial portion of the employees of the
Company. Parent, Merger Sub and the Company agree that the policies and
procedures specified on Annex B shall apply for the twelve-month period
following the closing of the Offer.
SECTION 6.08. AGREEMENTS OF AFFILIATES. The Company shall deliver to
Parent, prior to the date the Registration Statement becomes effective under the
Securities Act, a letter (the "AFFILIATE LETTER") identifying all persons who
are, or may be deemed to be, at the time of the Company Stockholders' Meetings,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its best efforts to cause each person who is identified as
an "affiliate" in the Affiliate Letter to deliver to Parent, prior to the
Effective Time, a written agreement (an "AFFILIATE AGREEMENT") in substantially
the form of Annex C hereto.
SECTION 6.09. INDEMNIFICATION. (a) The Certificate of Incorporation of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Certificate of Incorporation and By-Laws of the
Company, which provisions shall 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 at the Effective Time
were directors or officers of the Company, unless such modification is required
by law.
27
(b) The Company shall, to the fullest extent permitted under applicable law
or under the Company's Certificate of Incorporation or By-Laws and regardless of
whether the Merger becomes effective, indemnify and hold harmless, and after the
Effective Time, the Surviving Corporation and Parent shall, to the fullest
extent permitted under applicable law or under the Surviving Corporation's and
Parent's, as the case may be, Certificate of Incorporation or By-Laws, indemnify
and hold harmless, each director and officer of the Company or any of its
subsidiaries (collectively, the "INDEMNIFIED PARTIES") against any costs or
expenses (including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission by such
director or officer by virtue of their holding the office of director or officer
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) for a period of six years after the
Effective Time. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) any
counsel retained by the Indemnified Parties for any period after the Effective
Time shall be reasonably satisfactory to the Surviving Corporation and Parent
and (ii) neither the Surviving Corporation nor Parent shall be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld).
SECTION 6.10. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate and (ii) any failure of
the Company, Parent or Merger Sub, as the case may be, materially to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice; and PROVIDED, FURTHER that failure
to give such notice shall not be treated as a breach of covenant for the
purposes of Sections 7.02(a) and 7.03(a) unless the failure to give such notice
results in material prejudice to the other party.
SECTION 6.11. FURTHER ACTION. Upon the terms and subject to the conditions
hereof, each of the parties hereto in good faith shall use all commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and to
otherwise satisfy or cause to be satisfied all conditions precedent to its
obligations under this Agreement.
SECTION 6.12. PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Merger or this Agreement and shall not issue any
such press release or make any such public statement without the prior consent
of the other party, which shall not be unreasonably withheld; PROVIDED, HOWEVER,
that a party may, without the prior consent of the other party, issue such press
release or make such public statement as may upon the advice of counsel be
required by law or the NYSE if it has used all reasonable efforts to consult
with the other party.
SECTION 6.13. LISTING OF PARENT COMMON SHARES. Parent shall use its
reasonable best efforts to cause the shares of Parent Common Stock to be issued
in the Merger, upon exercise of the Options and upon conversion of the
Convertible Debentures,to be approved for listing on the NYSE.
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ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration
Statement shall have been issued by the SEC and no proceedings for that
purpose and no similar proceeding in respect of the Proxy Statement shall
have been initiated or threatened by the SEC;
(b) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the stockholders of the
Company;
(c) HSR ACT. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated;
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other similar binding legal restraint or
prohibition (an "INJUNCTION") preventing the consummation of the Merger
shall be in effect, nor shall any proceeding brought by any administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, seeking any of the foregoing be pending; and there
shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger, which makes
the consummation of the Merger illegal;
(e) NYSE LISTING. The Parent Common Shares to be issued in the Merger,
upon exercise of the Options and upon conversion of the Convertible
Debentures shall have been approved for listing, subject to notice of
issuance, on the NYSE; and
(f) OFFER. Parent shall have made, or caused to be made, the Offer and
shall have purchased, or caused to be purchased, Shares pursuant to the
Offer.
