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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 25, 2000 (the
"Agreement"), among SYMBOL TECHNOLOGIES, INC., a Delaware corporation
("Parent"), TX ACQUISITION CORPORATION, a Delaware corporation and a wholly
owned subsidiary of Parent ("Sub"), and TELXON CORPORATION, a Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of Sub and the Company have declared
this Agreement to be advisable, and the Boards of Directors of Parent, Sub and
the Company have each approved the merger of Sub with and into the Company and
the Company becoming a wholly owned direct subsidiary of Parent (the "Merger")
in accordance with the General Corporation Law of the State of Delaware ("DGCL")
upon the terms and subject to the conditions set forth herein; and
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION I.1 The Merger. Upon the terms and subject to the conditions of
this Agreement and in accordance with the DGCL, at the Effective Time (as
defined in Section 1.2), Sub shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Sub shall cease and
the Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
SECTION I.2 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Secretary of State of the State of
Delaware, in such form as required by and executed in accordance with the
relevant provisions of the DGCL (the date and time of the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware (or
such later time as is specified in the Certificate of Merger and agreed upon by
the parties hereto) being the "Effective Time").
SECTION I.3 Effects of the Merger. The Merger shall have the effects
set forth in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing and subject thereto, at the Effective Time all the
property, rights, privileges, immunities, powers and franchises of the Company
and Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Sub shall become the debts, liabilities and duties of
the Surviving Corporation.
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SECTION I.4 Certificate of Incorporation; By-Laws. (a) At the Effective
Time and without any further action on the part of the Company and Sub, the
Restated Certificate of Incorporation of the Company as in effect immediately
prior to the Effective Time shall be the Restated Certificate of Incorporation
of the Surviving Corporation until thereafter and further amended as provided
therein and under the DGCL.
(b) At the Effective Time and without any further action on the part of
the Company and Sub, the By-Laws of Sub shall be the By-Laws of the Surviving
Corporation and thereafter may be amended or repealed in accordance with their
terms or the Certificate of Incorporation of the Surviving Corporation and as
provided by law.
SECTION I.5 Directors and Officers. The directors of Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.
SECTION I.6 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Sub, the Company or the
holders of any of the following securities:
(a) Subject to Section 1.8, each share of Common Stock, par value $0.01
per share, of the Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time (other than shares of Company Common
Stock to be canceled in accordance with Section 1.6(b) hereof) shall be
converted into the right to receive .5 (the "Exchange Ratio") of a fully paid
and nonassessable share of Common Stock, par value $0.01 per share (the "Parent
Common Stock"), of Parent (the "Merger Consideration"); provided, that, in the
event that, between the date of this Agreement and the Closing Date (as defined
in Section 1.10), the Parent Common Stock shall have been affected or changed
into (i) a different number of shares as a result of a share split, reverse
share split or share dividend or distribution with a record date within such
period, then, in each such case, the Merger Consideration shall be adjusted such
that it shall equal the number of shares of Parent Common Stock to which a
holder of one share of Company Common Stock would have been entitled to hold
immediately following the occurrence of such event had the Effective Time
occurred immediately prior to the happening of such event or, in the case of a
stock dividend or other distribution, immediately prior to the record date for
determination of stockholders entitled thereto; or (ii) a different class of
shares as a result of a spin-off, recapitalization, reclassification or other
similar transaction with a record date within such period, then in each case,
the Merger Consideration shall be adjusted such that it shall equal the number
of shares of Parent Common Stock and/or other securities or property receivable
upon such spin-off, recapitalization, reclassification or other transaction, as
the case may be, by a holder of the number of shares of Parent Common Stock to
which a holder of one share of Company Common Stock would have been entitled to
hold had the Effective Time occurred immediately prior to the happening of such
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event; and, in any case, appropriate adjustment (as determined in good faith by
the Board of Directors of Parent in a manner reasonably satisfactory to the
Company) shall be made for the application of the provisions herein set forth
with respect to the rights and interests thereafter of the holders of Company
Common Stock to the end that the provisions set forth herein shall thereafter be
applicable, as nearly as reasonably practicable, in relation to any shares of
stock or other securities or property thereafter deliverable upon the Effective
Time. As of the Effective Time, all such shares of Company Common Stock shall no
longer be outstanding and shall automatically be canceled and shall cease to
exist, and each holder of a certificate representing any such shares of Company
Common Stock shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration and any cash in lieu of fractional
shares of Parent Common Stock to be issued or paid in consideration therefor
upon surrender of such certificate in accordance with Section 1.9, without
interest.
(b) Each share of Company Common Stock that is (i) held in the treasury
of the Company or (ii) owned by Parent or Sub, in each case immediately prior to
the Effective Time, shall be cancelled and retired without any conversion
thereof and no payment or distribution shall be made with respect thereto.
(c) Each share of common stock of Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one share of
common stock of the Surviving Corporation and shall thereafter constitute all of
the issued and outstanding capital stock of the Surviving Corporation.
SECTION I.7 Treatment of Employee Options and Other Employee Equity
Rights. (a) Prior to the Effective Time, the Board of Directors of the Company
(or, if appropriate, any committee thereof) shall adopt appropriate resolutions
and take all other actions necessary to provide, subject to the following
sentence, for the cancellation, effective at the Effective Time, of all the
outstanding stock options, stock appreciation rights, phantom shares or other
rights related to or denominated with reference to the securities of the Company
(the "Stock Rights") heretofore granted under any stock option, performance unit
or similar plan, program, agreement or arrangement related to or denominated
with reference to the securities of the Company (the "Stock Plans") in
consideration of the substitution and assumption set forth herein. At the
Effective Time, each of the Stock Rights which is an outstanding stock option
(whether vested or unvested) immediately prior to the Effective Time shall be
assumed by Parent and converted automatically into an option to purchase shares
of Parent Common Stock ("New Stock Rights") in an amount and at an exercise
price determined as provided below:
(i) The number of shares of Parent Common Stock to be subject
to the New Stock Right shall be equal to the product of the number of
shares of Company Common Stock remaining subject (as of immediately
prior to the Effective Time) to the original Stock Right and the
Exchange Ratio, provided that any fractional shares of Parent Common
Stock resulting from such multiplication shall be rounded up or down to
the nearest whole share; and
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(ii) The exercise price per share of Parent Common Stock under
the New Stock Right shall be equal to the exercise price per share of
the Company Common Stock under the original Stock Right divided by the
Exchange Ratio, provided that such exercise price shall be rounded down
to the nearest cent.
The adjustment provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Code) shall be and is intended
to be effected in a manner which is consistent with Section 424(a) of the Code.
In the event that the adjustment were determined by Parent to not be consistent
with such Section 424, Parent shall take such action as it shall reasonably
determine necessary to comply with such Section 424, if such compliance can be
accomplished without undue costs to the Company or Parent. After the Effective
Time, each New Stock Right shall be exercisable and shall vest upon the same
terms and conditions as were applicable to the related Stock Right immediately
prior to the date hereof except that (i) all references to "the Company" shall
be deemed to be references to "Parent", (ii) the New Stock Rights shall become
fully vested and exercisable if, after the Effective Time, the employment of the
holder of such New Stock Right is terminated by the Company without Cause (as
defined below) or is terminated by such holder with Good Reason (as defined
below) and (iii) all Stock Rights granted under any employment agreement listed
in Section 2.5(a) of the Company Disclosure Schedule shall vest and become
exercisable to the extent set forth under such employment agreement. "Cause"
with respect to any employee shall mean (A) the employee's continued failure to
substantially perform such employee's duties (other than as a result of total or
partial incapacity due to physical or mental illness) for a thirty-day period
following written notice by the Company to such employee of such failure, (B)
any material act or omission involving dishonesty in the performance of such
employee's duties, (C) the indictment of such employee of a felony under the
laws of the United States or any state thereof, (D) willful malfeasance or
willful misconduct in connection with such employee's duties or any act or
omission which is materially injurious to the financial condition or business
reputation of the Company or any of its subsidiaries or (E) such employee's
material breach of the provisions of any employment agreement with the Company
which is not cured within thirty days following written notice thereof by the
Company. "Good Reason" with respect to any employee shall mean: (X) a reduction
in such employee's base salary or target bonus, (Y) a transfer of such
employee's primary workplace by more than fifty miles or (Z) with respect to the
employees identified on Schedule 1.7(a) only, an adverse diminution in any
material respect in the employee's duties or responsibilities as of the date
hereof (other than solely by virtue of the Company ceasing to be a public
company) and the continuance of such diminution for a period of thirty days
after such employee has given the Company written notice of such diminution.
(b) Effective immediately prior to the Effective Time, the holders of
restricted shares of Company Common Stock shall be entitled to receive a number
of restricted shares of Parent Common Stock equal to (i) the number of
restricted shares of Company Common Stock so held, multiplied by (ii) the
Exchange Ratio. After the Effective Time, such restricted shares of Parent
Common Stock shall vest upon the same terms and conditions as were applicable to
the related restricted shares of Company Common Stock immediately prior to the
date hereof except that (i) all references to "the
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Company" shall be deemed to be references to "Parent", (ii) such shares shall
become fully vested if, after the Effective Time, the employment of the holder
of such shares is terminated by the Company without Cause or is terminated by
such holder with Good Reason and (iii) all such shares granted under any
employment agreement listed in Section 2.5(a) of the Company Disclosure Schedule
shall vest and become exercisable to the extent set forth under such employment
agreement.
(c) Parent shall reserve for issuance a sufficient number of shares of
Parent Common Stock for delivery in accordance with this Section 1.7, including
upon the exercise of the New Stock Rights. Parent shall file with the SEC a
registration statement on Form S-8 (or other appropriate form) or a
post-effective amendment to a previously filed registration statement as
promptly as practicable after the Effective Time for purposes of registering all
shares of Parent Common Stock issuable after the Effective Time upon exercise of
the New Stock Rights, and shall have such registration statement or
post-effective amendment become effective and comply, to the extent applicable,
with state securities or blue sky laws with respect thereto at the Effective
Time.
(d) As provided herein, but except as provided in Section 1.7(e), the
Stock Plans and any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any subsidiary shall terminate as of the Effective Time and the
Company shall ensure that following the Effective Time no holder of a Stock
Right or any participant in any Stock Plans shall have any right thereunder to
acquire capital stock of the Company, Sub, the Surviving Corporation or any of
their respective subsidiaries. Except as provided in Section 1.7(e), the Company
will take all necessary steps to ensure that, as of the Effective Time, none of
Sub, the Company, the Surviving Corporation or any of their respective
subsidiaries is or will be bound by any Stock Rights (other than the New Stock
Rights), other options, warrants, rights or agreements which would entitle any
person, other than Sub or its affiliates, to own any capital stock of the
Company, Sub, the Surviving Corporation or any of their respective subsidiaries
or to receive any payment in respect thereof.
