EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
SUN MICROSYSTEMS, INC.,
FLINTSTONE ACQUISITION CORP.
AND
FORTE SOFTWARE, INC.
Dated as of August 23, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effective Time; Closing. . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Certificate of Incorporation; Bylaws . . . . . . . . . . . . . . . 2
1.5 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Effect on Capital Stock. . . . . . . . . . . . . . . . . . . . . . 3
1.7 Surrender of Certificates. . . . . . . . . . . . . . . . . . . . . 4
1.8 No Further Ownership Rights in Company Common Stock. . . . . . . . 6
1.9 Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . 6
1.10 Tax and Accounting Consequences. . . . . . . . . . . . . . . . . . 7
1.11 Taking of Necessary Action; Further Action . . . . . . . . . . . . 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY . . . . . . . . . . . . . 7
2.1 Organization and Qualification; Subsidiaries . . . . . . . . . . . 7
2.2 Certificate of Incorporation and Bylaws. . . . . . . . . . . . . . 8
2.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Authority Relative to this Agreement . . . . . . . . . . . . . . 10
2.5 No Conflict; Required Filings and Consents . . . . . . . . . . . 10
2.6 Compliance; Permits. . . . . . . . . . . . . . . . . . . . . . . 11
2.7 SEC Filings; Financial Statements. . . . . . . . . . . . . . . . 12
2.8 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . 12
2.9 Absence of Certain Changes or Events . . . . . . . . . . . . . . 12
2.10 Absence of Litigation. . . . . . . . . . . . . . . . . . . . . . 13
2.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . 13
2.12 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.13 Registration Statement; Proxy Statement. . . . . . . . . . . . . 16
2.14 Restrictions on Business Activities. . . . . . . . . . . . . . . 16
2.15 Title to Property. . . . . . . . . . . . . . . . . . . . . . . . 17
2.16 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.17 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . 19
2.18 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.19 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . 20
2.20 Agreements, Contracts and Commitments. . . . . . . . . . . . . . 23
2.21 Company Rights Agreement . . . . . . . . . . . . . . . . . . . . 25
2.22 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.23 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . 26
2.24 Board Approval . . . . . . . . . . . . . . . . . . . . . . . . . 26
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TABLE OF CONTENTS
(continued)
PAGE
2.25 Vote Required. . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.26 State Takeover Statutes. . . . . . . . . . . . . . . . . . . . . 26
2.27 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB . . . . . 26
3.1 Organization and Qualification; Subsidiaries . . . . . . . . . . 27
3.2 Certificate of Incorporation and Bylaws. . . . . . . . . . . . . 27
3.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.4 Authority Relative to this Agreement . . . . . . . . . . . . . . 28
3.5 No Conflict; Required Filings and Consents . . . . . . . . . . . 28
3.6 SEC Filings; Financial Statements. . . . . . . . . . . . . . . . 29
3.7 Registration Statement; Proxy Statement. . . . . . . . . . . . . 29
3.8 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME . . . . . . . . . . . . . . . 30
4.1 Conduct of Business by Company . . . . . . . . . . . . . . . . . 30
4.2 Conduct of Business by Parent. . . . . . . . . . . . . . . . . . 33
ARTICLE V ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . 33
5.1 Proxy Statement/Prospectus; Registration Statement; Other
Filings; Board Recommendations . . . . . . . . . . . . . . . . . 33
5.2 Meeting of Company Stockholders. . . . . . . . . . . . . . . . . 34
5.3 Confidentiality; Access to Information . . . . . . . . . . . . . 36
5.4 No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . 36
5.5 Public Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 38
5.6 Reasonable Efforts; Notification . . . . . . . . . . . . . . . . 38
5.7 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . 39
5.8 Stock Options, Warrants and Employee Benefits. . . . . . . . . . 39
5.9 Form S-8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.10 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 40
5.11 Nasdaq Listing . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.12 Company Affiliate Agreement. . . . . . . . . . . . . . . . . . . 41
5.13 Regulatory Filings; Reasonable Efforts . . . . . . . . . . . . . 41
5.14 No Rights Plan Amendment . . . . . . . . . . . . . . . . . . . . 42
5.15 401(k) Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VI CONDITIONS TO THE MERGER. . . . . . . . . . . . . . . . . . . . . 42
6.1 Conditions to Obligations of Each Party to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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TABLE OF CONTENTS
(continued)
PAGE
6.2 Additional Conditions to Obligations of Company. . . . . . . . . 43
6.3 Additional Conditions to the Obligations of Parent
and Merger Sub .................................................. 43
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER. . . . . . . . . . . . . . . . 45
7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.2 Notice of Termination; Effect of Termination . . . . . . . . . . 47
7.3 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . 47
7.4 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.5 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VIII GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . 49
8.1 Non-Survival of Representations and Warranties . . . . . . . . . 49
8.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.3 Interpretation; Knowledge. . . . . . . . . . . . . . . . . . . . 50
8.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.5 Entire Agreement; Third Party Beneficiaries. . . . . . . . . . . 51
8.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.7 Other Remedies; Specific Performance . . . . . . . . . . . . . . 51
8.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.9 Rules of Construction. . . . . . . . . . . . . . . . . . . . . . 52
8.10 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.11 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . 52
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INDEX OF EXHIBITS
Exhibit A Form of Company Voting Agreement
Exhibit B Form of Stock Option Agreement
Exhibit C Form of Company Affiliate Agreement
Exhibit D-1 Persons to Sign Noncompetition Agreement (Forms A and B)
Exhibit D-2 Form of Noncompetition Agreement - Form A
Exhibit D-3 Form of Noncompetition Agreement - Form B
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as of
August 23, 1999, among Sun Microsystems, Inc., a Delaware corporation
("PARENT"), Flintstone Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB"), and Forte Software, Inc.,
a Delaware corporation ("COMPANY").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement (as
defined in Section 1.2 below) and in accordance with the Delaware General
Corporation Law ("DELAWARE LAW"), Parent and Company intend to enter into a
business combination transaction.
B. The Board of Directors of Company (i) has determined that the
Merger (as defined in Section 1.1) is consistent with and in furtherance of the
long-term business strategy of Company and fair to, and in the best interests
of, Company and its stockholders, (ii) has approved this Agreement, the Merger
(as defined in Section 1.1) and the other transactions contemplated by this
Agreement and (iii) has determined to recommend that the stockholders of
Company adopt and approve this Agreement and approve the Merger.
C. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
certain affiliates of Company are entering into Voting Agreements in
substantially the form attached hereto as EXHIBIT A (the "COMPANY VOTING
AGREEMENTS").
D. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
Company shall execute and deliver a Stock Option Agreement in favor of Parent
in substantially the form attached hereto as EXHIBIT B (the "STOCK OPTION
AGREEMENT"). The Board of Directors of Company has approved the Stock Option
Agreement.
E. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
certain affiliates of Company (the "COMPANY AFFILIATES") are entering into
Company Affiliate Agreements in substantially the form attached hereto as
EXHIBIT C (the "COMPANY AFFILIATE AGREEMENTS").
F. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "CODE").
G. It is also intended by the parties hereto that the Merger shall
qualify for accounting treatment as a pooling of interests.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and into
Company (the "MERGER"), the separate corporate existence of Merger Sub shall
cease and Company shall continue as the surviving corporation. Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "SURVIVING CORPORATION."
1.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware Law (the "CERTIFICATE OF
MERGER") (the time of such filing (or such later time as may be agreed in
writing by Company and Parent and specified in the Certificate of Merger) being
the "EFFECTIVE TIME") as soon as practicable on or after the Closing Date (as
herein defined). Unless the context otherwise requires, the term "AGREEMENT" as
used herein refers collectively to this Agreement and Plan of Reorganization and
the Certificate of Merger. The closing of the Merger (the "CLOSING") shall take
place at the offices of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, at a time and date to be specified by the parties, which shall be
no later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VI, or at such other time, date and location as
the parties hereto agree in writing (the "CLOSING DATE").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of Company and Merger Sub shall vest in the Surviving Corporation,
and all debts, liabilities and duties of Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation of the
Surviving Corporation; PROVIDED, HOWEVER, that at the Effective Time the
Certificate of Incorporation of the Surviving Corporation shall be amended so
that the name of the Surviving Corporation shall be "Forte Software, Inc."
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(b) The Bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be, at the Effective Time, the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Company immediately prior to the Effective Time, plus Michael Lehman
and Michael Morris, each as a Vice President, until their respective successors
are duly appointed.
1.6 EFFECT ON CAPITAL STOCK. Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Merger Sub, Company or the holders of any of the following
securities, the following shall occur:
(a) CONVERSION OF COMPANY COMMON STOCK. Each share of Common
Stock, $0.01 par value per share, of Company including, with respect to each
such share of Company Common Stock, the associated Rights (as defined in that
certain Rights Agreement (the "COMPANY RIGHTS PLAN") dated as of May 16, 1997
between the Company and BankBoston, N.A. as Rights Agent) (the "COMPANY COMMON
STOCK") issued and outstanding immediately prior to the Effective Time, other
than any shares of Company Common Stock to be canceled pursuant to Section
1.6(b), will be canceled and extinguished and automatically converted (subject
to Sections 1.6(e) and (f)) into the right to receive 0.3 shares of Common Stock
of Parent (the "PARENT COMMON STOCK") (the "EXCHANGE RATIO") upon surrender of
the certificate representing such share of Company Common Stock in the manner
provided in Section 1.7 (or in the case of a lost, stolen or destroyed
certificate, upon delivery of an affidavit (and bond, if required) in the manner
provided in Section 1.9). If any shares of Company Common Stock outstanding
immediately prior to the Effective Time are unvested or are subject
to a repurchase option, risk of forfeiture or other condition under any
applicable restricted stock purchase agreement or other agreement with the
Company, then the shares of Parent Common Stock issued in exchange for such
shares of Company Common Stock will also be unvested and subject to the same
repurchase option, risk of forfeiture or other condition, and the certificates
representing such shares of Parent Common Stock may accordingly be marked with
appropriate legends. The Company shall take all action that may be necessary to
ensure that, from and after the Effective Time, Parent is entitled to exercise
any such repurchase option or other right set forth in any such restricted stock
purchase agreement or other agreement.
(b) CANCELLATION OF PARENT-OWNED STOCK. Each share of Company
Common Stock held by Company or owned by Merger Sub, Parent or any direct or
indirect wholly-owned subsidiary of Company or of Parent immediately prior to
the Effective Time shall be canceled and extinguished without any conversion
thereof.
(c) STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLANS. At the
Effective Time, all options to purchase Company Common Stock then outstanding
under Company's 1991 Equity Incentive Plan (the "1991 PLAN"), Company's 1996
Stock Option Plan (the "1996 PLAN") and
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Company's 1997 Stock Plan (the "1997 PLAN" and, together with the 1991 Plan
and the 1996 Plan, the "COMPANY OPTION PLANS") shall be assumed by Parent
in accordance with Section 5.8 hereof. Purchase rights outstanding under
Company's Employee Stock Purchase Plan (the "ESPP") shall be treated as
set forth in Section 5.8.
(d) CAPITAL STOCK OF MERGER SUB. Each share of Common Stock,
$0.001 par value per share, of Merger Sub (the "MERGER SUB COMMON STOCK") issued
and outstanding immediately prior to the Effective Time shall be converted into
one validly issued, fully paid and nonassessable share of Common Stock, $0.001
par value per share, of the Surviving Corporation. Each certificate evidencing
ownership of shares of Merger Sub Common Stock shall evidence ownership of such
shares of capital stock of the Surviving Corporation.
(e) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Common Stock), extraordinary
cash dividends, reorganization, recapitalization, reclassification, combination,
exchange of shares or other like change with respect to Parent Common Stock or
Company Common Stock occurring on or after the date hereof and prior to the
Effective Time.
(f) FRACTIONAL SHARES. No fraction of a share of Parent Common
Stock will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Company Common Stock who would otherwise be entitled to a fraction of
a share of Parent Common Stock (after aggregating all fractional shares of
Parent Common Stock that otherwise would be received by such holder) shall, upon
surrender of such holder's Certificates(s) (as defined in Section 1.7(c))
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 closing price of one share of Parent Common Stock for the five
(5) most recent days that Parent Common Stock has traded ending on the trading
day immediately prior to the Effective Time, as reported on the Nasdaq National
Market System ("NASDAQ").
1.7 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. Parent shall select a bank or trust company
reasonably acceptable to Company to act as the exchange agent (the "EXCHANGE
AGENT") in the Merger.
(b) PARENT TO PROVIDE COMMON STOCK. Promptly after the
Effective Time, Parent shall make available to the Exchange Agent, for exchange
in accordance with this Article I, the shares of Parent Common Stock issuable
pursuant to Section 1.6 in exchange for outstanding shares of Company Common
Stock, and cash in an amount sufficient for payment in lieu of fractional shares
pursuant to Section 1.6(f) and any dividends or distributions to which holders
of shares of Company Common Stock may be entitled pursuant to Section 1.7(d).
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(c) EXCHANGE PROCEDURES. Promptly after the Effective Time,
Parent shall cause the Exchange Agent to mail to each holder of record (as of
the Effective Time) of a certificate or certificates (the "CERTIFICATES"),
which immediately prior to the Effective Time represented outstanding shares
of Company Common Stock whose shares were converted into the right to receive
shares of Parent Common Stock pursuant to Section 1.6, cash in lieu of any
fractional shares pursuant to Section 1.6(f) and any dividends or other
distributions pursuant to Section 1.7(d), (i) a letter of transmittal in
customary form (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall contain such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing
shares of Parent Common Stock, cash in lieu of any fractional shares pursuant
to Section 1.6(f) and any dividends or other distributions pursuant to
Section 1.7(d). Upon surrender of Certificates for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, the holders of such
Certificates shall be entitled to receive in exchange therefor certificates
representing the number of whole shares of Parent Common Stock into which
their shares of Company Common Stock were converted at the Effective Time,
payment in lieu of fractional shares which such holders have the right to
receive pursuant to Section 1.6(f) and any dividends or distributions payable
pursuant to Section 1.7(d), and the Certificates so surrendered shall
forthwith be canceled. Until so surrendered, outstanding Certificates will be
deemed from and after the Effective Time, for all corporate purposes, subject
to Section 1.7(d) as to dividends and other distributions, to evidence only
the ownership of the number of full shares of Parent Common Stock into which
such shares of Company Common Stock shall have been so converted and the
right to receive an amount in cash in lieu of the issuance of any fractional
shares in accordance with Section 1.6(f) and any dividends or distributions
payable pursuant to Section 1.7(d).