SECTION 7.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER
SUB. The obligations of Parent and Merger Sub to effect the Merger are also
subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in this Agreement shall be true and correct in all
respects on and as of the Effective Time, except for (i) changes
contemplated by this Agreement, (ii) those representations and warranties
which address matters only as of a particular date (which shall remain true
and correct as of such date) and (iii) where the failure to be true and
correct would not have a Material Adverse Effect on the Company, with the
same force and effect as if made on and as of the Effective Time;
(b) AGREEMENTS AND COVENANTS. The 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 on or prior to the
Effective Time;
(c) CONSENTS OBTAINED. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made, by the Company for the authorization, execution and delivery of
this Agreement and the consummation by it of the transactions contemplated
hereby shall have been obtained and made by the Company;
29
(d) GOVERNMENTAL ACTIONS. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation or
other inquiry that might result in such an action or proceeding) by any
governmental authority or administrative agency before any governmental
authority, administrative agency or court of competent jurisdiction, nor
shall there be in effect any judgment, decree or order of any governmental
authority, administrative agency or court of competent jurisdiction, in
either case, seeking to prohibit or limit Parent from exercising all
material rights and privileges pertaining to its ownership of the Surviving
Corporation or the ownership or operation by Parent or any of its
subsidiaries of all or a material portion of the business or assets of
Parent or any of its subsidiaries, or seeking to compel Parent or any of its
subsidiaries to dispose of or hold separate all or any material portion of
the business or assets of Parent or any of its subsidiaries, as a result of
the Merger or the transactions contemplated by this Agreement;
(e) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall have been no change, occurrence or circumstance in the business,
results of operations or financial condition of the Company or any
subsidiary of the Company having or reasonably likely to have a Material
Adverse Effect; and
(f) AFFILIATE AGREEMENTS. Parent shall have received from each officer
and director person who is identified in the Affiliate Letter as an
"affiliate" of the Company an Affiliate Agreement, and each such Affiliate
Agreement shall be in full force and effect.
SECTION 7.03. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Parent and Merger Sub contained in this Agreement shall be true and
correct in all respects on and as of the Effective Time, except for (i)
changes contemplated by this Agreement, (ii) those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date) and (iii) failures to be true and
correct that would not have a Material Adverse Effect on the Company, with
the same force and effect as if made on and as of the Effective Time;
(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 the Effective Time;
(c) CONSENTS OBTAINED. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made, by Parent and Merger Sub for the authorization, execution and
delivery of this Agreement and the consummation by them of the transactions
contemplated hereby shall have been obtained and made by Parent and Merger
Sub; and
(d) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall have been no change, occurrence or circumstance in the business,
results of operations or financial condition of Parent or any subsidiary of
Parent having or reasonably likely to have a Material Adverse Effect.
ARTICLE VIII
TERMINATION
SECTION 8.01. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company:
(a) by mutual written consent duly authorized by the boards of directors
of Parent and the Company; or
30
(b) by either Parent or the Company if the Merger shall not have been
consummated by September 30, 1996 (PROVIDED that the right to terminate this
Agreement under this Section 8.01(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
cause of or resulted in the failure of the Merger to occur on or before such
date); or
(c) by either Parent or the Company if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall
have issued a non-appealable final order, decree or ruling or taken any
other action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger; or
(d) by Parent, if the Offer shall not have been consummated prior to
June 30, 1996 (PROVIDED that Parent is not then in material breach hereof);
or
(e) by Parent, if (i) the Board shall withdraw, modify or change its
recommendation of this Agreement, the Offer or the Merger in a manner
adverse to Parent or shall have resolved to do so; or (ii) the Board shall
have taken a "neutral" position with respect to an Alternative Transaction
(as defined in Section 8.03(c)); or (iii) any person or "group" (other than
Parent or an affiliate of Parent) becomes the owner of 20% or more of the
outstanding shares of Company Common Stock; or
(f) by Parent or the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company or Parent and
Merger Sub, respectively, set forth in this Agreement or if any
representation or warranty of the Company or Parent and Merger Sub,
respectively, shall have become untrue, in either case, such that the
conditions set forth in Section 7.02(a) or 7.02(b), or Section 7.03(a) or
7.03(b), would not be satisfied (a "TERMINATING BREACH"), PROVIDED that, if
such Terminating Breach is curable prior to the expiration of 30 days from
its occurrence (but in no event later than September 30, 1996) by Parent or
the Company, as the case may be, through the exercise of its reasonable best
efforts and for so long as Parent or the Company, as the case may be,
continues to exercise such reasonable best efforts, neither the Company nor
Parent, respectively, may terminate this Agreement under this Section
8.01(f) until the expiration of such period without such Terminating Breach
having been cured; or
(g) by the Company or Parent, if the Board shall have resolved to
accept, or accepted, a Superior Proposal.