(e) The Board of Directors of PenRight! Corporation has determined in
its discretion, in accordance with the PenRight! Corporation 1997 Stock Option
Plan, that upon a change in control occurring upon consummation of the
transactions contemplated by this Agreement, all outstanding stock options
heretofore granted under the PenRight! Corporation 1997 Stock Option Plan or any
other stock option, performance unit or similar plan of PenRight! Corporation
shall remain unchanged and outstanding thereunder. The Board of Directors of the
Company shall cause the Board of Directors of PenRight! Corporation to take all
such actions that are necessary to effectuate the foregoing.
SECTION I.8 Fractional Interests. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued in connection with the
Merger, and such fractional interests will not entitle the owner thereof to any
rights of a stockholder of Parent. In lieu of any such fractional interests,
each holder of shares of Company Common Stock exchanged pursuant to Section
1.6(a) who would otherwise have been entitled to receive a
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fraction of a share of Parent Common Stock (after taking into account all shares
of Company Common Stock then held of record by such holder) shall receive cash
(without interest) in an amount equal to the product of such fractional part of
a share of Parent Common Stock multiplied by the closing price of a share of
Parent Common Stock on the New York Stock Exchange (the "NYSE") as reported by
The Wall Street Journal (or if not reported thereby, any other authoritative
source) on the Closing Date (as defined in Section 1.10), rounded down to the
nearest cent.
SECTION I.9 Surrender of Shares of Company Common Stock; Stock Transfer
Books. (a) Prior to the Closing Date, Sub shall designate a bank or trust
company reasonably acceptable to the Company to act as agent for the holders of
shares of Company Common Stock in connection with the Merger (the "Exchange
Agent") to receive the shares of Parent Common Stock (and any cash payable in
lieu of any fractional shares of Parent Common Stock) to which holders of shares
of Company Common Stock shall become entitled pursuant to Sections 1.6(a) and
1.8. At or promptly after the Effective Time but in no event later than the
Closing Date, Parent or Sub will deposit with the Exchange Agent sufficient
shares of Parent Common Stock to make all exchanges pursuant to Section 1.9(b).
As soon as practicable after the determination of the amount of cash, if any, to
be paid in lieu of fractional shares, the Exchange Agent shall notify Parent,
and Parent shall promptly deposit such amount with the Exchange Agent.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented shares of Company Common Stock (the "Certificates"), a form of
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Exchange Agent) and instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing
shares of Parent Common Stock therefor. Upon surrender to the Exchange Agent of
a Certificate, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and such other
documents as may be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor, (i) a certificate
representing that number of whole shares of Parent Common Stock which such
holder has the right to receive pursuant to the provisions of Section 1.6(a) and
(ii) cash in lieu of any fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 1.8, after giving effect to any required
tax withholdings, and the Certificate so surrendered shall forthwith be
cancelled. If the exchange of certificates representing shares of Parent Common
Stock is to be made to a person other than the person in whose name the
surrendered Certificate is registered, it shall be a condition of exchange that
the Certificate so surrendered shall be properly endorsed or shall be otherwise
in proper form for transfer and that the person requesting such exchange shall
have paid any transfer and other taxes required by reason of the exchange of
certificates representing shares of Parent Common Stock to a person other than
the registered holder of the Certificate surrendered or shall have established
to the reasonable satisfaction of the Surviving Corporation that such tax either
has been paid or is not applicable.
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(c) At any time following six months after the Effective Time, the
Surviving Corporation shall be entitled to require the Exchange Agent to deliver
to it any shares of Parent Common Stock (and any cash payable in lieu of any
fractional shares of Parent Common Stock) which had been made available to the
Exchange Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar laws) only as general
creditors thereof with respect to the shares of Parent Common Stock (and any
cash payable in lieu of any fractional shares of Parent Common Stock) payable
upon due surrender of their Certificates. Notwithstanding the foregoing, none of
the Surviving Corporation, Parent or the Exchange Agent shall be liable to any
holder of a Certificate for shares of Parent Common Stock (and any cash payable
in lieu of any fractional shares of Parent Common Stock) delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company. From
and after the Effective Time, the holders of Certificates evidencing ownership
of shares of Company Common Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such shares of Company
Common Stock except as otherwise provided for herein or by applicable law.
(e) No dividends or other distributions declared or made after the
Effective Time with respect to shares of Parent Common Stock shall be paid to
the holder of any unsurrendered Certificate with respect to the whole shares of
Parent Common Stock it is entitled to receive and no cash payment in lieu of
fractional interests shall be paid pursuant to Section 1.8 until the holder of
such Certificate shall surrender such Certificate in accordance with the
provisions of this Agreement. Upon such surrender, there shall be paid to the
person in whose name the certificates representing such whole shares of Parent
Common Stock shall be issued, any dividends or distributions with respect to
such shares of Parent Common Stock which have a record date after the Effective
Time and shall have become payable between the Effective Time and the time of
such surrender. In no event shall the person entitled to receive such dividends
or distributions be entitled to receive interest thereon.
(f) If, at any time after the Effective Time, the Surviving Corporation
shall consider or be advised that any deeds, bills of sale, assignments,
assurances or any other actions or things are necessary or desirable to vest,
perfect or confirm of record or otherwise in the Surviving Corporation its
right, title or interest in, to or under any of the rights, properties or assets
of either Sub or the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out this Agreement, the officers of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of each of Sub and
the Company or otherwise, all such deeds, bills of sale, assignments and
assurances and to take and do, in such names and on such behalves or otherwise,
all such other actions and things as may be necessary
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or desirable to vest, perfect or confirm any and all right, title and interest
in, to and under such rights, properties or assets in the Surviving Corporation
or otherwise to carry out the purposes of this Agreement.
SECTION I.10 Closing and Closing Date. Unless this Agreement shall have
been terminated and the transactions herein contemplated shall have been
abandoned pursuant to the provisions of Section 7.1, the closing (the "Closing")
of this Agreement shall take place (a) at 10:00 a.m. (New York time) on the
second business day after all of the conditions to the respective obligations of
the parties set forth in Article VI hereof shall have been satisfied or waived
or (b) at such other time and date as Parent and the Company shall agree (such
date and time on and at which the Closing occurs being referred to herein as the
"Closing Date"). The Closing shall take place at the offices of Simpson Thacher
& Bartlett, 425 Lexington Avenue, New York, New York 10017 or such other
location as Parent and the Company shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Sub that:
SECTION II.1 Organization and Qualification. Each of the Company and
each of its subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to have such power and authority would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect (as
defined below). Each of the Company and each of its subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed or in good standing which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. When
used in this Article II or otherwise in connection with the Company or any of
its subsidiaries, the term "Material Adverse Effect" means any change or effect
that would be materially adverse to the business, assets (including intangible
assets), liabilities (including contingent liabilities), financial condition or
results of operations of the Company and its subsidiaries taken as a whole or
that would materially impair the ability of the Company to perform its
obligations hereunder; provided, however, that a Material Adverse Effect with
respect to the Company shall not include any change or effect resulting from (i)
the United States economy in general and not relating specifically to the
business of the Company and its subsidiaries taken as a whole, (ii) revenue
declines attributable to long-standing customers of the Company becoming
customers of Parent after the date hereof or (iii) any events described in
Section 2.1(a) of the Company Disclosure Schedule.
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SECTION II.2 Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to Parent complete and correct copies of the certificate of
incorporation and by-laws of each of the Company and its material subsidiaries.
Such certificates of incorporation and by-laws are in full force and effect and
no other organizational documents are applicable to or binding upon the Company
and its material subsidiaries. The Company has heretofore furnished to Parent
complete and correct copies of the minutes of all meetings or other actions of
the Board of Directors (and all committees thereof) of each of the Company and
its material subsidiaries held or taken since November 1, 1998 (other than any
matters reflected in any such minutes which are not adverse in any material
respect to the business, assets (including intangible assets), liabilities
(including contingent liabilities), financial condition or results of operations
of the Company and its subsidiaries). The redacted provisions of any such
minutes of the meetings of the Board of Directors of the Company relate soley to
potential business combination transactions involving the Company and do not in
any material respect relate to the business, assets (including intangible
assets), liabilities (including contingent liabilities), financial condition or
results of operations of the Company and its subsidiaries (other than to the
extent such business combination transactions relate thereto).
SECTION II.3 Capitalization; Subsidiaries. (a) The authorized capital
stock of the Company consists of 50,500,000 shares, consisting of (a) 500,000
shares of preferred stock, par value $1.00 per share ("preferred stock"), and
(b) 50,000,000 shares of Company Common Stock. As of July 24, 2000, (i)
17,520,272 shares of Company Common Stock were issued and outstanding (including
111,200 shares of restricted Company Common Stock), all of which shares were
duly authorized, validly issued, fully paid and nonassessable and were issued
free of preemptive (or similar) rights, (ii) no shares of Company Common Stock
were held in the treasury of the Company, (iii) an aggregate of 3,484,632 shares
of Company Common Stock were reserved for issuance and issuable upon or
otherwise deliverable in connection with the exercise of outstanding Stock
Rights (of which 1,909,666 shares were in respect of vested or exercisable
options), and (iv) $82,500,000 aggregate principal amount of 5 3/4% Convertible
Subordinated Debentures Due 2003 and $24,413,000 aggregate principal amount of
7 1/2% Convertible Subordinated Debentures Due 2012 were outstanding (together,
the "Convertible Debentures"). All of the shares of Company Common Stock which
may be issued pursuant to the Stock Rights of the Company will be, when issued
in exchange for the applicable exercise price thereof, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive (or similar)
rights. No shares of preferred stock of the Company are outstanding or held in
the treasury of the Company. Except (i) as set forth above, (ii) as a result of
the exercise of Stock Rights outstanding as of July 24, 2000 and referred to
above, (iii) issuances of up to 40,000 shares of Company Common Stock pursuant
to the Company's Employee Stock Purchase Plan and (iv) as a result of the
conversion of the Convertible Debentures into up to 3,912,635 shares of Company
Common Stock, there are outstanding (a) no shares of capital stock or other
voting securities of the Company, (b) no securities of the Company convertible
into or exchangeable for
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shares of capital stock or voting securities of the Company, (c) no options,
warrants or other rights to acquire from the Company, and no obligation of the
Company to issue, any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of the Company and
(d) no equity equivalents, interests in the ownership or earnings of the Company
or other similar rights (the shares, securities and other rights referred to in
clauses (a), (b), (c) and (d), collectively, "Company Securities"). Except for
the Stock Rights and the Convertible Debentures referred to above and except as
set forth in Section 2.3(a) of the Company Disclosure Schedule, (x) there are no
outstanding obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Company Securities or any voting or equity
securities or interests of any subsidiary of the Company, (y) there is no voting
trust or other agreement or understanding to which the Company or any of its
subsidiaries is a party or is bound with respect to the voting of the capital
stock or other voting securities of the Company of any of its subsidiaries and
(z) there are no other options, calls, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any of its subsidiaries to which the Company or
any of its subsidiaries is a party. The Company has heretofore furnished to
Parent a complete and correct list, as of July 24, 2000, of the names of each
holder of Stock Rights, the number of Stock Rights held by each such holder, the
exercise price and vesting terms for each such Stock Right (which vesting terms,
subject to Section 1.7(a) hereof, shall not be affected soley by the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby) and any amendments or modifications with respect to any
such Stock Right effected since March 31, 1999 (including any changes in the
exercise price, changes in or acceleration of the vesting terms and any
regranting of Stock Rights).