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the date of this
Agreement with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holders of any unsurrendered Certificates
with respect to the shares of Parent Common Stock represented thereby until
the holders of record of such Certificates shall surrender such Certificates.
Subject to applicable law, following surrender of any such Certificates, the
Exchange Agent shall deliver to the record holders thereof, without interest,
certificates representing whole shares of Parent Common Stock issued in
exchange therefor along with payment in lieu of fractional shares pursuant to
Section 1.6(f) hereof and the amount of any such dividends or other
distributions with a record date after the Effective Time payable with
respect to such whole shares of Parent Common Stock.
(e) TRANSFERS OF OWNERSHIP. If certificates representing
shares of Parent Common Stock are to be issued in a name other than that in
which the Certificates surrendered in exchange therefor are registered, it
will be a condition of the issuance thereof that the Certificates so
surrendered will be properly endorsed and otherwise in proper form for
transfer and that the persons requesting such exchange will have paid to
Parent or any agent designated by it any transfer or other
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taxes required by reason of the issuance of certificates representing shares
of Parent Common Stock in any name other than that of the registered holder
of the Certificates surrendered, or established to the satisfaction of Parent
or any agent designated by it that such tax has been paid or is not payable.
(f) REQUIRED WITHHOLDING. Each of the Exchange Agent, Parent
and the Surviving Corporation shall be entitled to deduct and withhold from
any consideration payable or otherwise deliverable pursuant to this Agreement
to any holder or former holder of Company Common Stock such amounts as may be
required (as advised by tax counsel for Parent) to be deducted or withheld
therefrom under the Code or under any provision of state, local or foreign
tax law or under any other applicable legal requirement. To the extent such
amounts are so deducted or withheld, such amounts shall be treated for all
purposes under this Agreement as having been paid to the person to whom such
amounts would otherwise have been paid.
(g) NO LIABILITY. Notwithstanding anything to the contrary
in this Section 1.7, neither the Exchange Agent, Parent, the Surviving
Corporation nor any party hereto shall be liable to a holder of shares of
Parent Common Stock or Company Common Stock for any amount properly paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
shares of Parent Common Stock issued in accordance with the terms hereof
(including any cash paid in respect thereof pursuant to Section 1.6(f) and
1.7(d)) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock, and there shall be
no further registration of transfers on the records of the Surviving
Corporation of shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article I.
1.9 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of
Company Common Stock represented by such Certificates were converted pursuant
to Section 1.6, cash for fractional shares, if any, as may be required
pursuant to Section 1.6(f) and any dividends or distributions payable
pursuant to Section 1.7(d); PROVIDED, HOWEVER, that Parent may, in its
discretion and as a condition precedent to the issuance of such certificates
representing shares of Parent Common Stock, cash and other distributions,
require the owner of such lost, stolen or destroyed Certificates to deliver a
bond in such sum as it may reasonably direct as indemnity against any claim
that may be made against Parent, the Surviving Corporation or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
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1.10 TAX AND ACCOUNTING CONSEQUENCES.
(a) It is intended by the parties hereto that the Merger
shall constitute a reorganization within the meaning of Section 368 of the
Code. The parties hereto adopt this Agreement as a "plan of reorganization"
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
Income Tax Regulations.
(b) It is intended by the parties hereto that the Merger
shall be treated as a pooling of interests for accounting purposes.
1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time
after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of Company and Merger Sub, the
officers and directors of Company and Merger Sub will take all such lawful
and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
As of the date hereof and as of the Closing Date, Company represents
and warrants to Parent and Merger Sub, subject to such exceptions as are
specifically disclosed in writing in the disclosure letter supplied by
Company to Parent dated as of the date hereof and certified by a duly
authorized officer of Company, which disclosure shall provide an exception to
or otherwise qualify the representations or warranties of the Company
specifically referred to in such disclosure and such other representations
and warranties to the extent such disclosure shall reasonably appear to be
applicable to such other representations or warranties (the "COMPANY
SCHEDULE"), as follows:
2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of 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 to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted, except where the failure to do so
would not, individually, or in the aggregate, have a Material Adverse Effect.
Each of Company and its subsidiaries 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 have such Approvals
would not, individually or in the aggregate, have a Material Adverse Effect
on Company.
(b) Company has no subsidiaries except for the corporations
identified in Section 2.1(b) of the Company Schedule. Neither Company nor any
of its subsidiaries has agreed nor is obligated to make nor is bound by any
written, oral or other agreement, contract, subcontract,
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lease, binding understanding, instrument, note, option, warranty, purchase
order, license, sublicense, insurance policy, benefit plan, commitment or
undertaking of any nature, as of the date hereof or as may hereafter be in
effect (a "CONTRACT") under which it may become obligated to make, any future
investment in or capital contribution to any other entity. Neither Company
nor any of its subsidiaries directly or indirectly owns any equity or similar
interest in or any interest convertible, exchangeable or exercisable for, any
equity or similar interest in, any corporation, partnership, joint venture or
other business, association or entity.
(c) Company and each of its subsidiaries is qualified to do
business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the nature of their business requires such
qualification and where the failure to so qualify would have a Material
Adverse Effect (as defined in Section 8.3) on the Company.
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Company has
previously furnished to Parent a complete and correct copy of its Certificate
of Incorporation and Bylaws as amended to date (together, the "COMPANY
CHARTER DOCUMENTS"). Such Company Charter Documents and equivalent
organizational documents of each of its subsidiaries are in full force and
effect. Company is not in violation of any of the provisions of the Company
Charter Documents, and no subsidiary of Company is in violation of its
equivalent organizational documents.
2.3 CAPITALIZATION.
(a) The authorized capital stock of Company consists of
45,000,000 shares of Company Common Stock and 5,000,000 shares of Preferred
Stock ("COMPANY PREFERRED STOCK"), each having a par value of $0.01 per
share. At the close of business on the date of this Agreement (i) 20,693,693
shares of Company Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable; (ii) 35,369 shares of Company
Common Stock were held in treasury by Company or by subsidiaries of Company;
(iii) 316,944 shares of Company Common Stock were available for future
issuance pursuant to Company's ESPP; (iv) 2,404,200 shares of Company Common
Stock were reserved for issuance upon the exercise of outstanding options to
purchase Company Common Stock under the 1996 Plan; (v) 2,285,809 shares of
Company Common Stock were reserved for issuance upon the exercise of
outstanding options to purchase Company Common Stock under the 1997 Plan;
(vi) 1,251,261 shares of Company Common Stock were available for future grant
under the 1996 Plan; (vii) 56,298 shares of Company Common Stock were
available for future grant under the 1997 Plan; (viii) 33,515 shares of
Company Common Stock were reserved for future issuance upon conversion of
warrants of the Company (the "WARRANTS"); and (ix) 4,118,045 shares of
Company Common Stock were reserved for future issuance pursuant to the Stock
Option Agreement. As of the date hereof, no shares of Company Preferred Stock
were issued or outstanding and 38,250 shares of Company Series A Junior
Participating Preferred Stock were reserved for issuance upon exercise of the
Company Rights. Section 2.3(a) of the Company Schedule sets forth the
following information with respect to each Company Stock Option (as defined
in Section 5.8) outstanding as of the date of this Agreement: (i) the name
and address of the optionee; (ii) the particular plan pursuant to which such
Company
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Stock Option was granted; (iii) the number of shares of Company Common Stock
subject to such Company Stock Option; (iv) the exercise price of such Company
Stock Option; (v) the date on which such Company Stock Option was granted;
(vi) the applicable vesting schedule; (vii) the date on which such Company
Stock Option expires; and (viii) whether the exercisability of such option
will be accelerated in any way by the transactions contemplated by this
Agreement, and indicates the extent of acceleration. Company has made
available to Parent accurate and complete copies of all stock option plans
pursuant to which the Company has granted such Company Stock Options that are
currently outstanding and the form of all stock option agreements evidencing
such Company Stock Options. All shares of Company Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instrument pursuant to which they are issuable, would be duly authorized,
validly issued, fully paid and nonassessable. Except as set forth in Section
2.3(a) of the Company Schedule, there are no commitments or agreements of any
character to which the Company is bound obligating the Company to accelerate
the vesting of any Company Stock Option as a result of the Merger. All
outstanding shares of Company Common Stock, all outstanding Company Stock
Options, and all outstanding shares of capital stock of each subsidiary of
the Company have been issued and granted in compliance with (i) all
applicable securities laws and other applicable Legal Requirements (as
defined below) and (ii) all requirements set forth in applicable Contracts.
For the purposes of this Agreement, "LEGAL REQUIREMENTS" means any federal,
state, local, municipal, foreign or other law, statute, constitution,
principle of common law, resolution, ordinance, code, edict, decree, rule,
regulation, ruling or requirement issues, enacted, adopted, promulgated,
implemented or otherwise put into effect by or under the authority of any
Governmental Entity (as defined below) and (ii) all requirements set forth in
applicable contracts, agreements, and instruments.
(b) Except for securities Company owns free and clear of all
liens, pledges, hypothecations, charges, mortgages, security interests,
encumbrances, claims, infringements, interferences, options, right of first
refusals, preemptive rights, community property interests or restriction of
any nature (including any restriction on the voting of any security, any
restriction on the transfer of any security or other asset, any restriction
on the possession, exercise or transfer of any other attribute of ownership
of any asset) directly or indirectly through one or more subsidiaries, and
except for shares of capital stock or other similar ownership interests of
subsidiaries of the Company that are owned by certain nominee equity holders
as required by the applicable law of the jurisdiction of organization of such
subsidiaries (which shares or other interests do not materially affect the
Company's control of such subsidiaries), as of the date of this Agreement,
there are no equity securities, partnership interests or similar ownership
interests of any class of equity security of any subsidiary of the Company,
or any security exchangeable or convertible into or exercisable for such
equity securities, partnership interests or similar ownership interests,
issued, reserved for issuance or outstanding. Except as set forth in Section
2.3(b) of the Company Schedule or as set forth in Section 2.3(a) hereof and
except for the Stock Option Agreement, there are no subscriptions, options,
warrants, equity securities, partnership interests or similar ownership
interests, calls, rights (including preemptive rights), commitments or
agreements of any character to which Company or any of its subsidiaries is a
party or by which it is bound obligating Company or any of its
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subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition of, any shares of capital stock, partnership
interests or similar ownership interests of the Company or any of its
subsidiaries or obligating the Company or any of its subsidiaries to grant,
extend, accelerate the vesting of or enter into any such subscription,
option, warrant, equity security, call, right, commitment or agreement. As of
the date of this Agreement, except as contemplated by this Agreement and
except for the Company Rights Plan, there are no registration rights and
there is, except for the Company Voting Agreements, no voting trust, proxy,
rights plan, antitakeover plan or other agreement or understanding to which
the Company or any of its subsidiaries is a party or by which they are bound
with respect to any equity security of any class of the Company or with
respect to any equity security, partnership interest or similar ownership
interest of any class of any of its subsidiaries. Stockholders of the Company
will not be entitled to dissenters' rights under applicable state law in
connection with the Merger.
2.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Company has all
necessary corporate power and authority to execute and deliver this Agreement
and the Stock Option Agreement and to perform its obligations hereunder and
thereunder and, subject to obtaining the approval of the stockholders of
Company of the Merger, to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Stock Option
Agreement by Company and the consummation by Company of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of Company and no other corporate
proceedings on the part of Company are necessary to authorize this Agreement,
the Stock Option Agreement or to consummate the transactions so contemplated
(other than the approval and adoption of this Agreement and the Merger by
holders of a majority of the outstanding shares of Company Common Stock in
accordance with Delaware Law and the Company Charter Documents). This
Agreement and the Stock Option Agreement have been duly and validly executed
and delivered by Company and, assuming the due authorization, execution and
delivery by Parent and Merger Sub, constitute legal and binding obligations
of Company, enforceable against Company in accordance with their respective
terms.
2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement and the
Stock Option Agreement by Company do not, and the performance of this
Agreement and the Stock Option Agreement by Company shall not, (i) conflict
with or violate the Company Charter Documents or the equivalent
organizational documents of any of Company's subsidiaries, (ii) subject to
obtaining the approval of Company's stockholders of this Agreement and the
Merger and compliance with the requirements set forth in Section 2.5(b)
below, conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to 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) under, or materially impair 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, or
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result in the creation of a lien or encumbrance on any of the properties or
assets of Company or any of its subsidiaries pursuant to, any material note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Company or any of its
subsidiaries is a party or by which Company or any of its subsidiaries or its
or any of their respective properties are bound or affected.
(b) The execution and delivery of this Agreement and the
Stock Option Agreement by Company do not, and the performance of this
Agreement by Company shall not, require any consent, approval, authorization
or permit of, or filing with or notification to, any court, administrative
agency, commission, governmental or regulatory authority, domestic or foreign
(a "GOVERNMENTAL ENTITY"), except (A) for applicable requirements, if any, of
the Securities Act of 1933, as amended (the "SECURITIES ACT"), the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), state securities laws
("BLUE SKY LAWS"), the pre-merger notification requirements (the "HSR
APPROVAL") of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT") and of foreign Governmental Entities and the rules
and regulations thereunder, the rules and regulations of Nasdaq, and the
filing and recordation of the Certificate of Merger as required by Delaware
Law and (B) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Company or, after the Effective Time, Parent , or
prevent consummation of the Merger or otherwise prevent the parties hereto
from performing their obligations under this Agreement.
2.6 COMPLIANCE; PERMITS.
(a) Neither 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 Company or any of its subsidiaries or
by which its or any of their respective properties is bound or affected, or
(ii) any material note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Company or any of its subsidiaries is a party or by which Company or any of
its subsidiaries or its or any of their respective properties is bound or
affected, except for any conflicts, defaults or violations that (individually
or in the aggregate) would not cause the Company to lose any material benefit
or incur any material liability. No investigation or review by any
governmental or regulatory body or authority is pending or, to the knowledge
of Company, threatened against Company or its subsidiaries, nor has any
governmental or regulatory body or authority indicated to the Company an
intention to conduct the same, other than, in each such case, those the
outcome of which could not, individually or in the aggregate, reasonably be
expected to have the effect of prohibiting or materially impairing any
business practice of the Company or any of its subsidiaries, any acquisition
of material property by the Company or any of its subsidiaries or the conduct
of business by the Company or any of its subsidiaries.