SECTION 8.02. EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 8.01, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or stockholders except (i) as set forth in
Section 8.03 and Section 9.01 hereof, and (ii) nothing herein shall relieve any
party from liability for any willful breach hereof.
SECTION 8.03. FEES AND EXPENSES. (a) Except as set forth in this Section
8.03, 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.
(b) The Company shall pay Parent a fee of $25,000,000 (the "FEE"), plus
actual, documented and reasonable out-of-pocket expenses of Parent, not in
excess of $2,500,000, relating to the transactions contemplated by this
Agreement (including, but not limited to, fees and expenses of Parent's
counsel), upon the earliest to occur of the following events:
(i) the termination of this Agreement by Parent pursuant to Section
8.01(e), or by Parent or the Company pursuant to Section 8.01(g); or
(ii) the termination of this Agreement by Parent pursuant to Section
8.01(f) after a willful breach by the Company of this Agreement; or
31
(iii) the termination of this Agreement by Parent pursuant to Section
8.01(d), if, at the time of termination there has been publicly announced
and not withdrawn an Alternative Transaction (as defined in Section
8.03(c));
(iv) the consummation of an Alternative Transaction on or prior to
December 31, 1996.
PROVIDED, HOWEVER, that no Fee or expense reimbursement shall be payable
pursuant to this Section 8.03(b) if Parent or Merger Sub shall then be in
intentional material breach of its obligations hereunder.
(c) As used herein, "ALTERNATIVE TRANSACTION" means (i) a transaction
pursuant to which any person (or group of persons) other than Parent or its
affiliates (a "THIRD PARTY") acquires more than 20% of the outstanding Shares,
whether from the Company or pursuant to a tender offer or exchange offer or
otherwise, (ii) a merger or other business combination involving the Company
pursuant to which any Third Party acquires more than 20% of the outstanding
equity securities of the Company or the entity surviving such merger or business
combination or (iii) any other transaction pursuant to which any Third Party
acquires control of assets (including for this purpose the outstanding equity
securities of subsidiaries of the Company, and the entity surviving any merger
or business combination including any of them) of the Company and its
subsidiaries having a fair market value equal to more than 20% of the fair
market value of all the assets of the Company and its subsidiaries, taken as a
whole, immediately prior to such transaction; PROVIDED, HOWEVER, that the term
Alternative Transaction shall not include any acquisition of securities by a
broker dealer in connection with a bona fide public offering of such securities.
(d) The Fee payable pursuant to Section 8.03(b) shall be paid within one
business day after the first to occur of the events described in Section
8.03(b)(i), (ii), (iii) and (iv).
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Except as otherwise provided in this Section 9.01, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that the agreements set
forth in Section 6.08 shall survive the Effective Time indefinitely and those
set forth in Section 8.03 shall survive termination indefinitely. The
Confidentiality Agreement shall survive termination of this Agreement as
provided therein.