(b) Except as set forth on Section 2.3(b) of the Company Disclosure
Schedule, each of the outstanding shares of capital stock of each of the
Company's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive (or similar) rights, and all such
shares are owned by the Company or another wholly owned subsidiary of the
Company free and clear of all security interests, liens, claims, pledges,
agreements, limitations in voting rights, charges or other encumbrances of any
nature whatsoever. There are outstanding (a) no securities of the Company or any
of its subsidiaries convertible into or exchangeable for shares of capital stock
or voting securities of any subsidiary of the Company, (b) no options, warrants
or other rights to acquire from the Company or any of its subsidiaries, and no
obligation of the Company or any of its subsidiaries to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of any subsidiary of the Company and (c) no
equity equivalents, interests in the ownership or earnings of any subsidiary of
the Company or other similar rights. Except as set forth on Section 2.3(b) of
the Company Disclosure Schedule, there are no outstanding contractual
obligations of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of any subsidiary or to provide
funds to or make any investment in excess of $1,000,000 (in the form of a loan,
capital contribution or otherwise) in any such subsidiary or any other entity.
The Company has the ability to effect any action requiring the approval of the
stockholders of any subsidiary of the Company and to designate all of the
members of the board of directors of each subsidiary of the Company. Section
2.3(b) of the Company Disclosure Schedule sets forth a complete and correct list
of all of the subsidiaries of the Company; such list sets forth the amount of
capital stock or other equity or
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voting securities or interests (i) authorized, (ii) outstanding and (iii) owned
by the Company, directly or indirectly, in such subsidiaries. Section 2.3(b) of
the Company Disclosure Schedule sets forth a complete and correct list of all
entities (other than subsidiaries of the Company) in which the Company owns,
directly or indirectly, any equity interest with a fair market value or book
value in excess of $1,000,000; such list sets forth the amount of capital stock
or other equity or voting securities or interests (i) authorized, (ii)
outstanding and (iii) owned by the Company, directly or indirectly, in such
entities.
SECTION II.4 Authority Relative to This Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than, with respect to the Merger, the adoption of this
Agreement by the holders of a majority of the outstanding shares of Company
Common Stock and the filing of appropriate merger documents as required by the
DGCL). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery hereof by
Parent and Sub, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms (subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered on a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing).
SECTION II.5 No Conflict; Required Filings and Consents. (a) Except as
set forth in Section 2.5(a) of the Company Disclosure Schedule, the execution,
delivery and performance of this Agreement by the Company do not and will not:
(i) conflict with or violate the Certificate of Incorporation or By-Laws of the
Company or the equivalent organizational documents of any of its subsidiaries;
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree of any governmental authority applicable to the Company or any of its
subsidiaries or by which its or any of their respective properties are bound or
affected (assuming that all consents, approvals and authorizations contemplated
by clauses (i), (ii) and (iii) of subsection (b) below have been obtained and
all filings described in such clauses have been made); or (iii) result in any
breach or violation of or constitute a default (or an event which with notice or
lapse of time or both could become a default) or result in the loss of a
material benefit under, or give rise to any right 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 the Company or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
(including, without limitation, the Contracts (as defined below)) to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their respective properties are bound or affected,
except, in the case of clauses (ii) and
<PAGE> 12
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(b) Except as set forth in Section 2.5(b) of the Company Disclosure
Schedule, the execution, delivery and performance of this Agreement by the
Company and the consummation of the Merger by the Company do not and will not
require the Company or any of its subsidiaries to obtain or make any consent,
approval, authorization or permit of, action by, filing with or notification to,
any governmental or regulatory authority, domestic or foreign, except for (i)
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated thereunder, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), Council Regulation (EEC)
No. 4064/89 (the "Regulation"), similar foreign laws regulating competition, the
rules and regulations of The Nasdaq National Market ("Nasdaq"), the NYSE, the
Communications Act of 1934, as amended, any rules, regulations, practices and
policies promulgated by the Federal Communications Commission (the "FCC") and
state securities, takeover and Blue Sky laws, (ii) the filing and recordation of
appropriate merger or other documents as required by the DGCL and (iii) such
consents, approvals, authorizations, permits, actions, filings or notifications
the failure of which to make or obtain which would not, individually or in the
aggregate, reasonably be expected to (x) prevent or materially delay
consummation of the Merger or (y) have a Material Adverse Effect.
SECTION II.6 Compliance. Except as set forth in Section 2.6 of the
Company Disclosure Schedule, the Company and each of its subsidiaries are in
compliance with, and are not in default or violation of, (i) the Certificate of
Incorporation and By-Laws of the Company or the equivalent organizational
documents of such subsidiary, (ii) all laws (including, without limitation,
Environmental Laws), rules, regulations, orders, judgments and decrees of any
governmental authority applicable to them or by which any of their respective
properties are bound or affected and (iii) all notes, bonds, mortgages,
indentures, contracts, agreements, leases, licenses, permits, franchises and
other instruments or obligations (other than the Contracts (as defined below)
which are governed by Section 2.20) to which any of them are a party or by which
any of them or any of their respective properties are bound or affected, except,
in the case of clauses (ii) and (iii), for any such failures of compliance,
defaults and violations which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as disclosed
with reasonable specificity prior to the date hereof in the Company SEC Reports
and except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, (x) the Company and its subsidiaries
have all permits, licenses, authorizations, consents, approvals and franchises
from governmental agencies required to conduct their businesses as now being
conducted and (y) neither the Company nor any of its subsidiaries has received
notice of any revocation or modification of any such permit, license,
authorization, consent or approval.
SECTION II.7 SEC Filings; Financial Statements. (a) Except as set forth
in Section 2.7 of the Company Disclosure Schedule, the Company and,
<PAGE> 13
to the extent applicable, each of its then or current subsidiaries, has filed
all forms, reports, statements and documents required to be filed with the
Securities and Exchange Commission (the "SEC") since January 1, 1999
(collectively, the "Company SEC Reports"), each of which has complied in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations promulgated thereunder, or the Exchange Act and the rules
and regulations promulgated thereunder, each as in effect on the date so filed.
The Company has heretofore delivered or (in the case of any such document not
yet filed with the SEC) promptly will deliver to Parent, in the form filed with
the SEC (including any amendments thereto), true and complete copies of the
Company SEC Reports. Except as set forth in Section 2.7 of the Company
Disclosure Schedule, none of such Company SEC Reports (including but not limited
to any financial statements or schedules included or incorporated by reference
therein) contained, when filed, any untrue statement of a material fact or
omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. Except as
set forth in Section 2.7 of the Company Disclosure Schedule and except to the
extent revised or superseded by a subsequent filing with the SEC (a copy of
which has been provided to Parent prior to the date hereof), none of the Company
SEC Reports filed by the Company since January 1, 1999, contains any untrue
statement of a material fact or omits to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Except as set forth in Section 2.7 of the Company Disclosure
Schedule, each of the audited and unaudited consolidated financial statements of
the Company and its subsidiaries (including any related notes thereto) included
in the Company SEC Reports, complies or, if not yet filed, will comply when
filed as to form in all material respects with all applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, and has been or, if not yet filed, will when filed have been
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited consolidated quarterly statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto) and fairly presents or, if not
yet filed, will when filed fairly present in all material respects the
consolidated financial position of the Company and its subsidiaries at the
respective dates thereof and the consolidated results of its and their
operations and changes in cash flows for the periods indicated (subject, in the
case of unaudited quarterly statements, to normal year-end audit adjustments).
Except as set forth in Section 2.7 of the Company Disclosure Schedule, the books
and records of the Company and its subsidiaries have been for the periods
covered by the Company SEC Reports, and are being, maintained in all material
respects in accordance with applicable legal and accounting requirements.
(c) The Company has heretofore furnished Parent with the Company's
consolidated results of operations for the three month period ended June 30,
2000. Such financial information has been prepared in good faith and in a manner
consistent with previous quarterly financial statements and, to the knowledge of
the Company, fairly present in all material respects the
<PAGE> 14
consolidated results of operations of the Company and its subsidiaries for the
periods indicated.
(d) Except as and to the extent set forth on the consolidated balance
sheet of the Company and its subsidiaries at March 31, 2000, including the notes
thereto, included in the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 2000 (the "2000 10K") and except as and to the extent set
forth on Section 2.7(d) of the Company Disclosure Schedule, neither the Company
nor any of its subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise), except for liabilities or
obligations incurred in the ordinary course of business since March 31, 2000
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(e) The Company has heretofore furnished to Parent a complete and
correct copy of any amendments or modifications made prior to the date hereof to
agreements, documents or other instruments which previously had been filed by
the Company with the SEC pursuant to the Securities Act and the rules and
regulations promulgated thereunder or the Exchange Act and the rules and
regulations promulgated thereunder, which amendments or modifications have not
yet been filed with the SEC.
(f) As of the date hereof, except as set forth in Section 2.7(f) of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries has
any outstanding indebtedness for borrowed money other than the Convertible
Debentures.
SECTION II.8 Absence of Certain Changes or Events. Since March 31,
2000, except as contemplated by this Agreement, disclosed with reasonable
specificity in the Company SEC Reports filed prior to the date of this Agreement
or set forth in Sections 2.8, 2.10 or 2.11 of the Company Disclosure Schedule,
the Company and its subsidiaries have conducted their businesses only in the
ordinary course and in a manner consistent with past practice and since such
date there has not been (i) any conditions, events or occurrences which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect, (ii) any damage, destruction or loss (whether or not
covered by insurance) with respect to any assets of the Company or any of its
subsidiaries which would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, or (iii) any other action which,
if it had been taken after the date hereof, would have required the consent of
Parent under Section 4.1 hereof.
SECTION II.9 Absence of Litigation. Except as disclosed with reasonable
specificity in the Company SEC Reports filed and publicly available prior to the
date of this Agreement or Section 2.9 of the Company Disclosure Schedule, there
are no suits, claims, actions, proceedings or investigations pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries, or any properties or rights of the Company or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, that (i) if adversely
determined, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect or (ii) seek to enjoin or prohibit the
consummation of the transactions contemplated hereby. Neither the Company nor
<PAGE> 15
any of its subsidiaries nor any of their respective properties is or are subject
to any order, writ, judgment, injunction, decree, determination or award which
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect or would enjoin or prohibit the consummation of the
transactions contemplated hereby.