(b) Company and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities
which are material to operation of the business of Company and its
subsidiaries taken as a whole (collectively, the "COMPANY PERMITS").
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Company and its subsidiaries are in compliance in all material respects with
the terms of the Company Permits.
2.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Company has made available to Parent a correct and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Company with the Securities and Exchange Commission
("SEC") since April 1, 1997 (the "COMPANY SEC REPORTS"), which are all the
forms, reports and documents required to be filed by Company with the SEC
since April 1, 1997. The Company SEC Reports (A) were prepared in accordance
with the requirements of the Securities Act or the Exchange Act, as the case
may be, and (B) did not at the time they were filed (and 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 light of the circumstances under which they
were made, not misleading. None of Company's subsidiaries is required to file
any reports or other documents with the SEC.
(b) Each set of consolidated financial statements
(including, in each case, any related notes thereto) contained in the Company
SEC Reports was prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited statements, do not contain footnotes as permitted by Form 10-Q of
the Exchange Act) and each fairly presents in all material respects the
consolidated financial position of Company and its subsidiaries 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 adjustments which were not
or are not expected to be material in amount.
(c) Company has previously 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 Company
with the SEC pursuant to the Securities Act or the Exchange Act.
2.8 NO UNDISCLOSED LIABILITIES. Neither Company nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise)
of a nature required to be disclosed on a balance sheet or in the related
notes to the consolidated financial statements prepared in accordance with
GAAP which are, individually or in the aggregate, material to the business,
results of operations or financial condition of Company and its subsidiaries
taken as a whole, except (i) liabilities provided for in Company's balance
sheet as of March 31, 1999 or (ii) liabilities incurred since March 31, 1999
in the ordinary course of business, none of which is material to the
business, results of operations or financial condition of Company and its
subsidiaries, taken as a whole.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since April 1, 1999,
there has not been: (i) any Material Adverse Effect on Company, (ii) any
declaration, setting aside or payment of any
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dividend on, or other distribution (whether in cash, stock or property) in
respect of, any of Company's or any of its subsidiaries' capital stock, or
any purchase, redemption or other acquisition by Company of any of Company's
capital stock or any other securities of Company or its subsidiaries or any
options, warrants, calls or rights to acquire any such shares or other
securities except for repurchases from employees following their termination
pursuant to the terms of their pre-existing stock option or purchase
agreements, (iii) any split, combination or reclassification of any of
Company's or any of its subsidiaries' capital stock, (iv) any granting by
Company or any of its subsidiaries of any increase in compensation or fringe
benefits, except for normal increases of cash compensation in the ordinary
course of business consistent with past practice, or any payment by Company
or any of its subsidiaries of any bonus, except for bonuses made in the
ordinary course of business consistent with past practice, or any granting by
Company or any of its subsidiaries of any increase in severance or
termination pay or any entry by Company or any of its subsidiaries into any
currently effective employment, severance, termination or indemnification
agreement or any agreement the benefits of which are contingent or the terms
of which are materially altered upon the occurrence of a transaction
involving Company of the nature contemplated hereby, (v) entry by Company or
any of its subsidiaries into any licensing or other agreement with regard to
the acquisition or disposition of any Intellectual Property (as defined in
Section 2.19) other than licenses in the ordinary course of business
consistent with past practice or any amendment or consent with respect to any
licensing agreement filed or required to be filed by Company with the SEC,
(vi) any material change by Company in its accounting methods, principles or
practices, except as required by concurrent changes in GAAP, or (vii) any
revaluation by Company of any of its assets, including, without limitation,
writing down the value of capitalized inventory or writing off notes or
accounts receivable or any sale of assets of the Company other than in the
ordinary course of business.
2.10 ABSENCE OF LITIGATION. There are no claims, actions, suits or
proceedings pending or, to the knowledge of Company, threatened (or, to the
knowledge of Company, any governmental or regulatory investigation pending or
threatened) against Company or any of its subsidiaries or any properties or
rights of Company or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign.
2.11 EMPLOYEE BENEFIT PLANS.
(a) All employee compensation, incentive, fringe or benefit
plans, programs, policies, commitments or other arrangements (whether or not
set forth in a written document and including, without limitation, all
"employee benefit plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) covering any
active, former employee, director or consultant of Company, any subsidiary of
Company or any trade or business (whether or not incorporated) which is a
member of a controlled group or which is under common control with Company
within the meaning of Section 414 of the Code (an "AFFILIATE"), or with
respect to which Company has liability, are listed in Section 2.11(a) of the
Company Schedule (the "PLANS"). Company has provided to Parent: (i) correct
and complete copies of all documents embodying each Plan including (without
limitation) all amendments thereto, all related trust documents, and all
material written agreements and contracts relating to each such Plan; (ii)
the three
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(3) most recent annual reports (Form Series 5500 and all schedules and
financial statements attached thereto), if any, required under ERISA or the
Code in connection with each Plan; (iii) the most recent summary plan
description together with the summary(ies) of material modifications thereto,
if any, required under ERISA with respect to each Plan; (iv) all IRS or DOL
determination, opinion, notification and advisory letters; (v) all material
correspondence to or from any governmental agency relating to any Plan; (vi)
all COBRA forms and related notices; (vii) all discrimination tests for each
Plan for the most recent three (3) plan years; (viii) the most recent annual
actuarial valuations, if any, prepared for each Plan; (xi) if the Plan is
funded, the most recent annual and periodic accounting of Plan assets; (x)
all material written agreements and contracts relating to each Plan,
including, but not limited to, administrative service agreements, group
annuity contracts and group insurance contracts; (xi) all material
communications to employees or former employees regarding in each case,
relating to any amendments, terminations, establishments, increases or
decreases in benefits, acceleration of payments or vesting schedules or other
events which would result in any material liability under any Plan or
proposed Plan; (xii) all policies pertaining to fiduciary liability insurance
covering the fiduciaries for each Plan; and (xiii) all registration
statements, annual reports (Form 11-K and all attachments thereto) and
prospectuses prepared in connection with any Plan.
(b) Each Plan has been maintained and administered in all
material respects in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations, including
but not limited to ERISA and the Code, which are applicable to such Plans. No
suit, action or other litigation (excluding claims for benefits incurred in
the ordinary course of Plan activities) has been brought, or to the knowledge
of Company is threatened, against or with respect to any such Plan. There are
no audits, inquiries or proceedings pending or, to the knowledge of Company,
threatened by the Internal Revenue Service (the "IRS") or Department of Labor
(the "DOL") with respect to any Plans. All contributions, reserves or premium
payments required to be made or accrued as of the date hereof to the Plans
have been timely made or accrued. Any Plan intended to be qualified under
Section 401(a) of the Code and each trust intended to qualify under Section
501(a) of the Code (i) has either obtained a favorable determination,
notification, advisory and/or opinion letter, as applicable, as to its
qualified status from the IRS or still has a remaining period of time under
applicable Treasury Regulations or IRS pronouncements in which to apply for
such letter and to make any amendments necessary to obtain a favorable
determination, and (ii) incorporates or has been amended to incorporate all
provisions required to comply with the Tax Reform Act of 1986 and subsequent
legislation to the extent such amendment or incorporation is required as of
the Closing Date. Company does not have any plan or commitment to establish
any new Plan, to modify any Plan (except to the extent required by law or to
conform any such Plan to the requirements of any applicable law, in each case
as previously disclosed to Parent in writing, or as required by this
Agreement), or to enter into any new Plan. Each Plan can be amended,
terminated or otherwise discontinued after the Effective Time in accordance
with its terms, without liability to Parent, Company or any of its Affiliates
(other than ordinary administration expenses and expenses for benefits
accrued but not yet paid).
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(c) Neither Company, any of its subsidiaries, nor any of
their Affiliates has at any time ever maintained, established, sponsored,
participated in, or contributed to any plan subject to Title IV of ERISA or
Section 412 of the Code and at no time has Company or any of its subsidiaries
contributed to or been requested to contribute to any "multiemployer plan,"
as such term is defined in ERISA or to any plan described in Section 413(c)
of the Code. Neither Company, any of its subsidiaries, nor any officer or
director of Company or any of its subsidiaries is subject to any liability or
penalty under Section 4975 through 4980B of the Code or Title I of ERISA. No
"prohibited transaction," within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of
ERISA, has occurred with respect to any Plan which could subject Company or
its subsidiaries to material liabilities.
(d) Neither Company, any of its subsidiaries, nor any of
their Affiliates has, prior to the Effective Time and in any material
respect, violated any of the health continuation requirements of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
the requirements of the Family Medical Leave Act of 1993, as amended, the
requirements of the Women's Health and Cancer Rights Act, as amended, the
requirements of the Newborns' and Mothers' Health Protection Act of 1996, as
amended, or any similar provisions of state law applicable to employees of
the Company or any of its subsidiaries. None of the Plans promises or
provides retiree medical or other retiree welfare benefits to any person
except as required by applicable law, and neither Company nor any of its
subsidiaries has represented, promised or contracted (whether in oral or
written form) to provide such retiree benefits to any employee, former
employee, director, consultant or other person, except to the extent required
by statute.
(e) Neither Company nor any of its subsidiaries is bound by
or subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union. No employee of Company or
any of its subsidiaries is represented by any labor union or covered by any
collective bargaining agreement and, to the knowledge of Company, no campaign
to establish such representation is in progress. There is no pending or, to
the knowledge of Company, threatened labor dispute involving Company or any
of its subsidiaries and any group of its employees nor has Company or any of
its subsidiaries experienced any labor interruptions over the past three (3)
years, and Company and its subsidiaries consider their relationships with
their employees to be good. The Company and its subsidiaries are in
compliance in all material respects with all applicable material foreign,
federal, state and local laws, rules and regulations respecting employment,
employment practices, terms and conditions of employment and wages and hours.
(f) Except as disclosed on Schedule 2.11(f) of the Company
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute,
bonus or otherwise) becoming due to any stockholder, director or employee of
Company or any of its subsidiaries under any Plan or otherwise, (ii)
materially increase any benefits otherwise payable under any Plan, or (iii)
result in the acceleration of the time of payment or vesting of any such
benefits.
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(g) Each International Employee Plan (as defined below) has
been established, maintained and administered in compliance with its terms
and conditions and with the requirements prescribed by any and all statutory
or regulatory laws that are applicable to such International Employee Plan.
Furthermore, no International Employee Plan has unfunded liabilities that, as
of the Effective Time, will not be offset by insurance or fully accrued.
Except as required by law, no condition exists that would prevent the Company
or Parent from terminating or amending any International Employee Plan at any
time for any reason. For purposes of this Section "INTERNATIONAL EMPLOYEE
PLAN" shall mean each Plan that has been adopted or maintained by the Company
or any of its subsidiaries, whether informally or formally, for the benefit
of current or former employees of the Company or any of its subsidiaries
outside the United States.
2.12 LABOR MATTERS. (i) There are no material controversies pending
or, to the knowledge of each of Company and its respective subsidiaries,
threatened, between Company or any of its subsidiaries and any of their
respective employees; (ii) as of the date of this Agreement, neither Company
nor any of its subsidiaries is a party to any collective bargaining agreement
or other labor union contract applicable to persons employed by Company or
its subsidiaries nor does Company or its subsidiaries know of any activities
or proceedings of any labor union to organize any such employees; and (iii)
as of the date of this Agreement, neither Company nor any of its subsidiaries
has any knowledge of any strikes, slowdowns, work stoppages or lockouts, or
threats thereof, by or with respect to any employees of Company or any of its
subsidiaries.
2.13 REGISTRATION STATEMENT; PROXY STATEMENT. None of the information
supplied or to be supplied by Company for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of the Parent Common Stock in or as a
result of the Merger (the "S-4") will, at the time the S-4 becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading; and (ii) the proxy statement/prospectus to be
filed with the SEC by Company pursuant to Section 5.1(a) hereof (the "PROXY
STATEMENT/PROSPECTUS") will, at the dates mailed to the stockholders of Company,
at the times of the stockholders meeting of Company (the "COMPANY STOCKHOLDERS'
MEETING") in connection with the transactions contemplated hereby and as of 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/Prospectus will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. 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.
2.14 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
commitment, judgment, injunction, order or decree binding upon Company or its
subsidiaries or to which the Company or any of its subsidiaries is a party which
has or could reasonably be expected to have the effect of
-16-
prohibiting or materially impairing any business practice of Company or any
of its subsidiaries, any acquisition of property by Company or any of its
subsidiaries or the conduct of business by Company or any of its subsidiaries
as currently conducted.
2.15 TITLE TO PROPERTY. Neither Company nor any of its subsidiaries
owns any material real property. Company and each of its subsidiaries have
good and defensible title to all of their material 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 materially interfere
with the present use of the property affected thereby; and all leases
pursuant to which Company or any of its subsidiaries lease from others
material real or personal property are in good standing, valid and effective
in accordance with their respective terms, and there is not, under any of
such leases, any existing material default or event of default of Company or
any of its subsidiaries or, to the Company's knowledge, any other party (or
any event which with notice or lapse of time, or both, would constitute a
material default and in respect of which Company or subsidiary has not taken
adequate steps to prevent such default from occurring). All the plants,
structures and equipment of Company and its subsidiaries, except such as may
be under construction, are in good operating condition and repair, in all
material respects.
2.16 TAXES.
(a) DEFINITION OF TAXES. For the purposes of this Agreement,
"TAX" or "TAXES" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
(b) TAX RETURNS AND AUDITS.
(i) The Company and each of its subsidiaries have timely
filed all federal, state, local and foreign returns, estimates, information
statements and reports ("RETURNS") relating to Taxes required to be filed by the
Company and each of its subsidiaries with any Tax authority, except such Returns
which are not material to the Company. The Company and each of its subsidiaries
have paid all Taxes shown to be due on such Returns.
(ii) The Company and each of its subsidiaries as of the
Effective Time will have withheld with respect to its employees all federal and
state income Taxes, Taxes pursuant to the Federal Insurance Contribution Act,
Taxes pursuant to the Federal Unemployment Tax Act and other Taxes required to
be withheld, except such Taxes which are not material to the Company.
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(iii) Neither the Company nor any of its subsidiaries
has been delinquent in the payment of any material Tax nor is there any
material Tax deficiency outstanding, proposed or assessed against the Company
or any of its subsidiaries, nor has the Company or any of its subsidiaries
executed any unexpired waiver of any statute of limitations on or extending
the period for the assessment or collection of any Tax.
