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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported) September 18, 2000
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Cobalt Networks, Inc.
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(Exact name of registrant as specified in its charter)
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Delaware 000-24360 77-0440751
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
555 Ellis Street, Mountain View, CA 94043
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (650) 623-2500
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On September 18, 2000, Cobalt Networks, Inc. ("Cobalt") entered into an
Agreement and Plan of Merger and Reorganization (the "Merger Agreement") with
Sun Microsystems, Inc. ("Sun"), a Delaware corporation, and Azure Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Sun. If
the merger is completed, Cobalt will become a wholly-owned subsidiary of Sun and
each outstanding share of Cobalt common stock will be converted into the right
to receive 0.50 of a share of Sun common stock.
Cobalt, its directors, executive officers, certain other members of Cobalt
management and certain Cobalt employees may be soliciting proxies from Cobalt
stockholders in favor of the adoption and approval of the Merger Agreement and
approval of the merger and related matters, including: Stephen W. DeWitt (Chief
Executive Officer, President and Director) Vivek Mehra (Chief Technology Officer
and Vice President, Products), Kenton D. Chow (Chief Financial Officer, Vice
President, Finance and Secretary), Gary A. Martell (Chief Operating Officer),
Patrick J. Conte (Vice President, Sales, Americas and Asia-Pacific), Kelly M.
Herrell (Vice President, Marketing), George M. Korchinsky (Vice President, EMEA
Operations), Sharon McCorkle (Vice President, Operations), Mark H. Orr (Vice
President, Business Development), Ruth Henniger (Vice President, Product
Development), Jordan Levy (Director), Gordon Campbell (Director), Gary Bengier
(Director), Stephen Luczo (Director), Carl Pascarella (Director) and Mark
Spagnolo (Director). Certain information concerning the participants in the
solicitation is set forth below. Additional information will be set forth in the
Proxy Statement/Prospectus and the Registration Statement that are expected to
be filed with the Securities and Exchange Commission in connection with the
merger. In connection with the merger, (i) certain directors, executive officers
and stockholders of Cobalt holding an aggregate of approximately 5,809,983
shares of Cobalt common stock and options to acquire shares of Cobalt common
stock have entered into voting agreements with Sun, dated September 18, 2000
(the "Voting Agreements") and have delivered irrevocable proxies to Sun (the
"Irrevocable Proxies"), pursuant to which they have agreed to vote their Cobalt
shares in favor of the adoption of the Merger Agreement and approval of the
merger, in favor of any matter that could reasonably be expected to facilitate
the merger, against any proposal made in opposition to, or in competition with,
the merger, and against any other action that is intended to, or could
reasonably be expected to impede, interfere with, delay, postpone, discourage or
adversely affect the merger, (ii) certain officers of Cobalt, one of whom is
also a director of Cobalt, holding an aggregate of approximately 4,671,519
shares of Cobalt common stock and options to acquire shares of Cobalt common
stock have entered into severance and acceleration waiver letter agreements (the
"Waiver Letters") with Cobalt and Sun pursuant to which they have agreed to
waive, upon completion of the merger, certain severance benefits and
acceleration of stock option vesting to which they may have otherwise been
entitled as a result of the merger, (iii) Messrs. DeWitt and Mehra, who hold an
aggregate of approximately 2,558,537 shares of Cobalt common stock and options
to acquire shares of Cobalt common stock, have entered into non-competition
agreements (the "Non-Competition Agreements") with Sun pursuant to which they
have agreed, upon completion of the merger, not to engage in certain activities
or make certain investments competitive with Sun, and not to solicit Sun
employees, for a period of two years following the completion of the merger, and
(iv) certain officers of Cobalt, one of whom is also a director of Cobalt,
holding an aggregate of approximately 4,891,248 shares of Cobalt common stock
and options to acquire shares of Cobalt common stock have received employment
offers from Sun following the completion of the merger (the "Employment Offers")
that include compensation and proposed Sun option grants if the offers are
accepted. In addition, the Merger Agreement provides for Sun to fulfill and
honor, and cause Cobalt to fulfill and honor, the obligations of Cobalt and its
subsidiaries under any indemnification agreements between Cobalt (or any of its
subsidiaries) and their directors and officers and any indemnification
provisions of Cobalt's (and its subsidiaries') certificate(s) of incorporation
and bylaws. The Merger Agreement also provides for existing exculpation and
indemnification provisions of Cobalt's certificate of incorporation and bylaws
to be maintained for six years following the completion of the merger and for
directors and officers insurance coverage to be maintained for four years
following the completion of the merger, subject to certain limitations.
In addition, in connection with the execution of the Merger Agreement,
Cobalt and Sun entered into a Stock Option Agreement, dated September 18, 2000
(the "Stock Option Agreement"), pursuant to which Cobalt has granted to Sun an
option to acquire newly issued shares of Cobalt common stock representing up to
19.99% of Cobalt's outstanding common stock. The option is only exercisable upon
the occurrence of certain events specified in the Stock Option Agreement.
The foregoing description of the Merger Agreement, the Stock Option
Agreement, the Voting Agreements, the Irrevocable Proxies, the Waiver Letters,
the Non-Competition Agreements, the Employment Offers and the transactions
contemplated thereby do not purport to be complete and is qualified in its
entirety by reference to the full text of such documents. Copies or forms of the
Merger Agreement, the Stock Option Agreement, the Voting Agreement, and the
Irrevocable Proxies are expected to be filed as exhibits to the Registration
Statement or attached as annexes to the Proxy Statement/Prospectus that will be
filed in connection with the merger.
It is expected that Cobalt will file with the SEC and mail to its
stockholders a proxy statement containing information about the merger and Sun
will file a Registration Statement (the "Registration Statement") with the SEC
on Form S-4 (which will include a proxy statement/prospectus (the "Proxy
Statement/Prospectus")). Investors and security holders are urged to read the
Proxy Statement/Prospectus and the Registration Statement carefully when they
are available. The Proxy Statement/Prospectus and the Registration Statement
will contain important information about Cobalt, Sun, the merger, the persons
soliciting proxies relating to the merger, their interests in the merger, and
related matters. Investors and security holders will be able to obtain free
copies of these documents through the web site maintained by the SEC at
http://www.sec.gov. Free copies of the Proxy Statement/Prospectus and these
other documents may also be obtained from Cobalt by accessing its web site at
http://www.cobalt.com or by directing a request by mail or telephone to Cobalt
Networks, Inc., 555 Ellis Street, Mountain View, CA 94043, attention: Investor
Relations; telephone: (650) 623-2500. Free copies of Sun's filings may be
obtained by accessing its web site at http://www.sun.com or by directing a by
mail or telephone to Sun Microsystems, Inc., 910 San Antonio Road, Palo Alto, CA
94303, attention: Investor Relations, telephone: (800) 801-7869.
In addition to the Proxy Statement/Prospectus and the Registration
Statement, Cobalt and Sun file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information filed by Cobalt or Sun at the SEC
public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at
any of the SEC's other public reference rooms in New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Cobalt's and Sun's filings with the SEC are also
available to the public from commercial document-retrieval services and at the
web site maintained by the SEC at http://www.sec.gov.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Dated: September 19, 2000
COBALT NETWORKS, INC.
By: /S/ KENTON D. CHOW
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Kenton D. Chow
Vice President of Finance and
Chief Financial Officer