SECTION II.10 Employee Benefit Plans. (a) Section 2.10(a) of the
Company Disclosure Schedule contains a true and complete list of each "employee
benefit plan" (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), (including without
limitation multiemployer plans within the meaning of ERISA Section 3(37)), stock
purchase, stock option, severance, employment, change-of-control, fringe
benefit, collective bargaining, bonus, incentive, deferred compensation and all
other employee benefit plans, agreements, programs, policies or other
arrangements, whether or not subject to ERISA, whether formal or informal, oral
or written, under which any employee or former employee of the Company or any of
its subsidiaries has any present or future right to benefits or under which the
Company or any of its subsidiaries has any present or future liability. All such
plans, agreements, programs, policies and arrangements shall be collectively
referred to as the "Plans".
(b) With respect to each Plan, the Company has either filed such Plan
as an exhibit to the Company SEC Reports or delivered to Parent a current,
accurate and complete copy (or, to the extent no such copy exists, an accurate
description) thereof and, to the extent applicable, (i) any related trust
agreement, annuity contract or other funding instrument; (ii) the most recent
determination letter; (iii) any summary plan description and other written
communications by the Company or any of its subsidiaries to its employees (which
is material to the Company or such subsidiary) concerning the extent of the
benefits provided under a Plan; and (iv) for the three most recent years: (I)
the Form 5500 and attached schedules; (II) audited financial statements; and
(III) actuarial valuation reports.
(c) Except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, (i) each Plan has been
established and administered in all material respects in accordance with its
terms, and in all material respects in compliance with the applicable provisions
of ERISA, the Code and other applicable laws, rules and regulations and if
intended to be qualified within the meaning of section 401(a) of the Code is so
qualified, and no Plan is currently under audit by the Internal Revenue Service,
the Department of Labor or the Pension Benefit Guaranty Corporation; (ii) with
respect to any Plan, no actions, suits or claims (other than routine claims for
benefits in the ordinary course) are pending or threatened; (iii) neither the
Company nor any other party has engaged in a prohibited transaction, as such
term is defined under section 4975 of the Code or section 406 of ERISA, which
would subject the Company, the Surviving Corporation, any of their subsidiaries,
Sub or Parent to any material taxes, penalties or other material liabilities
under section 4975 of the Code or sections 409 or 502(i) of ERISA; and (iv) no
Plan provides for an increase in benefits on or after the Closing Date.
(d) Except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, no Plan is, or at any time was,
subject to Title IV of ERISA, and neither the Company, nor any
<PAGE> 16
member of its "Controlled Group" (defined as any organization which is a member
of a controlled group of organizations within the meaning of sections 414(b),
(c), (m) or (o) of the Code), has incurred any liability under Title IV of ERISA
and no condition exists that presents a material risk of incurring any such
liability. Except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, neither the Company, nor any member
of its Controlled Group, has any incurred any liability, and no condition exists
that presents a risk of incurring such liability, in connection with any
multiemployer plan (within the meaning of section 4001(a)(3) of ERISA).
(e) Except as set forth on Section 2.10(a) of the Company Disclosure
Schedule, no Plan exists which could result in the payment to any employee of
the Company or any of its subsidiaries of any money or other property or rights
or accelerate or provide any other rights or benefits to any such employee as a
result of the transactions contemplated by this Agreement, whether or not
subject to Section 280G of the Code, or whether or not any further or subsequent
event or action is required therefor.
SECTION II.11 Tax Matters. Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, the Company
and each of its subsidiaries, and any consolidated, combined, unitary or
aggregate group for Tax purposes of which the Company or any of its subsidiaries
is a member has timely filed all material Tax Returns required to be filed by it
in the manner provided by law, has timely paid all material Taxes (including
interest and penalties) (whether or not shown to be due on such Tax Returns) and
has provided adequate reserves as required by GAAP in its financial statements
for any Taxes that have not been paid, whether or not shown as being due on any
returns. Except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, no deficiencies for any United
States federal income Taxes have been proposed, asserted or assessed in writing
against the Company or any of its subsidiaries that are not adequately reserved
for as required by GAAP. Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect: (i) no audit of any
United States federal income Tax Return of the Company or any of its
subsidiaries is being conducted by a Tax authority; (ii) no extension of the
statute of limitations on the assessment of any United States federal income
Taxes has been granted by the Company or any of its subsidiaries and is
currently in effect; (iii) neither the Company nor any of its subsidiaries (A)
has been a member of an affiliated group filing a consolidated Federal income
Tax Return (other than a group the common parent of which was the Company) or
(B) has any liability for the Taxes of any person (other than the Company and
its subsidiaries), including liability arising from the application of Treasury
Regulations Section 1.1502-6 or any analogous provision of state, local or
foreign law, or as a transferee or successor, by contract or otherwise; (iv) no
consent under Section 341(f) of the Code has been filed with respect to the
Company or any of its subsidiaries; and (v) neither the Company or any of its
subsidiaries will be required (A) as a result of a change in accounting method
for a Tax period beginning on or before the Effective Time, to include any
adjustment under Section 481(c) of the Code (or any similar provision of state,
local or foreign law) in taxable income for any Tax period beginning on or after
the Effective Time, or (B) to include any item or amount accrued in a Tax period
<PAGE> 17
beginning on or before the Effective Time in taxable income for any Tax period
beginning on or after the Effective Time. As used herein, "Taxes" shall mean (A)
any taxes of any kind, including but not limited to those on or measured by or
referred to as income, gross receipts, capital, sales, use, ad valorem,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any governmental authority, domestic or foreign
and (B) any liability of the Company or any subsidiary for the payment of any
amount of the type described in clause (A) as a result of being a member of an
affiliated or combined group. As used herein, "Tax Return" shall mean any
return, report or statement required to be filed with any governmental authority
with respect to Taxes.
SECTION II.12 Environmental Matters. Except as set forth in Section
2.12 of the Company Disclosure Schedule and except as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect: (i)
each of the Properties and Facilities (as such terms are defined in Section 8.3)
has been maintained by the Company in compliance with all Environmental Laws (as
defined in Section 8.3), (ii) there are no Hazardous Materials which have been
or are being released or disposed of by the Company or any of its subsidiaries,
or in the case of asbestos only, is present, on any property, (iii) to the
knowledge of the Company, there are no Hazardous Materials which have been or
are being released by persons other than the Company or any of its subsidiaries
and which have encroached through the soil or groundwater onto or under the
Properties and Facilities, (iv) there are no existing uncured written notices of
noncompliance, notices of violation, administrative actions, or lawsuits against
the Company or any of its subsidiaries arising under Environmental Laws or
relating to the use, handling, storage, treatment, recycling, generation, or
release of Hazardous Materials, nor has the Company received any uncured written
notification of any allegation of any responsibility for any disposal, release,
or threatened release at any location of any Hazardous Materials, (v) there are
no consent decrees, consent orders, judgments, judicial or administrative
orders, or liens by any governmental authority relating to any Environmental Law
which have not already been fully satisfied and which name the Company or any of
its subsidiaries, (vi) to the knowledge of the Company, no Properties or
Facilities of the Company or any subsidiary of the Company are listed on the
federal National Priorities List, the federal Comprehensive Environmental
Response Compensation Liability Information System list, or any similar state
listing of sites known to be contaminated with Hazardous Materials, and (vii)
there are no budgeted expenses or capital costs that will be required in the
next two years to maintain compliance with Environmental Laws.
SECTION II.13 Form S-4; Proxy Statement. None of the information
supplied by the 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 shares of Parent Common Stock in connection with
the Merger, or any of the amendments or supplements thereto (collectively, the
"Form S-4") will, at the time the Form S-4 is filed with the SEC, at any time it
is amended or supplemented and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material
<PAGE> 18
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the proxy
statement for use relating to the adoption by the stockholders of the Company of
this Agreement or any of the amendments or supplements thereto (collectively,
the "Proxy Statement"), will, at the date it is first mailed to the Company's
stockholders and at the time of the meeting of the Company's stockholders held
to vote on the adoption of this Agreement, 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
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied by Parent or Sub
specifically for inclusion or incorporation by reference in the Proxy Statement.
SECTION II.14 Opinion of Financial Advisor. The Company has received
the opinion of Prudential Securities Incorporated (the "Company Financial
Advisor"), dated the date hereof, to the effect that the Exchange Ratio is fair
to such stockholders from a financial point of view. An executed copy of such
opinion will be delivered to Parent promptly after it becomes available.
SECTION II.15 Brokers. Except as set forth in Section 2.15 of the
Company Disclosure Schedule, no broker, finder or investment banker (other than
the Company Financial Advisor) is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company. The
Company has heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and the Company Financial Advisor pursuant to
which such firm would be entitled to any payment relating to the transactions
contemplated hereby.
SECTION II.16 Affiliate Transactions. Except as set forth in Section
2.16 of the Company Disclosure Schedule or as disclosed with reasonable
specificity in the Company SEC Reports filed prior to the date of this
Agreement, there are no material contracts, commitments, agreements,
arrangements or other transactions between the Company or any of its
subsidiaries, on the one hand, and any (i) present or former officer or director
of the Company or any of its subsidiaries or any of their immediate family
members (including their spouses), (ii) record or beneficial owner of five
percent or more of the voting securities of the Company or (iii) affiliate of
any such officer, director, family member or beneficial owner, on the other
hand.
SECTION II.17 Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock entitled to vote
thereon is the only vote of the holders of any class or series of the Company's
capital stock necessary to adopt this Agreement. The Board of Directors of the
Company (the "Company Board") (at a meeting duly called and held) has (i)
approved and declared advisable this Agreement, (ii) determined that the
transactions contemplated hereby are advisable and in the best
<PAGE> 19
interests of the holders of Company Common Stock, (iii) resolved to recommend
adoption of this Agreement to such holders and (iv) directed that adoption of
this Agreement be submitted to the Company's stockholders. The Company hereby
agrees to the inclusion in the Form S-4 and the Proxy Statement of the
recommendation of the Company Board described in this Section 2.17.
SECTION II.18 DGCL Section 203; State Takeover Statutes. Prior to the
date hereof, the Board of Directors of the Company has approved this Agreement
and the Merger and the other transactions contemplated hereby and such approval
is sufficient to render inapplicable to this Agreement, the Merger and any of
such other transactions contemplated hereby, the restrictions on "business
combinations" set forth in Section 203 of the DGCL. To the Company's knowledge,
no other state takeover statute or similar statute or regulation applies or
purports to apply to the Merger, this Agreement or any of the transactions
contemplated by this Agreement and no provision of the Certificate of
Incorporation or By-Laws of the Company or similar governing instruments of any
of the Company's subsidiaries would, directly or indirectly, restrict or impair
the ability of Parent to vote, or otherwise to exercise the rights of a
stockholder with respect to, shares of the Company and its subsidiaries that may
be acquired or controlled by Parent.