(iv) No audit or other examination of any Return of the
Company or any of its subsidiaries by any Tax authority is presently in
progress, nor has the Company or any of its subsidiaries been notified of any
request for such an audit or other examination.
(v) No adjustment relating to any Returns filed by the
Company or any of its subsidiaries has been proposed in writing, formally or
informally, by any Tax authority to the Company or any of its subsidiaries or
any representative thereof.
(vi) Neither the Company nor any of its subsidiaries has
any liability for any material unpaid Taxes which has not been accrued for or
reserved on the Company balance sheet dated March 31, 1999 in accordance with
GAAP, whether asserted or unasserted, contingent or otherwise, which is material
to the Company, other than any liability for unpaid Taxes that may have accrued
since April 1, 1999 in connection with the operation of the business of the
Company and its subsidiaries in the ordinary course.
(vii) There is no contract, agreement, plan or arrangement
to which the Company or any of its subsidiaries is a party as of the date of
this Agreement, including but not limited to the provisions of this Agreement,
covering any employee or former employee of the Company or any of its
subsidiaries that, individually or collectively, would reasonably be expected to
give rise to the payment of any amount that would not be deductible pursuant to
Sections 280G, 404 or 162(m) of the Code. There is no contract, agreement, plan
or arrangement to which the Company or any of its subsidiaries is a party or by
which it is bound to compensate any individual for excise taxes paid pursuant to
Section 4999 of the Code.
(viii) Neither the Company nor any of its subsidiaries has
filed any consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as defined in Section 341(f)(4) of the Code) owned by the Company or any of its
subsidiaries.
(ix) Neither the Company nor any of its subsidiaries is
party to or has any obligation under any tax-sharing, tax indemnity or tax
allocation agreement or arrangement.
(x) None of the Company's or its subsidiaries' assets
are tax exempt use property within the meaning of Section 168(h) of the Code.
(xi) Neither the Company nor any of its subsidiaries
has distributed the stock of any corporation in a transaction satisfying the
requirements of Section 355 of the Code since
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April 16, 1997. The stock of neither the Company nor any of its subsidiaries
has been distributed in a transaction satisfying the requirements of Section
355 of the Code since April 16, 1997.
2.17 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIAL. Except as would not result in
material liability to the Company or any of its subsidiaries, no underground
storage tanks and no amount of any substance that has been designated by any
Governmental Entity or by applicable federal, state or local law to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant
to the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, or defined as a hazardous waste pursuant to the United
States Resource Conservation and Recovery Act of 1976, as amended, and the
regulations promulgated pursuant to said laws, but excluding office and
janitorial supplies, (a "HAZARDOUS MATERIAL") are present, as a result of the
actions of the Company or any of its subsidiaries or any affiliate of the
Company, or, to the Company's knowledge, as a result of any actions of any
third party or otherwise, in, on or under any property, including the land
and the improvements, ground water and surface water thereof, that the
Company or any of its subsidiaries has at any time owned, operated, occupied
or leased.
(b) HAZARDOUS MATERIALS ACTIVITIES. Except as would not
result in a material liability to the Company (in any individual case or in
the aggregate) (i) neither the Company nor any of its subsidiaries has
transported, stored, used, manufactured, disposed of, released or exposed its
employees or others to Hazardous Materials in violation of any law in effect
on or before the Closing Date, and (ii) neither the Company nor any of its
subsidiaries has disposed of, transported, sold, used, released, exposed its
employees or others to or manufactured any product containing a Hazardous
Material (collectively "HAZARDOUS MATERIALS ACTIVITIES") in violation of any
rule, regulation, treaty or statute promulgated by any Governmental Entity in
effect prior to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.
(c) PERMITS. The Company and its subsidiaries currently hold
all environmental approvals, permits, licenses, clearances and consents (the
"COMPANY ENVIRONMENTAL PERMITS") necessary for the conduct of the Company's and
its subsidiaries' Hazardous Material Activities and other businesses of the
Company and its subsidiaries as such activities and businesses are currently
being conducted.
(d) ENVIRONMENTAL LIABILITIES. No action, proceeding,
revocation proceeding, amendment procedure, writ or injunction is pending, and
to the Company's knowledge, no action, proceeding, revocation proceeding,
amendment procedure, writ or injunction has been threatened by any Governmental
Entity against the Company or any of its subsidiaries in a writing delivered to
the Company or any of its subsidiaries concerning any Company Environmental
Permit, Hazardous Material or any Hazardous Materials Activity of the Company or
any of its subsidiaries. The Company is not aware of any fact or circumstance
which could involve the Company or any of its
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subsidiaries in any environmental litigation or impose upon the Company any
material environmental liability.
2.18 BROKERS. Company has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders fees or agent's commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
2.19 INTELLECTUAL PROPERTY. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and all
worldwide common law and statutory rights in, arising out of, or
associated therewith: (i) patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations
and continuations-in-part thereof ("PATENTS"); (ii) inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know how, technology, technical data and
customer lists, and all documentation relating to any of the foregoing;
(iii) copyrights, copyrights registrations and applications therefor,
and all other rights corresponding thereto throughout the world; (iv)
domain names, uniform resource locators ("URLS") and other names and
locators associated with the Internet ("DOMAIN NAMES"); (v) industrial
designs and any registrations and applications therefor; (vi) trade
names, logos, common law trademarks and service marks, trademark and
service mark registrations and applications therefor; (vii) all databases
and data collections and all rights therein; (viii) all moral and
economic rights of authors and inventors, however denominated, and (ix)
any similar or equivalent rights to any of the foregoing (as applicable).
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual Property that
is owned by, or exclusively licensed to, Company and it subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" means all Intellectual Property that
is the subject of an application, certificate, filing, registration or
other document issued, filed with, or recorded by any private, state,
government or other legal authority.
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, the Company or
any of its subsidiaries.
(a) Section 2.19(a) of the Company Schedule is a complete and
accurate list of all Company Registered Intellectual Property and specifies,
where applicable, the jurisdictions in which each such item of Company
Registered Intellectual Property has been issued or registered and lists any
proceedings or actions before any court or tribunal (including the United States
Patent and Trademark Office (the "PTO") or equivalent authority anywhere in the
world) related to any of the Company Registered Intellectual Property.
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(b) Section 2.19(b) of the Company Schedule is a complete and
accurate list (by name and version number) of all software products or service
offerings of the Company or any of its subsidiaries ("COMPANY PRODUCTS") that
have been distributed or provided in the ten (10)-year period preceding the date
hereof or which the Company or any of its subsidiaries currently intends to
distribute or provide in the future, including any products or service offerings
under development.
(c) No Company Intellectual Property or Company Product is
subject to any proceeding or outstanding decree, order, judgment, contract,
license, agreement, or stipulation restricting in any manner the use, transfer,
or licensing thereof by Company or any of its subsidiaries, or which may affect
the validity, use or enforceability of such Company Intellectual Property or
Company Product.
(d) Each material item of Company Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance and
renewal fees currently due in connection with such Company Registered
Intellectual Property have been made and all necessary documents, recordations
and certificates in connection with such Company Registered Intellectual
Property have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Company Registered Intellectual Property.
(e) Section 2.19(e) of the Company Schedule is a complete and
accurate list of all material actions that are required to be taken by the
Company within ninety (90) days of the date hereof with respect to any of the
foregoing Registered Intellectual Property.
(f) Company owns and has good and exclusive title to, each
material item of Company Intellectual Property owned by it free and clear of any
lien or encumbrance (excluding non-exclusive licenses and related restrictions
granted in the ordinary course). Without limiting the foregoing: (i) Company is
the exclusive owner of all trademarks and trade names used in connection with
the operation or conduct of the business of Company and its subsidiaries,
including the sale, distribution or provision of any Company Products by Company
or its subsidiaries; (ii) Company owns exclusively, and has good title to, all
copyrighted works that are Company Products or which Company or any of its
subsidiaries otherwise purports to own; and (iii) to the extent that any Patents
would be infringed by any Company Products, Company is the exclusive owner of
such Patents.
(g) To the extent that any material technology, software or
Intellectual Property has been developed or created independently or jointly by
a third party for Company or any of its subsidiaries or is incorporated into any
of the Company Products, Company has a written agreement with such third party
with respect thereto and Company thereby either (i) has obtained ownership of,
and is the exclusive owner of, or (ii) has obtained a perpetual, non-terminable
license (sufficient for the conduct of its business as currently conducted and
as proposed to be conducted) to all such third party's Intellectual Property in
such work, material or invention by operation of law or by valid assignment, to
the fullest extent it is legally possible to do so.
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(h) Neither Company nor any of its subsidiaries has
transferred ownership of, or granted any exclusive license with respect to,
any Intellectual Property that is material Company Intellectual Property, to
any third party, or knowingly permitted Company's rights in such material
Company Intellectual Property to lapse or enter the public domain.
(i) Section 2.19(i) of the Company Schedule lists all
material contracts, licenses and agreements to which Company or any of its
subsidiaries is a party: (i) with respect to Company Intellectual Property
licensed or transferred to any third party (other than end-user licenses in
the ordinary course); or (ii) pursuant to which a third party has licensed or
transferred any material Intellectual Property to Company.
(j) All material contracts, licenses and agreements relating
to either (i) Company Intellectual Property or (ii) Intellectual Property of
a third party licensed to Company or any of its subsidiaries, are in full
force and effect. The consummation of the transactions contemplated by this
Agreement will neither violate nor result in the breach, modification,
cancellation, termination or suspension of such contracts, licenses and
agreements. Each of Company and its subsidiaries is in material compliance
with, and has not materially breached any term of any such contracts,
licenses and agreements and, to the knowledge of Company, all other parties
to such contracts, licenses and agreements are in compliance with, and have
not materially breached any term of, such contracts, licenses and agreements.
Following the Closing Date, the Surviving Corporation will be permitted to
exercise all of Company's rights under such contracts, licenses and
agreements to the same extent Company and its subsidiaries would have been
able to had the transactions contemplated by this Agreement not occurred and
without the payment of any additional amounts or consideration other than
ongoing fees, royalties or payments which Company would otherwise be required
to pay. Neither this Agreement nor the transactions contemplated by this
Agreement, including the assignment to Parent or Merger Sub by operation of
law or otherwise of any contracts or agreements to which the Company is a
party, will result in (i) either Parent's or the Merger Sub's granting to any
third party any right to or with respect to any material Intellectual
Property right owned by, or licensed to, either of them, (ii) either the
Parent's or the Merger Sub's being bound by, or subject to, any non-compete
or other material restriction on the operation or scope of their respective
businesses, or (iii) either the Parent's or the Merger Sub's being obligated
to pay any royalties or other material amounts to any third party in excess
of those payable by Parent or Merger Sub, respectively, prior to the Closing.
(k) The operation of the business of the Company and its
subsidiaries as such business currently is conducted, including (i) Company's
and its subsidiaries' design, development, manufacture, distribution,
reproduction, marketing or sale of the products or services of Company and its
subsidiaries (including Company Products ) and (ii) the Company's use of any
product, device or process, has not, does not and, to its knowledge, will not
infringe or misappropriate the Intellectual Property of any third party or
constitute unfair competition or trade practices under the laws of any
jurisdiction.
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(l) Neither Company nor any of its subsidiaries has received
notice from any third party that the operation of the business of Company or
any of its subsidiaries or any act, product or service of Company or any of
its subsidiaries, infringes or misappropriates the Intellectual Property of
any third party or constitutes unfair competition or trade practices under
the laws of any jurisdiction.
(m) To the knowledge of Company, no person has or is infringing
or misappropriating any Company Intellectual Property.
(n) Company and each of its subsidiaries has taken
reasonable steps to protect Company's and its subsidiaries' rights in
Company's confidential information and trade secrets that it wishes to
protect or any trade secrets or confidential information of third parties
provided to Company or any of its subsidiaries, and, without limiting the
foregoing, each of Company and its subsidiaries has and uses its best efforts
to enforce a policy requiring each employee and contractor to execute a
proprietary information/confidentiality agreement substantially in the form
provided to Parent and all current and former employees and contractors of
Company and any of its subsidiaries have executed such an agreement, except
where the failure to do so is not reasonably expected to be material to
Company.
(o) All of the Company Products (i) will record, store,
process, calculate and present calendar dates falling on and after (and if
applicable, spans of time including) January 1, 2000, and will calculate any
information dependent on or relating to such dates in the same manner, and
with the same functionality, data integrity and performance, as the products
record, store, process, calculate and present calendar dates on or before
December 31, 1999, or calculate any information dependent on or relating to
such dates (collectively, "YEAR 2000 COMPLIANT"), (ii) will lose no
functionality with respect to the introduction of records containing dates
falling on or after January 1, 2000, and (iii) will, to the knowledge of
Company, be interoperable with other products used and distributed by Parent
that may reasonably deliver records to the Company's or any of its
subsidiaries' products or receive records from the Company's or any of its
subsidiaries' products, or interact with the Company's or any of its
subsidiaries' products. All of Company's or its subsidiaries' Information
Technology (as defined below) is Year 2000 Compliant, and will not cause an
interruption in the ongoing operations of the Company's or any of its
subsidiaries' business on or after January 1, 2000. For purposes of the
foregoing, the term "INFORMATION TECHNOLOGY" shall mean and include all
software, hardware, firmware, telecommunications systems, network systems,
embedded systems and other systems, components and/or services (other than
general utility services including gas, electric, telephone and postal) that
are owned or used by the Company or any of its subsidiaries in the conduct of
their business, or purchased by the Company or any of its subsidiaries from
third-party suppliers.