SECTION 9.02. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or mailed if delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like changes of address shall be effective upon receipt)
or sent by electronic transmission, with confirmation received, to the telecopy
number specified below:
(a) If to Parent or Merger Sub:
Silicon Graphics, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Mail Stop ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Legal Services
32
With a copy to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(b) If to the Company:
Cray Research, Inc.
Cray Research Park
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to:
Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 9.03. CERTAIN DEFINITIONS. For purposes of this Agreement, the
term:
(a) "AFFILIATES" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person; including, without limitation, any
partnership or joint venture in which the first mentioned person (either
alone, or through or together with any other subsidiary) has, directly or
indirectly, an interest of 10 percent or more;
(b) "BENEFICIAL OWNER" with respect to any shares of Company Common
Stock, means a person who shall be deemed to be the beneficial owner of such
shares (i) which such person or any of its affiliates or associates
beneficially owns, directly or indirectly, (ii) which such person or any of
its affiliates or associates (as such term is defined in Rule 12b-2 of the
Exchange Act) has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or person with whom such person or any of its affiliates or
associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any shares;
(c) "BUSINESS DAY" means any day other than a day on which banks in San
Francisco are required or authorized to be closed;
(d) "CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(e) when used in connection with the Company or any of its
subsidiaries, or Parent or any of its subsidiaries, as the case may be, the
term "MATERIAL ADVERSE EFFECT" means any change or effect that, individually
or when taken together with all other such changes or effects that have
33
occurred prior to the date of determination of the occurrence of the
Material Adverse Effect, is or is reasonably likely to be materially adverse
to the business, operations, condition (financial or otherwise), assets
(including intangible assets) or liabilities (including, without limitation,
contingent liabilities) or prospects of the Company and its subsidiaries or
Parent and its subsidiaries, as the case may be, in each case taken as a
whole;
(f) "PERSON" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(g) "SUBSIDIARY" or "SUBSIDIARIES" of the Company, the Surviving
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Surviving
Corporation, Parent or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, more than 50% of the stock or other equity interests the holders
of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
SECTION 9.04. AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective boards of directors
at any time prior to the Effective Time; PROVIDED, HOWEVER, that, after approval
of the Merger by the stockholders of the Company, no amendment may be made which
by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 9.05. WAIVER. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
SECTION 9.06. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.07. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.08. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Agreement), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein, are not intended to confer upon any other person any
rights or remedies hereunder.
SECTION 9.09. ASSIGNMENT, MERGER SUB. This Agreement shall not be assigned
by operation of law or otherwise, except that Parent and Merger Sub may assign
all or any of their rights hereunder to any affiliate provided that no such
assignment shall relieve the assigning party of its obligations hereunder.
SECTION 9.10. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied (including, without limitation, Section 6.07
hereof), is intended to or shall confer upon any other person any right, benefit
34
or remedy of any nature whatsoever under or by reason of this Agreement, other
than Section 6.08 (which is intended to be for the benefit of the Indemnified
Parties and may be enforced by such Indemnified Parties).
SECTION 9.11. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 9.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE.
SECTION 9.13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.14. WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE
COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SILICON GRAPHICS, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief
Operating Officer
C ACQUISITION CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
CRAY RESEARCH, INC.