SECTION II.19 Material Contracts. Section 2.19 of the Company
Disclosure Schedule contains a complete and accurate list of all contracts
(written or oral), plans, undertakings, commitments or agreements to which the
Company or any of its subsidiaries is a party or by which any of them is bound
as of the date of this Agreement of the following categories ("Contracts")
(other than those listed as exhibits to the Company SEC Reports):
(a) to the extent not listed in Section 2.10(a) of the Company
Disclosure Schedule, employment contracts, including, without
limitation, contracts to employ executive officers and other contracts
with officers, directors or stockholders of the Company, and all
severance, change in control or similar arrangements with any officers,
employees or agents of the Company that will result in any obligation
(absolute or contingent) of the Company or any of its subsidiaries to
make any payment to any officers, employees or agents of the Company
following either the consummation of the transactions contemplated
hereby, termination of employment, or both;
(b) (i) other than purchase orders issued in the ordinary
course of business, Contracts for the purchase of inventory/supplies
involving future annual expenditures or liabilities of the Company and
its subsidiaries in excess of $1,000,000 which are not cancelable
(without penalty, cost or other liability in excess of $1,000,000)
within one (1) year and (ii) other Contracts made in the ordinary
course of business involving future annual expenditures or liabilities
of the Company and its subsidiaries in excess of $1,000,000 which are
not cancelable (without penalty, cost or other liability in excess of
$1,000,000) within ninety (90) days;
(c) promissory notes, loans, agreements, indentures, evidences
of indebtedness or other instruments providing for the lending of money
in excess of $1,000,000, whether as borrower, lender or guarantor;
<PAGE> 20
(d) Contracts (other than Leases) containing covenants
limiting the freedom of the Company or any of its subsidiaries or,
after the Merger, Parent or any of its subsidiaries, to engage in any
line of business or compete with any person or operate at any location;
(e) joint venture or partnership agreements or joint
development or similar agreements pursuant to which any third party is
entitled to develop any products on behalf of the Company or its
subsidiaries;
(f) any Contract where the customer under such Contract is a
United States federal government and the aggregate amount payable by
the customer exceeds $2,000,000;
(g) any Contract pending for the acquisition, directly or
indirectly (by merger or otherwise) of assets with fair market value or
book value in excess of $500,000 (other than inventory) or capital
stock of another person; and
(h) any other Contract (other than real property leases)
containing "change of control" provisions which would be triggered upon
the Merger.
True and complete copies of the written Contracts identified on Section
2.19 of the Company Disclosure Schedule have been filed with the SEC as exhibits
to the Company SEC Reports or delivered to Parent, including, without
limitation, all material schedules, exhibits and annexes to such Contracts.
There are no contracts, plans, undertakings, commitments or agreements which are
material to the Company other than those listed in Section 2.10(a), 2.16 or 2.19
of the Company Disclosure Schedule or those filed as exhibits to the Company SEC
Reports.
SECTION II.20 Absence of Breaches or Defaults. Except as set forth in
Section 2.20 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries nor, to the Company's knowledge, any other party to any
Contract is in default under, or in breach or violation of, any Contract and, to
the knowledge of the Company, no event has occurred which, with the giving of
notice or passage of time or both would constitute a default under any Contract,
except for such defaults, breaches and violations which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
Except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, other than Contracts which have terminated or
expired in accordance with their terms, each of the Contracts is valid, binding
and enforceable in accordance with its terms against the Company and, to the
Company's knowledge, the other party (subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered on a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing) and is in full force and
effect. No event (except for the execution, delivery and performance of this
Agreement) has occurred which either entitles, or would, on notice or lapse of
time or both, entitle the holder of any indebtedness for borrowed money of the
Company or
<PAGE> 21
any of its subsidiaries to accelerate, or which does accelerate, the maturity of
any indebtedness affecting the Company or any of its subsidiaries, except as set
forth in Section 2.5(a) or 2.20 of the Company Disclosure Schedule.
SECTION II.21 Intellectual Property. (a) Section 2.21(a) of the Company
Disclosure Schedule sets forth all material Intellectual Property (as defined
below) that is owned or used by the Company or any of its subsidiaries and is
filed or registered with, or issued by, a governmental authority and all
material IP Licenses (as defined below). Except as set forth in Section 2.21(b)
of the Company Disclosure Schedule or except as would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect, (i) the
Company and its subsidiaries own or have the right to use all Intellectual
Property material to their businesses as currently conducted, (ii) such
Intellectual Property is valid, unexpired, enforceable and has not been
abandoned; (iii) each Intellectual Property license to which the Company or any
of its subsidiaries is a party ("IP License") is valid and enforceable, and the
Company and its subsidiaries are not in breach or default thereunder; (iv) the
Company and its subsidiaries are not infringing or otherwise impairing the
Intellectual Property of any third party, and no third party is infringing or
otherwise impairing their Intellectual Property; (v) there is no pending or, to
the knowledge of the Company, threatened action or order relating to any
Intellectual Property owned or used by the Company and its subsidiaries; and
(vi) the Company and its subsidiaries have taken reasonable steps to protect,
maintain and safeguard their Intellectual Property. For purposes hereof,
"Intellectual Property" means all U.S. and foreign intellectual property,
including without limitation (i) inventions, discoveries, processes, formulae,
designs, methods, procedures, concepts, developments, technology, and all
related improvements and know-how; (ii) copyrights and copyrightable works,
including computer applications, programs, hardware, software, systems,
databases and related items; (iii) trademarks, service marks, trade names, brand
names, corporate names, logos and trade dress, the goodwill of any business
symbolized thereby, and all common-law rights relating thereto; and (iv) trade
secrets, data and other confidential information.
(b) Neither the Company nor any of its subsidiaries has licensed
Intellectual Property owned by them (or licensed to them by a third party) to
any person in a manner that, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect, and the transactions contemplated
by this Agreement will not constitute a breach, or otherwise reduce or impair
the rights of the Company or any of its subsidiaries, under such IP Licenses
except such breaches, reductions or impairments which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
(c) The ownership of Intellectual Property and the right to secure such
rights currently enjoyed by the Company and its subsidiaries will not be
affected by the transactions contemplated by this Agreement in any manner that
would reasonably be expected to have a Material Adverse Effect.
SECTION II.22 Reorganization Qualification. Neither Company nor, to its
knowledge, any of its affiliates, has taken or agreed to take any action, or
knows of any circumstances, that (without regard to any action
<PAGE> 22
taken or agreed to be taken by Parent or any of its affiliates) would prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
SECTION II.23 Rights Agreement. The Rights Agreement, dated as of
August 25, 1987, as amended and restated as of July 31, 1996 (the "Rights
Agreement"), between the Company and KeyBank National Association, as Rights
Agent, has been amended so as to provide that: (i) neither Parent or Sub will
become an "Acquiring Person" and (ii) no "Acquisition Date", "Triggering Event"
or "Distribution Date" (as such terms are defined in the Rights Agreement) will
occur, in either case, as a result of the approval, execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby, and
the Rights (as defined in the Rights Agreement) will expire immediately prior to
the Effective Time. Since July 31, 1996, the Rights Agreement has not been
amended or otherwise modified in any respect (other than the substitution of the
rights agent thereunder on June 11, 1997).
SECTION II.24 Cisco Shares. The Company owns beneficially and of record
4,166,083 shares (the "Cisco Shares") of common stock of Cisco Systems, Inc.
free and clear of all security interests, liens, claims, pledges, agreements,
limitations in voting or transfer rights, charges or other encumbrances or
restrictions of any nature whatsoever, other than any restrictions under
applicable securities laws and the restrictions described on Section 2.24 of the
Company Disclosure Schedule. Except for the transactions described on Section
2.24 of the Company Disclosure Schedule (the "Existing Hedging Transactions"),
the Cisco Shares are not subject to any hedging agreement or other arrangement
to change the Company's economic interest therein. Neither the Company nor any
of its subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations
promulgated thereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub hereby, jointly and severally, represent and warrant to
the Company that:
SECTION III.1 Corporate Organization. (a) Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is incorporated and has the requisite corporate
power and authority to own, operate or lease its properties and to carry on its
business as it is now being conducted, except where the failure to have such
power and authority would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect (as defined below). Each of
Parent and Sub is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed or in good standing which would not, individually
or in the
<PAGE> 23
aggregate, reasonably be expected to have a Parent Material Adverse Effect. When
used in this Article III or otherwise in connection with Parent or any of its
subsidiaries (including Sub), the term "Parent Material Adverse Effect" means
any change or effect that would be materially adverse to the business, assets
(including intangible assets), liabilities (including contingent liabilities),
financial condition or results of operations of Parent and its subsidiaries
taken as a whole or that would materially impair the ability of Parent to
perform its obligations hereunder; provided, however, that a Material Adverse
Effect with respect to the Parent shall not include any change or effect
resulting from (i) the United States economy in general and not relating
specifically to the business of Parent and its subsidiaries taken as a whole or
(ii) revenue declines attributable to long-standing customers of Parent becoming
customers of the Company after the date hereof.
(b Parent has heretofore furnished to or made available to the Company
a complete and correct copy of its certificate of incorporation and by-laws as
currently in effect. Such certificate of incorporation and by-laws are in full
force and effect and no other organizational documents are applicable to or
binding upon Parent.
(c) Sub has heretofore furnished to or made available to the Company a
complete and correct copy of the certificate of incorporation of Sub and the
by-laws of Sub as currently in effect. Such certificate of incorporation and
bylaws are in full force and effect and no other organizational documents are
applicable to or binding upon Sub.
SECTION III.2 Capitalization. (a) The authorized capital stock of
Parent consists of 310,000,000 shares, consisting of 300,000,000 shares of
Parent Common Stock and 10,000,000 shares of preferred stock, par value $1.00
per share. As of June 30, 2000, (i) 137,245,433 shares of Parent Common Stock
were issued and outstanding, all of which were duly authorized, validly issued,
fully paid and nonassessable and were issued free of preemptive (or similar)
rights, (ii) 18,124,453 shares of Parent Common Stock were held in the treasury
of Parent, (iii) no shares of Parent Common Stock which are restricted stock
were issued and outstanding and (iv) an aggregate of 24,486,026 shares of Parent
Common Stock were reserved for issuance and issuable upon or otherwise
deliverable in connection with the exercise of outstanding stock options to
purchase shares of Parent Common Stock issued pursuant to the employee benefit
plans of Parent or warrants to purchase shares of Parent Common Stock issued to
directors ("Parent Options"). No shares of preferred stock of Parent are
outstanding or held in the treasury of Parent. Except (i) as set forth above or
(ii) as a result of the exercise of the Parent Options outstanding as of June
30, 2000, there are outstanding as of the date hereof (a) no shares of capital
stock or other voting securities of Parent, (b) no securities of Parent
convertible into or exchangeable for shares of capital stock or voting
securities of Parent, (c) no options, warrants, or other rights to acquire from
Parent, and no obligation of Parent to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of Parent and (d) no equity equivalents, interests in the
ownership or earnings of Parent or other similar rights (the shares, securities
and other rights referred to in clauses (a), (b), (c) and (d), collectively,
"Parent Securities"). All of the shares of Parent Common Stock issuable as
consideration in the Merger at the Effective Time in accordance with this
Agreement will be, when so issued, duly
<PAGE> 24
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights. Except as set forth in Section 3.2(a) of the Parent Disclosure Schedule
delivered by Parent to the Company prior to the execution of this Agreement (the
"Parent Disclosure Schedule"), as of the date hereof there are no outstanding
obligations of Parent or any of its subsidiaries to repurchase, redeem or
otherwise acquire any Parent Securities. Except as set forth in Section 3.2(a)
of the Parent Disclosure Schedule, as of the date hereof (x) there are no
outstanding obligations of Parent or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Parent Securities, (y) there is no voting trust
or other agreement or understanding to which Parent or any of its subsidiaries
is a party or is bound with respect to the voting of the capital stock or other
voting securities of Parent and (z) there are no other options, calls, warrants
or other rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of Parent to which Parent or
any of its subsidiaries is a party.