2.20 AGREEMENTS, CONTRACTS AND COMMITMENTS. Neither Company nor any
of its subsidiaries is a party to or is bound by:
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(a) any employment or consulting agreement, contract or
commitment with any officer, director, Company employee currently earning an
annual salary in excess of $100,000 or member of Company's Board of
Directors, other than those that are terminable by Company or any of its
subsidiaries on no more than thirty (30) days' notice without liability or
financial obligation to the Company;
(b) any agreement or plan, including, without limitation,
any stock option plan, stock appreciation right plan or stock purchase plan,
any of the benefits of which will be increased, or the vesting of benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement;
(c) any material agreement of indemnification or any
guaranty other than any agreement of indemnification entered into in
connection with the sale or license of software products in the ordinary
course of business;
(d) any material agreement, contract or commitment
containing any covenant limiting in any respect the right of Company or any
of its subsidiaries to engage in any line of business or to compete with any
person or granting any exclusive distribution rights;
(e) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by Company or any of its
subsidiaries after the date of this Agreement of a material amount of assets
not in the ordinary course of business or pursuant to which Company or any of
its subsidiaries has any material ownership interest in any corporation,
partnership, joint venture or other business enterprise other than Company's
subsidiaries;
(f) any dealer, distributor, joint marketing or development
agreement currently in force under which Company or any of its subsidiaries
have continuing material obligations to jointly market any product,
technology or service and which may not be canceled without penalty upon
notice of ninety (90) days or less, or any material agreement pursuant to
which Company or any of its subsidiaries have continuing material obligations
to jointly develop any intellectual property that will not be owned, in whole
or in part, by Company or any of its subsidiaries and which may not be
canceled without penalty upon notice of ninety (90) days or less;
(g) any agreement, contract or commitment currently in force
to provide source code to any third party for any product or technology that
is material to Company and its subsidiaries taken as a whole;
(h) any agreement, contract or commitment currently in force to
license any third party to manufacture or reproduce any Company product, service
or technology or any agreement, contract or commitment currently in force to
sell or distribute any Company products, service or technology except agreements
with distributors or sales representative in the normal course of
-24-
business cancelable without penalty upon notice of ninety (90) days or less
and substantially in the form previously provided to Parent;
(i) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other agreements or instruments relating
to the borrowing of money or extension of credit;
(j) any material settlement agreement entered into within
five (5) years prior to the date of this Agreement; or
(k) any other agreement, contract or commitment that has a
value of $500,000 or more individually.
Neither Company nor any of its subsidiaries, nor to Company's
knowledge any other party to a Company Contract (as defined below), is in
breach, violation or default under, and neither Company nor any of its
subsidiaries has received written notice that it has breached, violated or
defaulted under, any of the material terms or conditions of any of the
agreements, contracts or commitments to which Company or any of its
subsidiaries is a party or by which it is bound that are required to be
disclosed in the Company Schedule (any such agreement, contract or
commitment, a "COMPANY CONTRACT") in such a manner as would permit any other
party to cancel or terminate any such Company Contract, or would permit any
other party to seek material damages or other remedies (for any or all of
such breaches, violations or defaults, in the aggregate).
2.21 COMPANY RIGHTS AGREEMENT. The Company Rights Plan has been
amended to (i) render the Company Rights Plan inapplicable to the Merger and
the other transactions contemplated by this Agreement, the Stock Option
Agreement, the Company Affiliate Agreements and the Company Voting Agreements
(this Agreement, the Stock Option Agreement, the Company Affiliate Agreements
and the Company Voting Agreements hereinafter referred to collectively as the
"TRANSACTION DOCUMENTS"), (ii) ensure that (x) neither Parent nor Merger Sub,
nor any of their affiliates shall be deemed to have become an Acquiring
Person (as defined in the Company Rights Plan) pursuant to the Company Rights
Plan solely by virtue of the execution of the Transaction Documents (as
defined in Section 2.26) or the consummation of the transactions contemplated
hereby or thereby and (y) a Distribution Date (as such term is defined in the
Company Rights Plan) or similar event does not occur solely by reason of the
execution of the Transaction Documents, the consummation of the Merger, or
the consummation of the other transactions, contemplated hereby and thereby,
(iii) provide that the exercise of rights under the Company Rights Plan shall
expire immediately prior to the Effective Time, and (iv) that such amendment
may not be further amended by the Company without the prior consent of Parent
in its sole discretion unless and until this Agreement shall have terminated.
2.22 INSURANCE. Company maintains insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of Company and its subsidiaries
(collectively, the "INSURANCE POLICIES") which are of the type and in amounts
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customarily carried by persons conducting businesses similar to those of
Company and its subsidiaries. There is no material claim by Company or any of
its subsidiaries pending under any of the material Insurance Policies as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds.
2.23 OPINION OF FINANCIAL ADVISOR. Company has been advised in
writing by its financial advisor, Hambrecht & Quist LLP, that in its opinion,
as of the date of this Agreement, the Exchange Ratio is fair to the
stockholders of Company from a financial point of view.
2.24 BOARD APPROVAL. The Board of Directors of Company has, as of
the date of this Agreement unanimously (i) approved, subject to stockholder
approval, this Agreement and the transactions contemplated hereby, (ii)
determined that the Merger is in the best interests of the stockholders of
Company and is on terms that are fair to such stockholders and (iii)
recommended that the stockholders of Company approve this Agreement and the
Merger.
2.25 VOTE REQUIRED. The affirmative vote of a majority of the votes
that holders of the outstanding shares of Company Common Stock are entitled
to vote with respect to the Merger is the only vote of the holders of any
class or series of Company's capital stock necessary to approve this
Agreement and the transactions contemplated hereby.
2.26 STATE TAKEOVER STATUTES. The Board of Directors of the Company
has approved the Merger and the Transaction Documents, and such approval is
sufficient to render inapplicable to the Merger, the Transaction Documents
and the transactions contemplated by the Transactions Documents, the
provisions of Section 203 of the Delaware Law to the extent, if any, such
section is applicable to the Merger, the Transaction Documents and the
transactions contemplated by the Transaction Documents. No other state
takeover statute or similar statute or regulation applies to or purports to
apply to the Merger, the Transaction Documents or the transactions
contemplated by the Transaction Documents.
2.27 POOLING OF INTERESTS. To its knowledge, based on consultation
with its independent accountants, neither the Company nor any of its
directors, officers or affiliates has taken any action which would interfere
with (i) Parent's ability to account for the Merger as a pooling of interests
or (ii) Parent's, Surviving Corporation's or the Company's ability to
continue to account for as a pooling of interests any past acquisition by the
Company currently accounted for as a pooling of interests.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to
Company, subject to such exceptions as are specifically disclosed in writing
in the disclosure letter and referencing a specific representation supplied
by Parent to Company dated as of the date hereof and certified by a duly
authorized officer of Parent (the "PARENT SCHEDULE"), as follows:
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3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of Parent
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 to own, lease and operate its
assets and properties and to carry on its business as it is now being
conducted, except where the failure to do so would not, individually or in
the aggregate, have a Material Adverse Effect on Parent. Each of Parent and
its subsidiaries 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
have such Approvals would not, individually or in the aggregate, have a
Material Adverse Effect on Parent. Each of Parent 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 the 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, either
individually or in the aggregate, have a Material Adverse Effect on Parent.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Parent has previously
furnished to Company complete and correct copies of the Company Charter
Documents as amended to date. Such Company Charter Documents and equivalent
organizational documents of each of its subsidiaries are in full force and
effect. Parent is not in violation of any of the provisions of the Company
Charter Documents, and no subsidiary of Company is in violation of any of its
equivalent organizational documents.
3.3 CAPITALIZATION. The authorized capital stock of Parent
consists of (i) 1,800,000,000 shares of Parent Common Stock, par value
$0.00067 per share, and (ii) 10,000,000 shares of Preferred Stock, par value
$0.01 per share ("PARENT PREFERRED STOCK"), of which 3,000,000 shares of
Parent Preferred Stock have been designated Series A Preferred Stock. At the
close of business on August 17, 1999, (i) 778,822,551 shares of Parent Common
Stock were issued and outstanding, (ii) 87,841,031 shares of Parent Common
Stock were held in treasury by Parent or by subsidiaries of Parent, (iii)
33,956,367 shares of Parent Common Stock were reserved for future issuance
pursuant to Parent's employee stock purchase plan, (iv) 101,377,755 shares of
Parent Common Stock were reserved for issuance upon the exercise of
outstanding options ("PARENT OPTIONS") to purchase Parent Common Stock. As of
the date hereof, no shares of Parent Preferred Stock were issued or
outstanding. The authorized capital stock of Merger Sub consists of 1,000
shares of common stock, par value $0.01 per share, all 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. All shares of Parent
Common Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall, and the shares of Parent Common Stock to be issued pursuant to the
Merger will be, duly authorized, validly issued, fully paid and
nonassessable. All of the outstanding shares of capital stock (other than
directors' qualifying shares) of each of Parent's subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and all such shares
(other than directors' qualifying shares) are owned by Parent or another
subsidiary free and clear of all
-27-
security interests, liens, claims, pledges, agreements, limitations in
Parent's voting rights, charges or other encumbrances of any nature
whatsoever.
3.4 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 the Stock Option Agreement, and to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Stock Option Agreement by Parent and Merger Sub and the consummation
by Parent and Merger Sub of the transactions contemplated hereby and thereby
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 and
the Stock Option Agreement, or to consummate the transactions so
contemplated. This Agreement and the Stock Option Agreement have been duly
and validly executed and delivered by Parent and Merger Sub and, assuming the
due authorization, execution and delivery by Company, constitute legal and
binding obligations of Parent and Merger Sub, enforceable against Parent and
Merger Sub in accordance with their respective terms.
3.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent
and Merger Sub and the Stock Option Agreement by Parent do not, and the
performance of this Agreement by Parent and Merger Sub and the Stock Option
Agreement by Parent shall not, (i) conflict with or violate the Certificate
of Incorporation, Bylaws or equivalent organizational documents of Parent or
any of its subsidiaries, (ii) subject to compliance with the requirements set
forth in Section 3.5(b) below, conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Parent or any of its
subsidiaries or by which it or their respective properties are 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)
under, or impair Parent's or any such subsidiary's rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of
Parent or any of its subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which 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 to the extent such
conflict, violation, breach, default, impairment or other effect could not in
the case of clauses (ii) or (iii) individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent.
(b) The execution and delivery of this Agreement by Parent
and Merger Sub and the Stock Option Agreement by Parent do not, and the
performance of this Agreement by Parent and Merger Sub shall not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity except (i) for applicable requirements, if any,
of the Securities Act, the Exchange Act, Blue Sky Laws, the pre-merger
notification requirements of the
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HSR Act and of foreign governmental entities and the rules and regulations
thereunder, the rules and regulations of Nasdaq, and the filing and
recordation of the Certificate of Merger 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, (x) would not prevent
consummation of the Merger or otherwise prevent Parent or Merger Sub from
performing their respective obligations under this Agreement or (y) could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent.
3.6 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has made available to Company a correct and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Parent with the SEC on or after July 1, 1997 (the
"PARENT SEC REPORTS"), which are all the forms, reports and documents
required to be filed by Parent with the SEC since July 1, 1997. The Parent
SEC Reports (A) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (B) 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
light of the circumstances under which they were made, not misleading. None
of Parent's subsidiaries is required to file any reports or other documents
with the SEC.
(b) Each set of consolidated financial statements
(including, in each case, any related notes thereto) contained in the Parent
SEC Reports was prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, do not contain
footnotes as permitted by Form 10-Q of the Exchange Act) and each fairly
presents in all material respects the consolidated financial position of
Parent and its subsidiaries 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 adjustments which were not or are not expected to be
material in amount.
(c) Since the date of the balance sheet included in
Parent's report on Form 10-Q filed on May 5, 1999, and until the date hereof,
there has not occurred any Material Adverse Effect on Parent.
3.7 REGISTRATION STATEMENT; PROXY STATEMENT. None of the
information supplied or to be supplied by Parent for inclusion or
incorporation by reference in (i) the S-4 will, at the time the S-4 becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading; and (ii) the Proxy
Statement/Prospectus will, at the dates mailed to the stockholders of
Company, at the time of the Company Stockholders' Meeting and as of the
Effective Time, contain any untrue statement of a
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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 S-4 will comply
as to form in all material respects with the provisions of the Securities Act
and the rules and regulations promulgated by the SEC thereunder.
Notwithstanding the foregoing, Parent makes no representation or warranty
with respect to any information supplied by the Company which is contained in
any of the foregoing documents.
3.8 POOLING OF INTERESTS. To its knowledge, based on consultation
with its independent accountants, neither Parent nor any of its directors,
officers or affiliates has taken any action which would interfere with
Parent's ability to account for the Merger as a pooling of interests.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS BY COMPANY. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms or the Effective Time, Company and each
of its subsidiaries shall, except to the extent that Parent shall otherwise
consent in writing, carry on its business, in the usual, regular and ordinary
course, in substantially the same manner as heretofore conducted and in
compliance with all applicable laws and regulations, pay its debts and taxes
when due subject to good faith disputes over such debts or taxes, pay or
perform other material obligations when due, and use its commercially
reasonable efforts consistent with past practices and policies to (i)
preserve intact its present business organization, (ii) keep available the
services of its present officers and employees and (iii) preserve its
relationships with customers, suppliers, distributors, licensors, licensees,
and others with which it has significant business dealings.