By /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
35
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, subject to the terms of
the Merger Agreement, Merger Sub shall not be required to accept for payment or
pay for any Shares tendered pursuant to the Offer, and may terminate or amend
the Offer and may postpone the acceptance for payment of and payment for Shares
tendered, if (i) the Minimum Condition shall not have been satisfied, (ii) any
applicable waiting period under the HSR Act shall not have expired or been
terminated prior to the expiration of the Offer, or (iii) at any time on or
after the date of this Agreement, and prior to the acceptance for payment of
Shares, any of the following conditions shall exist:
(a) there shall have been instituted or be pending or threatened any
action or proceeding by any governmental or quasi-governmental authority or
agency, domestic or foreign, before any court or governmental,
administrative or regulatory authority or agency, of competent jurisdiction,
domestic or foreign, (i) challenging or seeking to make illegal, materially
delay or otherwise directly or indirectly restrain or prohibit or make
materially more costly the making of the Offer, the acceptance for payment
of, or payment for, any Shares by Parent, Merger Sub or any other affiliate
of Parent, or the consummation of any other Transaction, or seeking to
obtain material damages in connection with any Transaction; (ii) seeking to
prohibit or limit materially the ownership or operation by the Company,
Parent or any of their subsidiaries of all or any material portion of the
business or assets of the Company, Parent or any of their subsidiaries, or
to compel the Company, Parent or any of their subsidiaries to dispose of or
hold separate all or any material portion of the business or assets of the
Company, Parent or any of their subsidiaries, as a result of the
Transactions; (iii) seeking to impose or confirm material limitations on the
ability of Parent, Merger Sub or any other affiliate of Parent to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Merger Sub pursuant to
the Offer or otherwise on all matters properly presented to the Company's
stockholders, including, without limitation, the approval and adoption of
this Agreement and the transactions contemplated hereby; (iv) seeking to
require divestiture by Parent, Merger Sub or any other affiliate of Parent
of any Shares; or (v) which otherwise has a Material Adverse Effect or which
is reasonably likely to materially adversely affect the business,
operations, properties, condition (financial or otherwise), assets or
liabilities (including, without limitation, contingent liabilities) or
prospects of the Company or Parent;
(b) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to (i) Parent, the Company or any subsidiary or affiliate of
Parent or the Company or (ii) any Transaction, by any legislative body,
court, government or governmental, administrative or regulatory authority or
agency, domestic or foreign, other than the routine application of the
waiting period provisions of the HSR Act to the Offer or the Merger, which
is reasonably likely in the good faith judgment of the Parent to result,
directly or indirectly, in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) after February 25, 1996, there shall have occurred any change,
condition, event or development that has a Material Adverse Effect on the
Company;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the NYSE, (ii) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States, (iii) a commencement of a war or armed
hostilities or other national or international crisis directly or indirectly
involving the United States or (iv) in the case of any of the foregoing
existing on the date hereof, in the good faith judgment of the Parent a
material acceleration or worsening thereof;
A-1
(e) (i) it shall have been publicly disclosed or Merger Sub shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of the then outstanding Shares has been acquired by any
person, other than Parent or any of its affiliates or (ii) (A) the Board or
any committee thereof shall have withdrawn or modified in a manner adverse
to Parent or Merger Sub the approval or recommendation of the Offer, the
Merger or the Merger Agreement, or approved or recommended any takeover
proposal or any other acquisition of Shares other than the Offer and the
Merger or (B) the Board or any committee thereof shall have resolved to do
any of the foregoing;
(f) any representation or warranty of the Company in the Merger
Agreement which is qualified as to materiality shall not be true and correct
or any such representation or warranty that is not so qualified shall not be
true and correct in any material respect, in each case as if such
representation or warranty was made as of such time on or after the date of
the Merger Agreement, except for (i) changes contemplated by the Merger
Agreement, (ii) those representations and warranties which address matters
only as of a particular date (which shall remain true and correct as of such
date) and (iii) where the failure to be true and correct would not have a
Material Adverse Effect on the Company;
(g) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;
(h) the Merger Agreement shall have been terminated; or
(i) Merger Sub and the Company shall have agreed that Merger Sub shall
terminate the Offer or postpone the acceptance for payment of or payment for
Shares thereunder;
which, in the reasonable good faith judgment of Merger Sub in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
any of its affiliates) giving rise to any such condition, makes it inadvisable
to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Merger Sub and Parent
and may be asserted by Merger Sub or Parent regardless of the circumstances
giving rise to any such condition or may be waived by Merger Sub or Parent in
whole or in part at any time and from time to time in their sole discretion. The
failure by Parent or Merger Sub at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right; the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances; and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
A-2
ANNEX B
CERTAIN EMPLOYEE MATTERS
POLICIES AND PROCEDURES
I. GENERAL: In general, the Surviving Corporation shall offer severance
benefits as provided in the Cray Research, Inc. 1995 Amended
and Restated Severance Pay Plan for Cray Research, Inc. (the
"EXISTING PLAN").