(b The authorized capital stock of Sub consists of 100 shares of common
stock, par value $0.01 per share, 100 shares of which are duly authorized,
validly issued and outstanding, fully paid and nonassessable and owned by Parent
free and clear of all liens, claims and encumbrances. Sub was formed solely for
the purpose of engaging in a business combination transaction with the Company
and has engaged in no other business activities and has conducted its operations
only as contemplated hereby.
SECTION III.3 Authority Relative to This Agreement. Each of Parent and
Sub has all necessary corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Sub and the consummation by each of Parent
and Sub of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and Sub and no other corporate
proceedings on the part of Parent or Sub are necessary to authorize this
Agreement or to consummate the transactions so contemplated (other than the
filing of appropriate merger documents as required by the DGCL). This Agreement
has been duly executed and delivered by Parent and Sub and, assuming due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each such corporation enforceable against such
corporation in accordance with its terms (subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered on a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing).
SECTION III.4 No Conflict; Required Filings and Consents. (a) Except as
set forth in Section 3.4(a) of the Parent Disclosure Schedule, the execution,
delivery and performance of this Agreement by Parent and Sub do not and will
not: (i) conflict with or violate the respective certificates of incorporation
or by-laws of Parent or Sub; (ii) assuming that all consents, approvals and
authorizations contemplated by clauses (i), (ii) and (iii) of subsection (b)
below have been obtained and all filings described in such clauses have been
made, conflict with or violate any law, rule, regulation, order, judgment or
decree of any governmental authority applicable to Parent
<PAGE> 25
or Sub or by which either of them or any of their respective properties are
bound or affected; or (iii) result in any breach or violation of or constitute a
default (or an event which with notice or lapse of time or both could become a
default) or result in the loss of a material benefit under, or give rise to any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the property or assets of Parent
or Sub pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or Sub is a party or by which Parent or Sub or any of their respective
properties are bound or affected, except, in the case of clauses (ii) and (iii),
for any such conflicts, violations, breaches, defaults or other occurrences
which would not, individually or in the aggregate, reasonably be expected to
prevent or materially delay the consummation of the Merger or to have a Parent
Material Adverse Effect.
(b Except as set forth in Section 3.4(b) of the Parent Disclosure
Schedule, the execution, delivery and performance of this Agreement by Parent
and Sub do not and will not require Parent or any of its subsidiaries to obtain
or make any consent, approval, authorization or permit of, action by, filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements of the Securities Act and the
rules and regulations promulgated thereunder, the Exchange Act and the rules and
regulations promulgated thereunder, the HSR Act, the Regulation, similar foreign
laws regulating competition, the rules and regulations of Nasdaq, the NYSE, the
Communications Act of 1934, as amended, any rules, regulations, practices and
policies promulgated by the FCC and state securities, takeover and Blue Sky
laws, (ii) the filing and recordation of appropriate merger or other documents
as required by the DGCL, and (iii) such consents, approvals, authorizations,
permits, actions, filings or notifications the failure of which to make or
obtain would not, individually or in the aggregate, reasonably be expected to
prevent the consummation of the Merger or to have a Parent Material Adverse
Effect.
SECTION III.5 Compliance. Except as set forth in Section 3.5 of the
Parent Disclosure Schedule, Parent and each of its subsidiaries are in
compliance with, and are not in default or violation of, (i) the Certificate of
Incorporation and By-Laws of Parent or the equivalent organizational documents
of such subsidiary, (ii) all laws (including, without limitation, Environmental
Laws), rules, regulations, orders, judgments and decrees of any governmental
authority applicable to them or by which any of their respective properties are
bound or affected and (iii) all notes, bonds, mortgages, indentures, contracts,
agreements, leases, licenses, permits, franchises and other instruments or
obligations to which any of them are a party or by which any of them or any of
their respective properties are bound or affected, except, in the case of
clauses (ii) and (iii), for any such failures of compliance, defaults and
violations which would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect. Except as disclosed with
reasonable specificity prior to the date hereof in the Parent SEC Reports and
except as would not, individually or in the aggregate, reasonably be expected to
have a Parent Material Adverse Effect, (x) Parent and its subsidiaries have all
permits, licenses, authorizations, consents, approvals and franchises from
governmental agencies required to conduct their businesses as now being
conducted and (y) neither Parent nor any
<PAGE> 26
of its subsidiaries has received notice of any revocation or modification of any
such permit, license, authorization, consent or approval.
SECTION III.6 SEC Filings; Financial Statements. (a Parent and, to the
extent applicable, each of its then or current subsidiaries, has filed all
forms, reports, statements and documents required to be filed with the SEC since
January 1, 1999 (collectively, the "Parent SEC Reports"), each of which has
complied in all material respects with the applicable requirements of the
Securities Act and the rules and regulations promulgated thereunder, or the
Exchange Act and the rules and regulations promulgated thereunder, each as in
effect on the date so filed. None of such Parent SEC Reports (including but not
limited to any financial statements or schedules included or incorporated by
reference therein) contained, when filed, any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Except to the extent revised or superseded by a subsequent filing with the SEC,
none of the Parent SEC Reports filed by Parent since January 1, 1999 and prior
to the date hereof contains any untrue statement of a material fact or omits to
state a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b Each of the audited and unaudited consolidated financial statements
of Parent and its subsidiaries (including any related notes thereto) included in
Parent SEC Reports complies or, if not yet filed, will comply when filed as to
form in all material respects with all applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, and
has been or, if not yet filed, will when filed have been prepared in accordance
with generally accepted accounting principles (except, in the case of unaudited
consolidated quarterly statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto) and fairly presents or, if not yet filed, will
when filed fairly present in all material respects the consolidated financial
position of Parent and its subsidiaries at the respective date thereof and the
consolidated results of its operations and changes in cash flows for the periods
indicated (subject, in the case of unaudited quarterly statements, to normal
year-end audit adjustments).
(c Parent has heretofore furnished the Company with Parent's
consolidated results of operations for the three month period ended June 30,
2000. Such financial information has been prepared in good faith and in a manner
consistent with previous quarterly financial statements and, to the knowledge of
Parent, fairly present in all material respects the consolidated results of
operations of Parent and its subsidiaries for the periods indicated.
SECTION III.7 Absence of Certain Changes or Events. Since December 31,
1999, except as specifically contemplated by this Agreement, disclosed with
reasonable specificity in the Parent SEC Reports filed and publicly available
prior to the date of this Agreement or disclosed in Section
<PAGE> 27
3.7 of the Parent Disclosure Schedule, Parent and its subsidiaries have
conducted their businesses through the date hereof only in the ordinary course
and in a manner consistent with past practice and since December 31, 1999 there
has not been (i) any conditions, events or occurrences which, individually or in
the aggregate, would reasonably be expected to have a Parent Material Adverse
Effect, (ii) any damage, destruction or loss (whether or not covered by
insurance) with respect to any assets of Parent or any of its subsidiaries which
would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, or (iii) any other action which, if it had been taken
after the date hereof, would have required the consent of the Company under
Section 4.2 hereof.
SECTION III.8 Form S-4; Proxy Statement. None of the information
supplied by Parent or Sub for inclusion or incorporation by reference in (i) the
Form S-4 will, at the time the Form S-4 is filed with the SEC, at any time it is
amended or supplemented and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Proxy Statement will, at the
date it is first mailed to the Company's stockholders and at the time of the
meeting of the Company's stockholders held to vote on adoption of this
Agreement, 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 Form S-4 will comply as to form in all material respects with
the requirements of the Securities Act and the rules and regulations thereunder,
except that no representation is made by Parent or Sub with respect to
statements made or incorporated by reference therein based on information
supplied by the Company specifically for inclusion or incorporation by reference
in the Form S-4.
SECTION III.9 Brokers. No broker, finder or investment banker (other
than Bear Stearns & Co. Inc., the fees and expenses of which shall be paid by
Parent) is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Sub.
SECTION III.10 Absence of Litigation. Except as disclosed in the Parent
SEC Reports filed and publicly available prior to the date of this Agreement or
in Section 3.10 of the Parent Disclosure Schedule, there are no suits, claims,
actions, proceedings or investigations pending or, to the knowledge of Parent,
threatened against Parent or any of its subsidiaries, or any properties or
rights of Parent or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign, that (i) if adversely determined, individually or in the aggregate,
would reasonably be expected to have a Parent Material Adverse Effect or (ii)
seek to enjoin or prohibit as of the date hereof the consummation of the
transactions contemplated hereby. Neither Parent nor any of its subsidiaries nor
any of their respective properties is or are subject to any order, writ,
judgment, injunction, decree, determination or award having, or which, would
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect or would enjoin or prohibit the consummation of the
transactions contemplated hereby.