In addition, except as permitted by the terms of this Agreement, and
except as provided in Section 4.1 of the Company Schedule, without the prior
written consent of Parent, during the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Company shall not do any of the
following and shall not permit its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of options or restricted stock, or
reprice options granted under any employee, consultant, director or other
stock plans or authorize cash payments in exchange for any options granted
under any of such plans;
(b) Grant any severance or termination pay to any officer or
employee except pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in writing or made
available to Parent, or adopt any new severance plan, or amend or modify or
alter in any manner any severance plan, agreement or arrangement existing on
the date hereof;
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(c) Transfer or license to any person or entity or otherwise
extend, amend or modify any rights to the Company Intellectual Property, or
enter into grants to transfer or license to any person future patent rights,
other than in the ordinary course of business consistent with past practices,
provided that in no event shall Company license on an exclusive basis or sell
any Company Intellectual Property;
(d) Declare, set aside or pay any dividends on or make any
other distributions (whether in cash, stock, equity securities or property)
in respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Company or its subsidiaries,
except repurchases of unvested shares at cost in connection with the
termination of the employment relationship with any employee pursuant to
stock option or purchase agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise
encumber or propose any of the foregoing with respect to, any shares of
capital stock or any securities convertible into shares of capital stock, or
subscriptions, rights, warrants or options to acquire any shares of capital
stock or any securities convertible into shares of capital stock, or enter
into other agreements or commitments of any character obligating it to issue
any such shares or convertible securities, other than (x) the issuance
delivery and/or sale of (i) shares of Company Common Stock pursuant to the
exercise of stock options outstanding as of the date of this Agreement, and
(ii) shares of Company Common Stock issuable to participants in the ESPP
consistent with the terms thereof and (y) the granting of stock options (and
the issuance of Common Stock upon exercise thereof), in the ordinary course
of business and consistent with past practices, in an amount not to exceed
options to purchase (and the issuance of Company Common Stock upon exercise
thereof) 250,000 shares in the aggregate;
(g) Cause, permit or propose any amendments to the Company
Charter Documents (or similar governing instruments of any of its
subsidiaries);
(h) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any 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 enter into any joint ventures, strategic partnerships or
alliances;
(i) Sell, lease, license, encumber or otherwise dispose of
any properties or assets except sales of inventory in the ordinary course of
business consistent with past practice, except for the sale, lease or
disposition (other than through licensing) of property or assets which are
not material, individually or in the aggregate, to the business of Company
and its subsidiaries;
(j) Incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other
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rights to acquire any debt securities of Company, enter into any "keep well"
or other agreement to maintain any financial statement condition or enter
into any arrangement having the economic effect of any of the foregoing other
than in connection with the financing of ordinary course trade payables
consistent with past practice;
(k) Adopt or amend any employee benefit plan, policy or
arrangement, any employee stock purchase or employee stock option plan, or
enter into any employment contract or collective bargaining agreement (other
than offer letters and letter agreements entered into in the ordinary course
of business consistent with past practice with employees who are terminable
"at will"), pay any special bonus or special remuneration to any director or
employee, or increase the salaries or wage rates or fringe benefits
(including rights to severance or indemnification) of its directors,
officers, employees or consultants;
(l) (i) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), or litigation (whether or not commenced prior to
the date of this Agreement) other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, or liabilities recognized or
disclosed in the most recent consolidated financial statements (or the notes
thereto) of Company included in the Company SEC Reports or incurred since the
date of such financial statements, or (ii) waive the benefits of, agree to
modify in any manner, terminate, release any person from or knowingly fail to
enforce any confidentiality or similar agreement to which Company or any of
its subsidiaries is a party or of which Company or any of its subsidiaries is
a beneficiary;
(m) Make any individual or series of related payments
outside of the ordinary course of business in excess of $500,000;
(n) Except in the ordinary course of business consistent
with past practice, modify, amend or terminate any material contract or
agreement to which Company or any subsidiary thereof is a party or waive,
delay the exercise of, release or assign any material rights or claims
thereunder;
(o) Enter into, renew or materially modify any contracts,
agreements, or obligations relating to the distribution, sale, license or
marketing by third parties of Company's products or products licensed by
Company other than renewals of existing nonexclusive contracts, agreements or
obligations;
(p) Except as required by GAAP, revalue any of its assets or
make any change in accounting methods, principles or practices;
(q) Incur or enter into any agreement, contract or
commitment requiring Company or any of its subsidiaries to pay in excess of
$500,000;
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(r) Engage in any action that could reasonably be expected
to (i) cause the Merger to fail to qualify as a "reorganization" under
Section 368(a) of the Code or (ii) interfere with Parent's ability to account
for the Merger as a pooling of interests, whether or not (in each case)
otherwise permitted by the provisions of this Article IV;
(s) Hire employees other than as provided in Section 4.1(s)
of the Company Schedule;
(t) Make any tax election that, individually or in the
aggregate, is reasonably likely to adversely affect in any material respect
the tax liability or tax attributes of Company or any of its subsidiaries or
settle or compromise any material income tax liability;
(u) Agree in writing or otherwise to take any of the actions
described in Section 4.1 (a) through (t) above.
4.2 CONDUCT OF BUSINESS BY PARENT. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, except as permitted by
the terms of this Agreement and the Stock Option Agreement and except as
provided in Section 4.2 of the Parent Schedule, without the prior written
consent of Company, Parent shall not engage in any action that could
reasonably be expected to (i) cause the Merger to fail to qualify as a
"reorganization" under Section 368(a) of the Code or (ii) interfere with
Parent's ability to account for the Merger as a pooling of interests.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT; OTHER
FILINGS; BOARD RECOMMENDATIONS.
(a) As promptly as practicable after the execution of this
Agreement, Company and Parent will prepare, and file with the SEC, the Proxy
Statement/Prospectus, and Parent will prepare and file with the SEC the S-4
in which the Proxy Statement/Prospectus will be included as a prospectus.
Each of Parent and Company shall provide promptly to the other such
information concerning its business and financial statements and affairs as,
in the reasonable judgment of the providing party or its counsel, may be
required or appropriate for inclusion in the Proxy Statement/Prospectus and
the S-4, or in any amendments or supplements thereto, and to cause its
counsel and auditors to cooperate with the other's counsel and auditors in
the preparation of the Proxy Statement/Prospectus and the S-4. Each of
Company and Parent will respond to any comments of the SEC, and will use its
respective commercially reasonable efforts to have the S-4 declared effective
under the Securities Act as promptly as practicable after such filing, and
Company will cause the Proxy Statement/Prospectus to be mailed to its
stockholders at the earliest practicable time after the S-4 is declared
effective by the SEC. As promptly as practicable after the date of this
Agreement, each of Company and Parent will prepare and file any other filings
required to be filed
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by it under the Exchange Act, the Securities Act or any other Federal,
foreign or Blue Sky or related laws relating to the Merger and the
transactions contemplated by this Agreement (the "OTHER FILINGS"). Each of
Company and Parent will notify the other promptly upon the receipt of any
comments from the SEC or its staff or any other government officials and of
any request by the SEC or its staff or any other government officials for
amendments or supplements to the S-4, the Proxy Statement/Prospectus or any
Other Filing or for additional information and will supply the other with
copies of all correspondence between such party or any of its
representatives, on the one hand, and the SEC or its staff or any other
government officials, on the other hand, with respect to the S-4, the Proxy
Statement/Prospectus, the Merger or any Other Filing. Each of Company and
Parent will cause all documents that it is responsible for filing with the
SEC or other regulatory authorities under this Section 5.1(a) to comply in
all material respects with all applicable requirements of law and the rules
and regulations promulgated thereunder. Whenever any event occurs which is
required to be set forth in an amendment or supplement to the Proxy
Statement/Prospectus, the S-4 or any Other Filing, Company or Parent, as the
case may be, will promptly inform the other of such occurrence and cooperate
in filing with the SEC or its staff or any other government officials, and/or
mailing to stockholders of Company, such amendment or supplement.
(b) The Proxy Statement/Prospectus will include the
recommendation of the Board of Directors of Company in favor of adoption and
approval of this Agreement and approval of the Merger.
5.2 MEETING OF COMPANY STOCKHOLDERS.
(a) Promptly after the date hereof, Company will take all
action necessary in accordance with Delaware Law and the Company Charter
Documents to convene the Company Stockholders' Meeting to be held as promptly
as practicable, and in any event (to the extent permissible under applicable
law) within 45 days after the declaration of effectiveness of the S-4, for
the purpose of voting upon this Agreement and the Merger. Subject to Section
5.2(c), Company will use its commercially reasonable efforts to solicit from
its stockholders proxies in favor of the adoption and approval of this
Agreement and the approval of the Merger and will take all other action
necessary or advisable to secure the vote or consent of its stockholders
required by the rules of Nasdaq or Delaware Law to obtain such approvals.
Notwithstanding anything to the contrary contained in this Agreement, Company
may adjourn or postpone the Company Stockholders' Meeting to the extent
necessary to ensure that any necessary supplement or amendment to the
Prospectus/Proxy Statement is provided to Company's stockholders in advance
of a vote on the Merger and this Agreement or, if as of the time for which
the Company Stockholders' Meeting is originally scheduled (as set forth in
the Prospectus/Proxy Statement) there are insufficient shares of Company
Common Stock represented (either in person or by proxy) to constitute a
quorum necessary to conduct the business of the Company Stockholders'
Meeting. Company shall ensure that the Company Stockholders' Meeting is
called, noticed, convened, held and conducted, and that all proxies solicited
by the Company in connection with the Company Stockholders' Meeting are
solicited, in compliance with Delaware Law, the Company Charter Documents,
the rules of Nasdaq and all other applicable legal requirements. Company's
obligation to call, give notice of, convene
and hold the Company Stockholders' Meeting in accordance with this Section
5.2(a) shall not be limited to or otherwise affected by the commencement,
disclosure, announcement or submission to Company of any Acquisition
Proposal.
(b) Subject to Section 5.2(c): (i) the Board of Directors of
Company shall unanimously recommend that Company's stockholders vote in favor
of and adopt and approve this Agreement and the Merger at the Company
Stockholders' Meeting; (ii) the Prospectus/Proxy Statement shall include a
statement to the effect that the Board of Directors of the Company has
unanimously recommended that Company's stockholders vote in favor of and
adopt and approve this Agreement and the Merger at the Company Stockholders'
Meeting; and (iii) neither the Board of Directors of Company nor any
committee thereof shall withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify in a manner adverse to Parent, the unanimous
recommendation of the Board of Directors of Company that Company's
stockholders vote in favor of and adopt and approve this Agreement and the
Merger. For purposes of this Agreement, said recommendation of the Board of
Directors shall be deemed to have been modified in a manner adverse to Parent
if said recommendation shall no longer be unanimous.
(c) Nothing in this Agreement shall prevent the Board of
Directors of Company from withholding, withdrawing, amending or modifying its
unanimous recommendation in favor of the Merger if (i) a Superior Offer (as
defined below) is made to the Company and is not withdrawn, (ii) neither
Company nor any of its representatives shall have violated any of the
restrictions set forth in Section 5.4, and (iii) the Board of Directors of
Company concludes in good faith, after consultation with its outside counsel,
that, in light of such Superior Offer, the withholding, withdrawal, amendment
or modification of such recommendation is required in order for the Board of
Directors of Company to comply with its fiduciary obligations to Company's
stockholders under applicable law. Nothing contained in this Section 5.2
shall limit Company's obligation to hold and convene the Company
Stockholders' Meeting (regardless of whether the unanimous recommendation of
the Board of Directors of the Company shall have been withdrawn, amended or
modified). For purposes of this Agreement, "SUPERIOR OFFER" shall mean an
unsolicited, bona fide written offer made by a third party to consummate any
of the following transactions: (i) a merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving Company pursuant to which the stockholders of Company
immediately preceding such transaction hold less than 35% of the equity
interest in the surviving or resulting entity of such transaction; (ii) a
sale or other disposition by Company of assets (excluding inventory and used
equipment sold in the ordinary course of business) representing in excess of
85% of the fair market value of Company's business immediately prior to such
sale, or (iii) the acquisition by any person or group (including by way of a
tender offer or an exchange offer or issuance by Company), directly or
indirectly, of beneficial ownership or a right to acquire beneficial
ownership of shares representing in excess of 85% of the voting power of the
then outstanding shares of capital stock of the Company, in each case on
terms that the Board of Directors of Company determines, in its reasonable
judgment (based on written advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Company stockholders from
a financial point of view than the terms of the Merger;
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PROVIDED, HOWEVER, that any such offer shall not be deemed to be a "Superior
Offer" if any financing required to consummate the transaction contemplated
by such offer is not committed and is not likely in the judgment of Company's
Board of Directors to be obtained by such third party on a timely basis.
5.3 CONFIDENTIALITY; ACCESS TO INFORMATION.
(a) The parties acknowledge that Company and Parent have
previously executed a Mutual Confidentiality Agreement, dated as of August 14,
1999 (the "CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will
continue in full force and effect in accordance with its terms.
(b) ACCESS TO INFORMATION. Company will afford Parent and
its accountants, counsel and other representatives reasonable access during
normal business hours, upon reasonable notice, to the properties, books,
records and personnel of Company during the period prior to the Effective
Time to obtain all information concerning the business, including the status
of product development efforts, properties, results of operations and
personnel of Company, as Parent may reasonably request. No information or
knowledge obtained by Parent in any investigation pursuant to this Section
5.3 will affect or be deemed to modify any representation or warranty
contained herein or the conditions to the obligations of the parties to
consummate the Merger.
5.4 NO SOLICITATION.
(a) From and after the date of this Agreement until the
Effective Time or termination of this Agreement pursuant to Article VII, Company
and its subsidiaries will not, nor will they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them to,
directly or indirectly (i) solicit, initiate, encourage or induce the making,
submission or announcement of any Acquisition Proposal (as defined below),
(ii) participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to, any Acquisition Proposal, (iii) engage in
discussions with any person with respect to any Acquisition Proposal, except as
to the existence of these provisions, (iv) subject to Section 5.2(c), approve,
endorse or recommend any Acquisition Proposal or (v) enter into any letter of
intent or similar document or any contract, agreement or commitment
contemplating or otherwise relating to any Acquisition Transaction (as defined
below); PROVIDED, HOWEVER, that between the date on which the Proxy
Statement/Prospectus is mailed to the stockholders of Company and the date on
which this Agreement is approved by the required Company Stockholder Vote, this
Section 5.4(a) shall not prohibit Company from furnishing nonpublic information
regarding Company and its subsidiaries to, entering into a confidentiality
agreement with or entering into discussions with, any person or group in
response to a Superior Offer submitted by such person or group (and not
withdrawn) if (1) neither Company nor any representative of Company and its
subsidiaries shall have violated any of the restrictions set forth in this
Section 5.4, (2) the Board of Directors of Company concludes in good faith,
after consultation with its outside legal counsel, that such action is required
in order for the
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Board of Directors of Company to comply with its fiduciary obligations to
Company's stockholders under applicable law, (3) (x) at least five days prior
to furnishing any such nonpublic information to, or entering into discussions
or negotiations with, such person or group, Company gives Parent written
notice of the identity of such person or group and of Company's intention to
furnish nonpublic information to, or enter into discussions or negotiations
with, such person or group and (y) the Company receives from such person or
group an executed confidentiality agreement containing customary limitations
on the use and disclosure of all nonpublic written and oral information
furnished to such person or group by or on behalf of the Company, and (4)
contemporaneously with furnishing any such nonpublic information to such
person or group, Company furnishes such nonpublic information to Parent (to
the extent such nonpublic information has not been previously furnished by
the Company to Parent). Company and its subsidiaries will immediately cease
any and all existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any Acquisition Proposal. Without
limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding two sentences by any officer or
director of Company or any of its subsidiaries or any investment banker,
attorney or other advisor or representative of Company or any of its
subsidiaries shall be deemed to be a breach of this Section 5.4 by Company.