II. BASE PAYMENTS: Employees whose employment is terminated for one of the
reasons described in Section III (ii) below shall be entitled
to the following payments:
(i) EXECUTIVE OFFICERS (defined as ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇)
shall be entitled to a lump sum cash payment equal to two
times such Executive Officer's Base Pay;
(ii) OFFICERS AND OFFICER EQUIVALENTS (defined consistent
with the Company's existing internal designation consisting of
approximately 50 people) shall be entitled to a lump sum
cash payment equal to one times such Officer's and
Officer Equivalent's Base Pay; and
(iii) ALL OTHER EMPLOYEES (including part-time employees)
shall be entitled to a lump sum cash payment calculated and
payable pursuant to Section C of the Existing Plan
plus, to the extent consistent with the Company's most
recent reduction in force, an additional per individual
payment not to exceed two months' Base Pay agreed upon
by Parent and the Company acting reasonably and in good
faith.
III. OTHER BENEFITS: Other severance benefits shall be offered as provided in the
Existing Plan (including, without limitation, payment for
accrued and unused personal time), subject to the following:
(i) in all cases where relevant, the provision of health,
life, disability and COBRA benefits (provided that, for the
purposes of COBRA, Parent shall pay for three months of
the employee's portion of the cost of such terminated
employee's medical insurance prior to the date of such
employee's termination) as offered by Parent to its
employees shall be deemed to satisfy the requirements of
the Existing Plan; and
(ii) termination shall mean elimination of a person's job,
termination without cause and resignation for "good
reason," which shall include only the following: (i) 15%
or more reduction in a person's Base Pay or (ii)
relocation more than 35 miles from a person's then
current work location.
IV. PERFORMANCE These policies and procedures shall not apply to terminations
EVALUATIONS: in connection with normal cause performance evaluations.
B-1
V. BASE PAY: Means all regular straight time earnings, exclusive of payment
for overtime, shift premiums, incentive compensation,
incentive payments, bonuses, commissions or other
compensation.
VI. COMMUNICATIONS: Between the date hereof and consummation of the Offer, Parent
and Company shall co-ordinate communications regarding these
policies and procedures to Company employees
▇-▇
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▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
, ▇▇▇▇
Silicon Graphics, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
Mail Stop ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Legal Services
Ladies and Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger dated as of
February 25, 1996 (the "AGREEMENT"), among Silicon Graphics, Inc., a Delaware
corporation ("PARENT"), C Acquisition Corporation, a Delaware corporation and
wholly owned subsidiary of Parent ("MERGER SUB"), and Cray Research, Inc., a
Delaware corporation (the "COMPANY"), Parent will acquire the Company through
the merger of Merger Sub with and into the Company (the "MERGER"). Subject to
the terms and conditions of the Agreement, at the Effective Time (as defined in
the Agreement), outstanding shares of the common stock, par value $1.00 per
share, of the Company ("COMPANY COMMON STOCK") will be converted into the right
to receive shares of the common stock, par value $0.001 per share, of Parent
("PARENT COMMON STOCK"), and, in certain events, cash on the basis described in
the Agreement.
The undersigned has been advised that as of the date hereof he, she or it
may be deemed to be an "affiliate" of the Company, as the term "affiliate" is
defined for purposes of paragraphs (c) and (d) of Rule 145 of the Rules and
Regulations (the "RULES AND REGULATIONS") of the Securities and Exchange
Commission (the "COMMISSION") under the Securities Act of 1933, as amended (the
"ACT").
The undersigned understands that the representations, warranties and
covenants set forth herein will be relied upon by Parent, stockholders of
Parent, the Company, other stockholders of the Company and their respective
counsel and accountants.