<PAGE> 28
SECTION III.11 Reorganization Qualification. Neither Parent nor Sub,
nor to Parent's knowledge, any affiliate of Parent, has taken or agreed to take
any action, or knows of any circumstances, that (without regard to any action
taken or agreed to be taken by the Company or any of its affiliates) would
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
SECTION III.12 Knowledge. Parent does not have actual knowledge, as of
the date hereof, of any material breach of the representations and warranties of
the Company set forth in this Agreement. As used in this Agreement, actual
knowledge with respect to Parent means the actual knowledge of the Chief
Executive Officer, the Chief Financial Officer and the General Counsel of
Parent.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION IV.1 Conduct of Business of the Company Pending the Merger. The
Company covenants and agrees that, during the period from the date hereof to the
Effective Time, unless Parent shall otherwise agree in writing in advance, the
businesses of the Company and its subsidiaries shall be conducted only in the
ordinary course of business and in a manner consistent with past practice and in
compliance with applicable laws; and the Company and its subsidiaries shall each
use its reasonable best efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the services
of the present officers, employees and consultants of the Company and its
subsidiaries and to preserve the present relationships of the Company and its
subsidiaries with customers, suppliers, licensors, licensees, advertisers,
distributors and other persons with which the Company or any of its subsidiaries
has significant business relations. By way of amplification and not limitation,
neither the Company nor any of its subsidiaries shall, between the date of this
Agreement and the Effective Time, directly or indirectly do, or agree, authorize
or commit to do, any of the following without the prior written consent of
Parent:
(a Amend its Certificate of Incorporation or By-Laws or equivalent
organizational documents;
(b Issue, deliver, sell, pledge, dispose of or encumber, or authorize
or commit to the issuance, sale, pledge, disposition or encumbrance of, (A) any
shares of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock,
or any other ownership interest (including but not limited to stock appreciation
rights or phantom stock), of the Company or any of its subsidiaries (except for
the issuance of shares of Company Common Stock issuable in accordance with the
terms of Stock Rights outstanding as of the date hereof and identified on the
list referred to in the last sentence of Section 2.3(a) or the Convertible
Debentures or referred to in Item 4 of Section 2.3(a) of the Company Disclosure
Schedule) or (B) any property or assets, whether tangible or intangible, of the
Company or any of its
<PAGE> 29
subsidiaries with a fair market value or book value in excess of $1,000,000 in
the aggregate, except for sales of goods and products in the ordinary course of
business and in a manner consistent with past practice;
(c Declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its or its
subsidiaries' capital stock;
(d Reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or any
capital stock of any of its subsidiaries;
(e (i) Acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or (except for the purchase of raw materials, inventory and supplies in
the ordinary course of business and capital expenditures permitted by clause
(vii) below) any assets with a fair market value or book value of $1,000,000 in
the aggregate; (ii) sell, transfer, lease, mortgage, pledge, encumber or
otherwise dispose of or subject to any lien any of its assets with a fair market
value or book value of $1,000,000 in the aggregate (including capital stock of
subsidiaries), except for the sale of goods and products in the ordinary course
of business; (iii) incur any indebtedness for borrowed money (other than (i)
borrowings of up to $25,000,000 in the aggregate in the ordinary course of
business pursuant to the revolving credit facilities identified in Section 2.19
of the Company Disclosure Schedule and (ii) borrowings of up to $10,000,000
incurred to pay, immediately prior to the Closing, fees and out-of-pocket
expenses in connection with the transactions contemplated hereby) or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, or make any
loans, advances or capital contributions to, or investments in, any other person
(other than a wholly-owned subsidiary of the Company); (iv) except as permitted
by subsection (f) below, enter into any transaction, contract, commitment,
arrangement or understanding with any affiliate of the Company or any other
persons or entities referred to in Section 2.16; (v) except as otherwise
permitted by this Section 4.1, enter into any commitments or transactions
involving consideration, transfer of assets or payments (or covers revenues
pursuant to marketing or distribution arrangements) in excess of $5,000,000 or
otherwise material, individually or in the aggregate, to the Company and its
subsidiaries taken as a whole; (vi) enter into any new material line of
business; (vii) authorize any single capital expenditure which is in excess of
$2,000,000 or capital expenditures which are, in the aggregate, in excess of
$10,000,000 for the Company and its subsidiaries taken as a whole; or (viii)
enter into, amend in any material respect, renew or terminate any contract or
agreement involving consideration or payments in excess of $1,000,000, any joint
venture arrangements or any other contract, agreement, commitment or arrangement
with respect to any of the matters set forth in this Section 4.1(e);
(f Except to the extent required under applicable law or under existing
employee and director benefit plans, agreements or arrangements as in effect on
the date of this Agreement, increase or otherwise amend the compensation or
fringe benefits of any of its directors, officers or employees
<PAGE> 30
(except for increases in salary or wages of employees who are not officers in
the ordinary course of business in accordance with past practice not to exceed
$1.5 million in the aggregate), or grant any retention, severance or termination
pay not currently required to be paid under existing severance plans or enter
into, or amend, renew or terminate, any employment, consulting or severance
agreement or arrangement with any present or former director, officer or other
employee of the Company or any of its subsidiaries, or establish, adopt, enter
into or amend, renew or terminate any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
directors, officers or employees, other than as required by the terms thereof or
by applicable law, or amend the terms of any outstanding options to purchase any
equity of the Company or any subsidiary (including accelerating the vesting or
lapse of repurchase rights or obligations);
(g Except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting practices
or principles used by it;
(h Revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or notes or accounts
receivable;
(i Take any action that (without regard to any action taken or agreed
to be taken by Parent or any of its affiliates) would prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(j Except as may be required by law, make or change any Tax election,
file any amended Tax Return, settle or compromise any federal, state, local or
foreign Tax liability, change any annual Tax accounting period, change any
method of Tax accounting, enter into any closing agreement relating to any Tax,
surrender any right to claim a Tax refund, or consent to any extension or waiver
of the limitations period applicable to any Tax claim or assessment;
(k Settle or compromise any pending or threatened suit, action or claim
which is in an aggregate amount in excess of $500,000 (provided that such
settlement or compromise does not involve any material non-monetary obligations
on the part of the Company and its subsidiaries) or which relates to the
transactions contemplated hereby;
(l Pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise) in excess
of $500,000, other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities reflected or
reserved against in the financial statements of the Company or incurred in the
ordinary course of business and consistent with past practice;
<PAGE> 31
(m Fail to use reasonable best efforts to maintain in full force and
effect the existing insurance policies covering the Company and its subsidiaries
and their respective properties, assets and businesses;
(n Enter into any agreement or contract so as to include, or amend any
agreement or contract so as to include, any of the following provisions, or
amend any of the following provisions to the extent contained in any agreement
or contract: (i) any provision limiting the freedom of the Company or any of its
subsidiaries or affiliates to engage in any line of business or compete with any
person or operate at any location or (ii) any "change of control" provision
which would be triggered upon the Merger, any sale of the Company or any of its
subsidiaries or similar transaction; or
(o Repurchase any shares of Company Common Stock pursuant to the
Company's stock repurchase program; or
(p Take, authorize or offer to take, or agree to take in writing or
otherwise, any of the actions described in Sections 4.1(a) through 4.1(o) or any
action which would reasonably be expected to result in any of the conditions set
forth in Article VI not being satisfied.
SECTION IV.2 Conduct of Business of Parent Pending the Merger. (a)
During the period from the date of this Agreement to the Effective Time (except
as otherwise contemplated by the terms of this Agreement), Parent shall use its
reasonable best efforts to preserve intact its and its subsidiaries' current
business organizations, keep available the services of their current officers
and employees and preserve their relationships with customers, suppliers,
licensors, licensees, advertisers, distributors and others having business
dealings with them to the end that their goodwill and ongoing businesses shall
be unimpaired at the Effective Time, in each case to the extent commercially
appropriate.
(b Without limiting the generality of the foregoing, during the period
from the date of this Agreement to the Effective Time, Parent shall not, without
the prior consent of the Company:
(i Amend Parent's certificate of incorporation (except to change the number
of authorized shares of capital stock) or by-laws in a manner that would be
materially adverse to the holders of Parent Common Stock;
(ii Other than in connection with acquisitions having a value of not more
than $750,000,000 in the aggregate, issue, deliver, sell, pledge, dispose
of or encumber, or authorize or commit to the issuance, sale, pledge,
disposition or encumbrance of, any shares of capital stock of any class, or
any options, warrants, convertible securities or other rights of any kind
to acquire any shares of capital stock, or any other ownership interest
(including but not limited to stock appreciation rights or phantom stock),
of Parent or any of its subsidiaries (except for the issuance of shares of
Parent Common Stock or the grant of employee stock options in accordance
with the terms of Parent's employee benefit plans in existence on the date
hereof or approved by the stockholders of Parent), if any such action would
reasonably be expected
<PAGE> 32
to prevent or materially delay the consummation of the transactions
contemplated hereby;
(iii Acquire (by merger, consolidation or acquisition of stock or assets)
any corporation, partnership or other business organization or division
thereof, if any such action would reasonably be expected to delay
materially the consummation of the transactions contemplated hereby; or
(iv Take, or offer or propose to take, or agree to take in writing or
otherwise, any of the actions described in Sections 4.2(b)(i) through
4.2(b)(iii) or any action which (except as otherwise provided herein) would
reasonably be likely to result in any of the conditions set forth in
Article VI not being satisfied.
(c Parent shall not, and shall not permit any of its subsidiaries to,
intentionally take any action that (without regard to any action taken or agreed
to be taken by the Company or any of its affiliates) would prevent the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION V.1 Preparation of Form S-4 and the Proxy Statement;
Stockholder Meeting. (a) Promptly following the date of this Agreement, the
Company shall, with the assistance and approval of Parent, prepare and file with
the SEC the Proxy Statement, and Parent shall prepare and file with the SEC the
Form S-4, in which the Proxy Statement will be included as a prospectus. Each of
the Company and Parent shall use its reasonable best efforts to have the Form
S-4 declared effective under the Securities Act as promptly as practicable after
such filing. The Company will use its reasonable best efforts to cause the Proxy
Statement to be mailed to its stockholders as promptly as practicable after the
Form S-4 is declared effective under the Securities Act. Parent shall also take
any action (other than qualifying to do business in any jurisdiction in which it
is not now so qualified) required to be taken under any applicable state
securities law in connection with the issuance of Parent Common Stock in
connection with the Merger, and the Company shall furnish all information
concerning the Company and the holders of the Company Common Stock and rights to
acquire Company Common Stock pursuant to the Stock Plans as may be reasonably
required in connection with any such action. Each of Parent, Sub and the Company
shall furnish all information concerning itself to the other as may be
reasonably requested in connection with any such action and the preparation,
filing and distribution of the Form S-4 and the preparation, filing and
distribution of the Proxy Statement. The Company, Parent and Sub each agree to
correct any information provided by it for use in the Form S-4 or the Proxy
Statement which shall have become false or misleading.
(b The Company, acting through its Board of Directors, shall, subject
to and in accordance with its Certificate of Incorporation and By-
<PAGE> 33
Laws, promptly and duly call, give notice of, convene and hold as soon as
practicable following the date upon which the Form S-4 becomes effective a
meeting of the holders of Company Common Stock for the purpose of voting to
adopt this Agreement, and (i) recommend adoption of this Agreement, by the
stockholders of the Company and include in the Proxy Statement such
recommendation and (ii) take all reasonable and lawful action to solicit and
obtain such approval. The Board of Directors of the Company shall not withdraw,
amend or modify in a manner adverse to Parent its recommendation referred to in
clause (i) of the preceding sentence (or announce publicly its intention to do
so), except that such Board of Directors shall be permitted to withdraw, amend
or modify its recommendation (or publicly announce its intention to do so) if:
(i) the Company has complied in all material respects with Section 5.4; (ii) an
unsolicited Superior Proposal (as defined in Section 5.4) shall have been
proposed by any person other than Parent or Sub and such proposal is pending at
the time of such withdrawal, amendment or modification; and (iii) the Company
shall have notified Parent of such Superior Proposal at least five business days
in advance of its intention to effect such withdrawal, amendment or modification
(which five business day period shall be contemporaneous with that provided for
in Section 7.1(j)(i) if such notice includes a notice of termination
contemplated by such Section). Without limiting the generality of the foregoing,
subject to the Company's rights pursuant to Sections 5.4 and 7.1(j), the Company
agrees that its obligations under this Section 5.1(b) shall not be affected by
the commencement, public proposal, public disclosure or communication to the
Company of any Acquisition Proposal (as defined in Section 5.4).