In addition to the foregoing, the Company shall (i) provide Parent with at
least forty-eight (48) hours prior notice (or such lesser prior notice as
provided to the members of Company's Board of Directors but in no event less
than eight hours) of any meeting of Company's Board of Directors at which
Company's Board of Directors is reasonably expected to consider a Superior
Offer and (ii) provide Parent with at least five (5) business days prior
written notice of a meeting of Company's Board of Directors at which
Company's Board of Directors is reasonably expected to recommend a Superior
Offer to its stockholders and together with such notice a copy of the
definitive documentation relating to such Superior Offer.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
offer or proposal (other than an offer or proposal by Parent) relating to any
Acquisition Transaction. For the purposes of this Agreement, "ACQUISITION
TRANSACTION" shall mean any transaction or series of related transactions
other than the transactions contemplated by this Agreement involving: (A) any
acquisition or purchase from the Company by any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a 5% interest in the total outstanding voting
securities of the Company or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 5% or more of the total outstanding voting
securities of the Company or any of its subsidiaries or any merger,
consolidation, business combination or similar transaction involving the
Company pursuant to which the stockholders of the Company immediately
preceding such transaction hold less than 95% of the equity interests in the
surviving or resulting entity of such transaction; (B) any sale, lease (other
than in the ordinary course of business), exchange, transfer, license (other
than in the ordinary course of business), acquisition or disposition of more
than 5% of the assets of the Company; or (C) any liquidation or dissolution
of the Company.
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(b) In addition to the obligations of Company set forth in
paragraph (a) of this Section 5.4, Company as promptly as practicable shall
advise Parent orally and in writing of any request received by Company for
non-public information which Company reasonably believes would lead to an
Acquisition Proposal or of any Acquisition Proposal, or any inquiry received
by Company with respect to or which Company reasonably should believe would
lead to any Acquisition Proposal, the material terms and conditions of such
request, Acquisition Proposal or inquiry, and the identity of the person or
group making any such request, Acquisition Proposal or inquiry. Company will
keep Parent informed in all material respects of the status and details
(including material amendments or proposed amendments) of any such request,
Acquisition Proposal or inquiry.
5.5 PUBLIC DISCLOSURE. Parent and Company will consult with each
other, and to the extent practicable, agree, before issuing any press release or
otherwise making any public statement with respect to the Merger, this Agreement
or an Acquisition Proposal and will not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
law or any listing agreement with a national securities exchange. The parties
have agreed to the text of the joint press release announcing the signing of
this Agreement.
5.6 REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including using reasonable efforts to accomplish the following:
(i) the taking of all reasonable acts necessary to cause the conditions
precedent set forth in Article VI to be satisfied, (ii) the obtaining of all
necessary actions or nonactions, waivers, consents, approvals, orders and
authorizations from Governmental Entities and the making of all necessary
registrations, declarations and filings (including registrations, declarations
and filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to avoid any suit, claim, action, investigation or
proceeding by any Governmental Entity, (iii) the obtaining of all consents,
approvals or waivers from third parties required as a result of the transactions
contemplated in this Agreement, (iv) the defending of any suits, claims,
actions, investigations or proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed and
(v) the execution or delivery of any additional instruments reasonably necessary
to consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement. In connection with and without limiting the
foregoing, Company and its Board of Directors shall, if any state takeover
statute or similar statute or regulation is or becomes applicable to the Merger,
this Agreement or any of the transactions contemplated by this Agreement, use
all reasonable efforts to ensure that the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and
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otherwise to minimize the effect of such statute or regulation on the
Merger, this Agreement and the transactions contemplated hereby.
Notwithstanding anything herein to the contrary, nothing in this Agreement
shall be deemed to require Parent or Company or any subsidiary or affiliate
thereof to agree to any divestiture by itself or any of its affiliates of
shares of capital stock or of any business, assets or property, or the
imposition of any material limitation on the ability of any of them to
conduct their business or to own or exercise control of such assets,
properties and stock.
(b) Company shall give prompt notice to Parent upon becoming
aware that any representation or warranty made by it contained in this
Agreement has become untrue or inaccurate, or of any failure of Company to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement, in
each case, such that the conditions set forth in Section 6.3(a) or 6.3(b)
would not be satisfied; PROVIDED, HOWEVER, that no such notification shall
affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
(c) Parent shall give prompt notice to Company upon becoming
aware that any representation or warranty made by it or Merger Sub contained
in this Agreement has become untrue or inaccurate, or of any failure of
Parent or Merger Sub to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement, in each case, such that the conditions set forth in Section
6.2(a) or 6.2(b) would not be satisfied; PROVIDED, HOWEVER, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
5.7 THIRD PARTY CONSENTS. As soon as practicable following the date
hereof, Parent and Company will each use its commercially reasonable efforts to
obtain any consents, waivers and approvals under any of its or its subsidiaries'
respective agreements, contracts, licenses or leases required to be obtained in
connection with the consummation of the transactions contemplated hereby.
5.8 STOCK OPTIONS, WARRANTS AND EMPLOYEE BENEFITS.
(a) STOCK OPTIONS. At the Effective Time, each outstanding
option to purchase shares of Company Common Stock (each, a "Company Stock
Option") under the Company Option Plans, whether or not vested, shall by
virtue of the Merger be assumed by Parent. Each Company Stock Option so
assumed by Parent under this Agreement will continue to have, and be subject
to, the same terms and conditions of such options immediately prior to the
Effective Time (including, without limitation, any repurchase rights or
vesting provisions and provisions regarding the acceleration of vesting on
certain transactions, other than the transactions contemplated by this
Agreement), except that (i) each Company Stock Option will be exercisable (or
will become exercisable in accordance with its terms) for that number of
whole shares of Parent Common Stock equal to the product of the number of
shares of Company Common Stock that were issuable upon exercise of such
Company Stock Option immediately prior to the Effective Time multiplied by the
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Exchange Ratio, rounded down to the nearest whole number of shares of Parent
Common Stock and (ii) the per share exercise price for the shares of Parent
Common Stock issuable upon exercise of such assumed Company Stock Option will
be equal to the quotient determined by dividing the exercise price per share
of Company Common Stock at which such Company Stock Option was exercisable
immediately prior to the Effective Time by the Exchange Ratio, rounded up to
the nearest whole cent.
(b) WARRANTS. At the Effective Time, the Warrants will be
assumed by Parent. Each Warrant so assumed by Parent under this Agreement will
continue to have, and be subject to, the same terms and conditions set forth in
the applicable warrant agreement immediately prior to the Effective Time
(including, without limitation, any repurchase rights or vesting provisions),
except that (i) each Warrant will be exercisable (or will become exercisable in
accordance with its terms) for that number of whole shares of Parent Common
Stock equal to the product of the number of shares of Company Common Stock that
were issuable upon exercise of such Warrant immediately prior to the Effective
Time multiplied by the Exchange Ratio, rounded to the nearest whole number of
shares of Parent Common Stock and (ii) the per share exercise price for the
share of Parent Common Stock issuable upon exercise of such assumed Warrant will
be equal to the quotient determined by dividing the exercise price per share of
Company Common Stock at which such Warrant was exercisable immediately prior to
the Effective Time by the Exchange Ratio, rounded to the nearest whole cent.
(c) ESPP. Prior to the Effective Time, outstanding purchase
rights under Company's ESPP shall be exercised in accordance with the terms
of the ESPP as described in Paragraph 22 of Company's Prospectus Supplement
with respect to and each share of Company Common Stock purchased pursuant to
such exercise shall by virtue of the Merger, and without any action on the
part of the holder thereof, be converted into the right to receive a number
of shares of Parent Common Stock equal to the Exchange Ratio without issuance
of certificates representing issued and outstanding shares of Company Common
Stock to ESPP participants. The Company agrees that it shall terminate the
ESPP immediately following the aforesaid purchase of shares of Company Common
Stock thereunder.
5.9 FORM S-8. Parent agrees to file, if available for use by
Parent, a registration statement on Form S-8 for the shares of Parent Common
Stock issuable with respect to assumed Company Stock Options as soon as is
reasonably practicable after the Effective Time.
5.10 INDEMNIFICATION.
(a) From and after the Effective Time, Parent will cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
Company pursuant to any indemnification agreements between Company and its
directors and officers in effect immediately prior to the Effective Time (the
"INDEMNIFIED PARTIES") and any indemnification provisions under the Company
Charter Documents as in effect on the date hereof. The Certificate of
Incorporation and Bylaws of the Surviving Corporation will contain provisions
with respect to exculpation and indemnification that are at least as favorable
to the Indemnified Parties as those contained in the
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Company Charter Documents as in effect on the date hereof, which provisions
will not be amended, repealed or otherwise modified for a period of six (6)
years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who, immediately prior to the Effective
Time, were directors, officers, employees or agents of Company, unless such
modification is required by law.
(b) For a period of six (6) years after the Effective Time,
Parent will cause the Surviving Corporation to use its commercially
reasonable efforts to maintain in effect, if available, directors' and
officers' liability insurance covering those persons who are currently
covered by the Company's directors' and officers' liability insurance policy
on terms comparable to those applicable to the current directors and officers
of the Company; PROVIDED, HOWEVER, that in no event will Parent or the
Surviving Corporation be required to expend an annual premium for such
coverage in excess of ($344,250 for such coverage (or such coverage as is
available for such annual premium).
5.11 NASDAQ LISTING. Parent agrees to cause the listing on Nasdaq
the shares of Parent Common Stock issuable, and those required to be reserved
for issuance, in connection with the Merger, subject to official notice of
issuance.
5.12 COMPANY AFFILIATE AGREEMENT. Set forth in Section 5.12 the
Company Schedule is a list of those persons who may be deemed to be, in
Company's reasonable judgment, affiliates of Company within the meaning of
Rule 145 promulgated under the Securities Act (each, a "COMPANY AFFILIATE").
Company will provide Parent with such information and documents as Parent
reasonably requests for purposes of reviewing such list. Each Company
Affiliate Agreement will be in full force and effect as of the Effective
Time. Parent will be entitled to place appropriate legends on the
certificates evidencing any Parent Common Stock to be received by a Company
Affiliate pursuant to the terms of this Agreement, and to issue appropriate
stop transfer instructions to the transfer agent for the Parent Common Stock,
consistent with the terms of the Company Affiliate Agreement.
5.13 REGULATORY FILINGS; REASONABLE EFFORTS. As soon as may be
reasonably practicable, Company and Parent each shall file with the United
States Federal Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice ("DOJ") Notification and Report Forms
relating to the transactions contemplated herein as required by the HSR Act,
as well as comparable pre-merger notification forms required by the merger
notification or control laws and regulations of any applicable jurisdiction,
as agreed to by the parties. Company and Parent each shall promptly (a)
supply the other with any information which may be required in order to
effectuate such filings and (b) supply any additional information which
reasonably may be required by the FTC, the DOJ or the competition or merger
control authorities of any other jurisdiction and which the parties may
reasonably deem appropriate; PROVIDED, HOWEVER, that Parent shall not be
required to agree to any divestiture by Parent or the Company or any of
Parent's subsidiaries or affiliates of shares of capital stock or of any
business, assets or property of Parent or its subsidiaries or affiliates or
of the Company, its affiliates, or the imposition of any material limitation
on the ability of any of them to conduct their businesses or to own or
exercise control of such assets, properties and stock.
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5.14 NO RIGHTS PLAN AMENDMENT. Except as expressly required by
Section 6.3(g), prior to the Closing or termination of this Agreement in
accordance with Article VII, Company and its Board of Directors shall not
amend or modify or take any other action with regard to the Company Rights
Plan in any manner or take another action so as to (i) render the Company
Rights Plan inapplicable to any transaction(s) other than the Merger and
other transactions contemplated by the Transaction Documents, or (ii) permit
any person or group who would otherwise be an Acquiring Person (as defined in
the Company Rights Plan) not to be an Acquiring Person, or (iii) provide that
a Distribution Date (as such term is defined in the Company Rights Plan) or
similar event does not occur by reason of the execution of any agreement or
transaction other than this Agreement and the Merger and the agreements and
transactions contemplated hereby and thereby, or (iv) except as specifically
contemplated by this Agreement, otherwise affect the rights of holders of
Rights.
5.15 401(k) PLAN. Company shall cause its 401(k) plan to terminate
effective as of the day immediately preceding the Closing Date.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the satisfaction at or prior to the Closing Date
of the following conditions:
(a) COMPANY STOCKHOLDER APPROVAL. This Agreement shall have
been approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law, by the stockholders of Company.
(b) REGISTRATION STATEMENT EFFECTIVE; PROXY STATEMENT. The
SEC shall have declared the S-4 effective. No stop order suspending the
effectiveness of the S-4 or any part thereof shall have been issued and no
proceeding for that purpose, and no similar proceeding in respect of the
Proxy Statement/Prospectus, shall have been initiated or threatened in
writing by the SEC.
(c) NO ORDER; HSR ACT. No Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and which has the
effect of making the Merger illegal or otherwise prohibiting consummation of
the Merger. All waiting periods, if any, under the HSR Act relating to the
transactions contemplated hereby will have expired or terminated early and
all material foreign antitrust approvals required to be obtained prior to the
Merger in connection with the transactions contemplated hereby shall have
been obtained.
(d) TAX OPINIONS. Parent and Company shall each have received
written opinions from their respective tax counsel (Wilson Sonsini Goodrich &
Rosati, Professional Corporation, and Irell & Manella LLP, respectively), in
form and substance reasonably satisfactory to them, to the effect that the
Merger will constitute a reorganization within the meaning of Section 368(a) of
the
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Code and such opinions shall not have been withdrawn; PROVIDED, HOWEVER, that
if the counsel to either Parent or Company does not render such opinion, this
condition shall nonetheless be deemed to be satisfied with respect to such
party if counsel to the other party renders such opinion to such party. The
parties to this Agreement agree to make such reasonable representations as
requested by such counsel for the purpose of rendering such opinions.
(e) NASDAQ LISTING. The shares of Parent Common Stock
issuable to the stockholders of Company pursuant to this Agreement and such
other shares required to be reserved for issuance in connection with the
Merger shall have been authorized for listing on Nasdaq upon official notice
of issuance.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY. The
obligation of Company to consummate and effect the Merger shall be subject to
the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Company:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of Parent and Merger Sub contained in this Agreement (i) shall have
been true and correct as of the date of this Agreement and (ii) shall be true
and correct on and as of the Closing Date with the same force and effect as
if made on the Closing Date except (A) in each case, or in the aggregate, as
does not constitute a Material Adverse Effect on Parent and Merger Sub, (B)
for changes contemplated by this Agreement and (C) for those representations
and warranties which address matters only as of a particular date (which
representations shall have been true and correct (subject to the
qualifications as set forth in the preceding clause A) as of such particular
date) (it being understood that, for purposes of determining the accuracy of
such representations and warranties, (i) all "Material Adverse Effect"
qualifications and other qualifications based on the word "material" or
similar phrases contained in such representations and warranties shall be
disregarded and (ii) any update of or modification to the Parent Schedule
made or purported to have been made after the date of this Agreement shall be
disregarded). Company shall have received a certificate with respect to the
foregoing signed on behalf of Parent by an authorized officer of Parent.