The undersigned represents and warrants to and agrees with Parent that:
1. The undersigned has full power to execute and deliver this Affiliate
Agreement and to make the representations and warranties herein and to perform
its obligations hereunder.
2. The undersigned has carefully read this letter and the Agreement and
discussed its requirements and other applicable limitations upon his, her or its
ability to sell, transfer or otherwise dispose of Parent Common Stock to the
extent the undersigned felt necessary, with his, her or its counsel or counsel
for the Company.
3. The undersigned shall not make any sale, transfer or other disposition
of Parent Common Stock in violation of the Act or the Rules and Regulations.
4. The undersigned has been advised that the issuance of shares of Parent
Common Stock to the undersigned in connection with the Merger has been or will
be registered with the Commission under the Act on a Registration Statement on
Form S-4. However, the undersigned has also been advised that, since at the time
the Merger was or will be submitted for a vote of the stockholders of the
Company the undersigned may be deemed to have been an affiliate of the Company
and the distribution by the undersigned of any Parent Common Stock has not been
registered under the Act, the undersigned may not sell, transfer or otherwise
dispose of Parent Common Stock issued to the undersigned in the Merger unless
(i) such sale, transfer or other disposition has been registered under the Act,
(ii) such sale, transfer or other disposition is made in conformity with the
requirements of Rule 145 promulgated by the Commission under the Act, or (iii)
in the opinion of counsel reasonably acceptable to Parent, such sale, transfer
or other disposition is otherwise exempt from registration under the Act.
C-1
5. Parent is under no obligation to register the sale, transfer or other
disposition of Parent Common Stock by the undersigned or on his, her or its
behalf under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
6. Stop transfer instructions will be given to Parent's transfer agent with
respect to the Parent Common Stock and that there will be placed on the
certificates for the Parent Common Stock issued to the undersigned, or any
substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION
TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT DATED FEBRUARY 25, 1996 BETWEEN THE
REGISTERED HOLDER HEREOF AND SILICON GRAPHICS, INC., A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF SILICON GRAPHICS, INC."
7. Unless the transfer by the undersigned of his, her or its Parent Common
Stock has been registered under the Act or is a sale made in conformity with the
provisions of Rule 145, Parent reserves the right to put the following legend on
the certificates issued to any transferee of the undersigned:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE
HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933."
8. The legends set forth in paragraphs 6 and 7 above shall be removed by
delivery of substitute certificates without such legend if the undersigned shall
have delivered to Parent a copy of a letter from the staff of the Commission, or
an opinion of counsel in form and substance reasonably satisfactory to Parent,
to the effect that such legend is not required for purposes of the Act.
9. The undersigned is the beneficial owner of (i.e., has sole or shared
voting or investment power with respect to) all the shares of Company Common
Stock and options to purchase Company Common Stock indicated on the last page
hereof (the "Company Securities"). Except for the Company Securities, the
undersigned does not beneficially own any shares of Company Common Stock or any
other equity securities of the Company or any options, warrants or other rights
to acquire any equity securities of the Company.
10. The undersigned intends to vote all Company Common Stock held by him or
her on the record date for the stockholders' meeting to be held to consider the
Merger in favor of the Merger.
11. The undersigned will not exercise dissenters' rights in connection with
the Merger.
C-2
NUMBER OF SHARES OF COMPANY COMMON STOCK
BENEFICIALLY OWNED BY THE UNDERSIGNED:
------------------------
NUMBER OF SHARES OF COMPANY COMMON STOCK
SUBJECT TO OPTIONS, OR ISSUABLE UPON CONVERSION OF
CONVERTIBLE DEBENTURES, BENEFICIALLY OWNED BY THE UNDERSIGNED:
------------------------
Very truly yours,
--------------------------------------
(print name of stockholder)
By:
--------------------------------------
Name:
Title:
(if applicable)
Accepted this day of
, 1996, by
SILICON GRAPHICS, INC.
By:
------------------------------------------
Name:
Title:
C-3