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them
on or prior to the Closing Date, and Company shall have received a
certificate to such effect signed on behalf of Parent by an authorized
officer of Parent.
(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with
respect to Parent shall have occurred since the date of this Agreement.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER
SUB. The obligations of Parent and Merger Sub to consummate and effect the
Merger shall be subject to the satisfaction at or prior to the Closing Date
of each of the following conditions, any of which may be waived, in writing,
exclusively by Parent:
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(a) REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of Company contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct
on and as of the Closing Date with the same force and effect as if made on
and as of the Closing Date except (A) in each case, or in the aggregate, as
does not constitute a Material Adverse Effect on Company provided, however,
such Material Adverse Effect qualifier shall be inapplicable with respect to
representations and warranties contained in Section 2.3 (other than an
inaccuracy in the aggregate amount of no greater than 50,000 shares of
Company Common Stock, shares of Company Common Stock issuable upon exercise
of Company Stock Options and shares of Company Common Stock issuable upon the
exercise of Warrants), 2.23, 2.24 and 2.26, (B) for changes contemplated by
this Agreement and (C) for those representations and warranties which address
matters only as of a particular date (which representations shall have been
true and correct (subject to the qualifications as set forth in the preceding
clause A) as of such particular date) (it being understood that, for purposes
of determining the accuracy of such representations and warranties, (i) all
"Material Adverse Effect" qualifications and other qualifications based on
the word "material" or similar phrases contained in such representations and
warranties shall be disregarded and (ii) any update of or modification to the
Company Schedule made or purported to have been made after the date of this
Agreement shall be disregarded). Parent shall have received a certificate
with respect to the foregoing signed on behalf of Company by an authorized
officer of Company.
(b) AGREEMENTS AND COVENANTS. Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of Company by the Chief Executive Officer and the Chief Financial Officer
of Company.
(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with
respect to Company and its subsidiaries shall have occurred since the date of
this Agreement.
(d) NONCOMPETITION AGREEMENTS. The persons set forth on
EXHIBIT D-1 hereto shall have entered into Noncompetition Agreements
substantially in the form attached hereto as EXHIBIT D-2 or EXHIBIT D-3, as
applicable, and such agreements shall be in full force and effect.
(e) AFFILIATE AGREEMENTS. Each of the Company Affiliates
shall have entered into the Company Affiliate Agreement and each of such
agreements will be in full force and effect as of the Effective Time.
(f) CONSENTS. Company shall have obtained all consents, waivers
and approvals required in connection with the consummation of the transactions
contemplated hereby in connection with the agreements, contracts, licenses or
leases set forth on Schedule 6.3(f).
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(g) COMPANY RIGHTS PLANS. All actions necessary to extinguish
and cancel all outstanding Rights under the Company Rights Plan at the Effective
Time and to render such rights inapplicable to the Merger shall have been taken.
(h) OPINIONS OF ACCOUNTANTS. Parent shall have received
(i) from Ernst & Young LLP, independent auditors for the Company, a copy of a
letter addressed to the Company dated as of the Closing Date in substance
reasonably satisfactory to Parent (which may contain customary qualifications
and assumptions) to the effect that Ernst & Young LLP concurs with Company
management's conclusion that no conditions exist related to the Company that
would preclude Parent from accounting for the Merger as a "pooling-of-interests"
and (ii) from Ernst & Young LLP, independent accountants for Parent, a letter
dated as of the Closing Date in substance reasonably satisfactory to Parent
(which may contain customary qualifications and assumptions) to the effect that
Ernst & Young LLP concurs with Parent management's conclusion that no conditions
exist related to Parent that would preclude Parent from accounting for the
Merger as a "pooling-of-interests."
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after the requisite approval of the
stockholders of Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and Company;
(b) by either Company or Parent if the Merger shall not have
been consummated by February 28, 2000 for any reason; PROVIDED, HOWEVER, that
the right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose action or failure to act has been a principal cause
of or resulted in the failure of the Merger to occur on or before such date and
such action or failure to act constitutes a breach of this Agreement;
(c) by either Company or Parent if a Governmental Entity
shall have issued an order, decree or ruling or taken any other action, in any
case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree, ruling or other action is final and
nonappealable;
(d) by either Company or Parent if the required approval of the
stockholders of Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Company stockholders duly convened therefor or at any adjournment thereof;
PROVIDED, HOWEVER, that the right to terminate this Agreement under this
Section 7.1(d) shall not be available to Company where the failure to obtain
Company stockholder approval shall have been caused by the action or failure to
act of Company and such action or failure to act constitutes a breach by Company
of this Agreement;
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(e) by Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or if
any representation or warranty of Parent shall have become untrue, in either
case such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, PROVIDED, that if such
inaccuracy in Parent's representations and warranties or breach by Parent is
curable by Parent through the exercise of its commercially reasonable efforts,
then Company may not terminate this Agreement under this Section 7.1(e) for
thirty (30) days after delivery of written notice from Company to Parent of such
breach, provided Parent continues to exercise commercially reasonable efforts to
cure such breach (it being understood that Company may not terminate this
Agreement pursuant to this paragraph (e) if it shall have materially breached
this Agreement or if such breach by Parent is cured during such thirty (30)-day
period);
(f) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of Company set forth in this Agreement, or if
any representation or warranty of Company shall have become untrue, in either
case such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, PROVIDED, that if such
inaccuracy in Company's representations and warranties or breach by Company is
curable by Company through the exercise of its commercially reasonable efforts,
then Parent may not terminate this Agreement under this Section 7.1(f) for
thirty (30) days after delivery of written notice from Parent to Company of such
breach, provided Company continues to exercise commercially reasonable efforts
to cure such breach (it being understood that Parent may not terminate this
Agreement pursuant to this paragraph (f) if it shall have materially breached
this Agreement or if such breach by Company is cured during such thirty (30)-day
period);
(g) by Parent, upon a breach of the provisions of Section 5.4
of this Agreement;
(h) by Parent if a Triggering Event (as defined below) shall
have occurred.
For the purposes of this Agreement, a "Triggering Event" shall be deemed to have
occurred if: (i) the Board of Directors of Company or any committee thereof
shall for any reason have withdrawn or shall have amended or modified in a
manner adverse to Parent its unanimous recommendation in favor of, the adoption
and approval of the Agreement or the approval of the Merger; (ii) Company shall
have failed to include in the Proxy Statement/Prospectus the unanimous
recommendation of the Board of Directors of Company in favor of the adoption and
approval of the Agreement and the approval of the Merger; (iii) Board of
Directors of Company fails to reaffirm its unanimous recommendation in favor of
the adoption and approval of the Agreement and the approval of the Merger within
five (5) business days after Parent requests in writing that such recommendation
be reaffirmed at any time following the announcement of an Acquisition Proposal;
(iv) the Board of Directors of Company or any committee thereof shall have
approved or recommended any Acquisition Proposal; (v) Company shall have entered
into any letter of intent or similar document or any agreement, contract or
commitment accepting any Acquisition Proposal; or (vi) a tender or
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exchange offer relating to securities of Company shall have been commenced by a
person unaffiliated with Parent and Company shall not have sent to its
securityholders pursuant to Rule 14e-2 promulgated under the Securities Act,
within ten (10) business days after such tender or exchange offer is first
published sent or given, a statement disclosing that Company recommends
rejection of such tender or exchange offer;
(i) by Company, if there has been a Material Adverse Effect on
Parent that is not curable by Parent; or
(j) by Parent, if there has been a Material Adverse Effect on
Company that is not curable by Company.
7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination of
this Agreement under Section 7.1 above will be effective immediately upon (or,
if the termination is pursuant to Section 7.1(f) or Section 7.1(g) and the
proviso therein is applicable, thirty (30) days after) the delivery of written
notice of the terminating party to the other parties hereto. In the event of the
termination of this Agreement as provided in Section 7.1, this Agreement shall
be of no further force or effect, except (i) as set forth in this Section 7.2,
Section 7.3 and Article 8 (General Provisions), each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability for any breach of this Agreement. No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement, all of which obligations shall survive termination of
this Agreement in accordance with their terms.
7.3 FEES AND EXPENSES.
(a) GENERAL. Except as set forth in this Section 7.3, all fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; PROVIDED, HOWEVER, that Parent and Company
shall share equally all fees and expenses, other than attorneys' and accountants
fees and expenses, incurred in relation to the printing and filing (with the
SEC) of the Proxy Statement/Prospectus (including any preliminary materials
related thereto) and the S-4 (including financial statements and exhibits) and
any amendments or supplements thereto.
(b) COMPANY PAYMENTS.
(i) The Company shall pay to Parent in immediately
available funds, within one (1) business day after demand by Parent, an amount
equal to $21,000,000 (the "TERMINATION FEE") if this Agreement is terminated by
Parent pursuant to Section 7.1(h).
(ii) Company shall pay Parent in immediately available
funds, within one (1) business day after demand by Parent, an amount equal to
the Termination Fee, if this Agreement is terminated by Parent or the Company,
as applicable, pursuant to Sections 7.1(b) or (d) and any of the following shall
occur:
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a) if following the date hereof and prior to the
termination of this Agreement, a third party has announced an Acquisition
Proposal and within twelve (12) months following the termination of this
Agreement a Company Acquisition (as defined below) is consummated; or
b) if following the date hereof and prior to the
termination of this Agreement, a third party has announced an Acquisition
Proposal and within twelve (12) months following the termination of this
Agreement the Company enters into an agreement or letter of intent providing for
a Company Acquisition.
(iii) The Company acknowledges that the agreements
contained in this Section 7.3(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent would
not enter into this Agreement; accordingly, if the Company fails to pay in a
timely manner the amounts due pursuant to this Section 7.3(b) and, in order to
obtain such payment, Parent makes a claim that results in a judgment against the
Company for the amounts set forth in this Section 7.3(b), the Company shall pay
to Parent its reasonable costs and expenses (including reasonable attorneys'
fees and expenses) in connection with such suit, together with interest on the
amounts set forth in this Section 7.3(b) at the prime rate of The Chase
Manhattan Bank in effect on the date such payment was required to be made.
Payment of the fees described in this Section 7.3(b) shall not be in lieu of
damages incurred in the event of breach of this Agreement. For the purposes of
this Agreement, "COMPANY ACQUISITION" shall mean any of the following
transactions (other than the transactions contemplated by this Agreement): (i) a
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company pursuant to which the
stockholders of the Company immediately preceding such transaction hold less
than 50% of the aggregate equity interests in the surviving or resulting entity
of such transaction, (ii) a sale or other disposition by the Company of assets
representing in excess of 50% of the aggregate fair market value of the
Company's business immediately prior to such sale or (iii) the acquisition by
any person or group (including by way of a tender offer or an exchange offer or
issuance by the Company), directly or indirectly, of beneficial ownership or a
right to acquire beneficial ownership of shares representing in excess of 50% of
the voting power of the then outstanding shares of capital stock of the Company.
7.4 AMENDMENT. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of Parent and Company.
7.5 EXTENSION; WAIVER. At any time prior to the Effective Time, any
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set
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forth in an instrument in writing signed on behalf of such party. Delay in
exercising any right under this Agreement shall not constitute a waiver of
such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Company, Parent and Merger Sub contained in
this Agreement shall terminate at the Effective Time, and only the covenants
that by their terms survive the Effective Time shall survive the Effective Time.
8.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
if to Parent or Merger Sub, to:
SunMicrosystems, Inc.
901 San Antonio Road
Palo Alto, CA 94303
Attention: General Counsel
Telephone No.: (650) 960-1300
Telecopy No.: (650) 336-0530
with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Larry W. Sonsini, Esq.
David J. Segre, Esq.
Daniel R. Mitz, Esq.
Telephone No.:(650) 493-9300
Telecopy No.:(650) 493-6811
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(a) if to Company, to:
Forte Software, Inc.
1800 Harrison Street
Oakland, CA 94612
Attention: General Counsel
Telephone No.: (510) 869-3400
Telecopy No.: (510) 869-3450
with a copy to:
Irell & Manella LLP
333 Hope St., Suite 3300
Los Angeles, CA 90071-3042
Attention: Edmund M. Kaufman, Esq.
Telephone No.: (213) 229-0500
Telecopy No.: (213) 229-0515
8.3 INTERPRETATION; KNOWLEDGE.
(a) When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. When a reference is made in this Agreement to Sections, such
reference shall be to a Section of this Agreement. Unless otherwise indicated
the words "include," "includes" and "including" when used herein shall be deemed
in each case to be followed by the words "without limitation." The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. When reference is made herein to "the business of" an entity, such
reference shall be deemed to include the business of all direct and indirect
subsidiaries of such entity. Reference to the subsidiaries of an entity shall be
deemed to include all direct and indirect subsidiaries of such entity.
(b) For purposes of this Agreement, the term "KNOWLEDGE" means
with respect to a party hereto, with respect to any matter in question, that any
of the executive officers of such party has actual knowledge of such matter.
(c) For purposes of this Agreement, the term "MATERIAL ADVERSE
EFFECT" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect that is materially adverse to the
business, assets (including intangible assets), capitalization, financial
condition or results of operations of such entity and its subsidiaries taken as
a whole; PROVIDED, HOWEVER, that for purposes for Sections 6.2(a), 6.2(c),
6.3(a), 6.3(c), 7.1(i) and 7.1(j), the definition of Material Adverse Effect
shall be supplemented as set forth in Schedule 8.3(c) to this Agreement.
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(d) For purposes of this Agreement, the term "PERSON" shall
mean any individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and
the documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Disclosure Schedule
and the Parent Disclosure Schedule (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 5.10.
8.6 SEVERABILITY. In the event that any provision of this Agreement,
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
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8.8 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof.
8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
8.10 ASSIGNMENT. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
8.11 WAIVER OF JURY TRIAL. EACH OF PARENT, COMPANY AND MERGER SUB
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
*****
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
SUN MICROSYSTEMS, INC.
By: _____________________________
Name: _____________________________
Title: _____________________________
FLINTSTONE ACQUISITION CORP.
By: _____________________________
Name: _____________________________
Title: _____________________________
FORTE SOFTWARE, INC.
By: _____________________________
Name: _____________________________
Title: _____________________________
**** REORGANIZATION AGREEMENT ****