SECTION V.2 Accountants' Letters. (a) The Company shall use its
reasonable best efforts to cause to be delivered to Parent "comfort" letters of
Arthur Andersen LLP and PricewaterhouseCoopers LLP, the Company's present and
former independent public accountants, dated a date within two business days
before the date on which the Form S-4 shall become effective and addressed to
Parent, in form and substance reasonably satisfactory to Parent and customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4. In connection
with the Company's efforts to obtain such letter, if requested by Arthur
Andersen LLP or PricewaterhouseCoopers LLP, Parent shall provide a
representation letter to such accounting firm, complying with the Statement on
Auditing Standards No. 72 ("SAS 72") or with the Statement on Auditing Standards
No. 76, if then required.
(b Parent shall use its reasonable best efforts to cause to be
delivered to the Company a "comfort" letter of Deloitte & Touche LLP, Parent's
independent public accountants, dated a date within two business days before the
date on which the Form S-4 shall become effective and addressed to the Company,
in form and substance reasonably satisfactory to the Company and customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4. In connection
with the Parent's efforts to obtain such letter, if requested by Deloitte &
Touche LLP, the Company shall provide a representation letter to Deloitte &
Touche LLP complying with SAS 72 or with the Statement on Auditing Standards No.
76, if then required.
<PAGE> 34
SECTION V.3 Access to Information; Confidentiality. (a From
the date hereof to the Effective Time or the earlier termination of this
Agreement, each of the Company and Parent shall, and shall cause its
subsidiaries, officers, directors, employees, auditors and other agents to,
afford the officers, employees, auditors and other agents of Parent or the
Company, respectively, during normal business hours reasonable access at all
reasonable times to its officers, employees, auditors, legal counsel,
properties, offices, plants and other facilities and to all books and records,
and shall furnish Parent or the Company, respectively, with all financial,
operating and other data and information as Parent or the Company, respectively,
through its officers, employees or agents may from time to time reasonably
request. In addition, subsequent to the date of this Agreement, Parent and/or
any of its subsidiaries may initiate communications with any officer or key
employee of the Company for the purpose of addressing the prospective retention
of such officer or employee following the Closing, provided that (i) Parent
believes, in good faith, that there is a compelling, legitimate business need to
initiate such communication prior to the Closing Date, (ii) such communications
shall be conducted in coordination with the Company's chief executive officer
and (iii) Parent shall not solicit to hire such officer or key employee through
such communications.
(b Each of the Company and Parent will hold and will cause its
directors, officers, employees, agents, advisors (including, without limitation,
counsel and auditors) and controlling persons to hold any such information or
data which is nonpublic in confidence on the same terms and conditions as the
confidentiality provisions set forth in the Confidentiality Agreement dated June
16, 2000, as amended from time to time, between the Company and Parent (the
"Confidentiality Agreement").
(c No investigation pursuant to this Section 5.3 shall affect
any representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
SECTION V.4 No Solicitation of Transactions. The Company
agrees that neither it nor any of its subsidiaries nor any of the officers and
directors of it or its subsidiaries shall, and that it shall direct and cause
its and its subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
subsidiaries) not to, directly or indirectly, initiate, solicit, encourage or
otherwise facilitate (including by way of furnishing information) any inquiries
or the making of any proposal or offer with respect to (i) a merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving it
or any of its subsidiaries, or (ii) any purchase or sale of all or any
significant portion of the assets or 15% or more of the voting securities of it
or any of its subsidiaries (other than the Merger) (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal"). The Company further
agrees that neither it nor any of its subsidiaries nor any of the officers and
directors of it or its subsidiaries shall, and that it shall direct and cause
its and its subsidiaries' employees, agents and representatives (including any
investment banker attorney or accountant retained by it or any of its
subsidiaries) not to, directly or indirectly,
<PAGE> 35
have any discussion with or provide any confidential information or data to any
person (other than Parent and Sub) relating to an Acquisition Proposal, or
engage in any negotiations concerning an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal or
accept an Acquisition Proposal. Notwithstanding the foregoing, the Company or
its Board of Directors shall be permitted to (A) to the extent applicable,
comply with Rule 14e-2(a) promulgated under the Exchange Act with regard to an
Acquisition Proposal, or (B) engage in any discussions or negotiations with, or
provide any information to, any person in response to an unsolicited bona fide
written Acquisition Proposal by any such person, if and only to the extent that,
in the case of the actions referred to in clause (B), (i) the Company's
stockholders meeting relating to the adoption of this Agreement by the
stockholders of the Company shall not have occurred, (ii) the Board of Directors
of the Company, by majority vote, concludes in good faith, after consultation
with its financial advisors and legal advisors, that, as a result of such
Acquisition Proposal, such action is reasonably necessary for the Board of
Directors to act in a manner consistent with its fiduciary duties under
applicable law, and (iii) prior to providing any information or data to any
person in connection with an Acquisition Proposal by any such person, the Board
of Directors of the Company receives from such person an executed
confidentiality agreement on terms no less favorable to the Company than those
contained in the Confidentiality Agreement. In the event an Acquisition Proposal
is made, the Board of Directors of the Company shall promptly notify Parent of
such proposal, together with the name of such person and the material terms and
conditions of any proposals or offers. The Company agrees that it will keep
Parent informed, on a current basis, of the status and terms of any such
proposals or offers and the status of any such discussions or negotiations. The
Company agrees that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal or similar transaction or
arrangement. The Company agrees that it will take the necessary steps to
promptly inform the individuals or entities referred to in the first sentence of
this Section 5.4 of the obligations undertaken in this Section 5.4. Nothing in
this Section 5.4 shall (x) permit the Company to terminate this Agreement
(except as specifically provided in Article VII hereof) or (y) affect any other
obligation of the Company under this Agreement. For purposes of this Agreement,
"Superior Proposal" shall mean a bona fide written Acquisition Proposal which
the Board of Directors of the Company concludes in good faith, after
consultation with its financial advisors and legal advisors, taking into account
all legal, financial, regulatory and other aspects of the proposal and the
person making the proposal (including any break-up fees, expense reimbursement
provisions and conditions to consummation), (i) would, if consummated, be more
favorable to the Company's stockholders, from a financial point of view, than
the transactions contemplated by this Agreement and (ii) is reasonably capable
of being completed (provided that for purposes of this definition of "Superior
Proposal," the term Acquisition Proposal shall have the meaning assigned to such
term in this Section 5.4, except that the reference to "15% or more" in the
definition of "Acquisition Proposal" shall be deemed to be a reference to "a
majority" and "Acquisition Proposal" shall only be deemed to refer to a
transaction involving voting securities of the Company, and the reference to
"assets" (including the shares of any subsidiary of the Company) shall refer
<PAGE> 36
to the assets of the Company and its subsidiaries, taken as a whole, and not the
assets of any of the subsidiaries alone).
SECTION V.5 Employee Benefits Matters. (a) The Company shall
or Parent shall cause the Company and the Surviving Corporation to promptly pay
or provide when due all compensation and benefits earned through or prior to the
Effective Time as provided pursuant to the terms of any Plans in existence as of
the date hereof and set forth on Section 2.10(a) of the Company Disclosure
Schedule for all employees (and former employees) and directors (and former
directors) of the Company. Parent and the Company agree that the Company and the
Surviving Corporation shall pay promptly or provide when due all compensation
and benefits required to be paid pursuant to the terms of any individual
agreement with any employee, former employee, director or former director in
effect and disclosed to Parent as of the date hereof. Nothing herein shall
require the continued employment of any person or prevent the Company and/or the
Surviving Corporation from taking any action or refraining from taking any
action which the Company could take or refrain from taking prior to the
Effective Time.
(b) As of the Effective Time, employees of the Company who
continue employment with the Surviving Corporation as of the Effective Time (the
"Affected Employees") shall be entitled to participate in the employee benefit
plans of Parent on substantially the same terms and conditions as similarly
situated employees of Parent. Parent shall provide, or shall cause the Surviving
Corporation to provide, Affected Employees with full credit for purposes of
eligibility to participate, eligibility for benefit forms and subsidies (other
than under any defined benefit pension plan), vesting, benefit accrual (other
than benefit accrual under any defined benefit pension plans) and determination
of the level of benefits under such plans for such Affected Employees' service
with the Company (except to the extent necessary to avoid duplication of
benefits and except under any post-retirement medical or life insurance
arrangements sponsored by Parent, the Surviving Corporation, or their
affiliates). In addition, Parent shall, or shall cause the Surviving Corporation
to, (i) waive all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the Affected Employees under any welfare benefit plans in which
such employees may be eligible to participate after the Effective Time, other
than limitations or waiting periods that are already in effect with respect to
such employees and that have not been satisfied as of the Effective Time under
any welfare plan maintained for the Affected Employees immediately prior to the
Effective Time, and (ii) provide each Affected Employee with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying any
applicable deductible or out-of-pocket requirements under any welfare plans that
such employees are eligible to participate in after the Effective Time for the
year in which the Effective Time occurs.
(c) To the extent requested by Parent, the Company will use
commercially reasonable efforts to cooperate to limit gross-up, parachute and
severance payments in order that the Company (prior to the Merger), the
Surviving Corporation and Parent do not incur material costs so long as (i) the
financial impact on the relevant individuals is not material in light of the
savings realized by the Company and (ii) the relevant individuals consent
<PAGE> 37
to such limitation to the extent the Company reasonably determines such consent
is required; provided that, nothing in this Section 5.5(c) shall require the
Company to violate any of its contractual obligations or any applicable law;
provided, further that, the Company shall use commercially reasonable efforts to
obtain any such consent.
SECTION V.6 Directors' and Officers' Indemnification;
Insurance. (a) For six years from the Effective Time, to the full extent
permitted under the DGCL, Parent shall cause the Surviving Corporation to
indemnify, defend and hold harmless any person who is now, or has been at any
time prior to the date hereof, or who becomes prior to the Effective Time, a
director, officer, employee or agent (an "Indemnified Person") of the Company or
any of its subsidiaries against all losses, claims, damages, liabilities, costs
and expenses (including attorneys' fees and expenses), judgments, fines, losses
and amounts paid in settlement in connection with any actual or threatened
action, suit, claim, proceeding or investigation (each a "Claim") to the extent
that any such Claim is based on, or arises out of: (i) the fact that such
Indemnified Person is or was a director, officer, employee or agent of the
Company or any of its subsidiaries or is or was serving at the request of the
Company or any of its subsidiaries as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise; or
(ii) this Agreement or any of the transactions contemplated hereby, in each case
to the extent that any such Claim pertains to any matter or fact arising,
existing or occurring prior to or at the Effective Time, regardless of whether
such Claim is asserted or claimed prior to, or at or after the Effective Time.
Without limiting the generality of the preceding sentence, in the event any
Indemnified Person becomes involved in any Claim, after the Effective Time,
Parent shall cause the Surviving Corporation to periodically advance to such
Indemnified person its legal and other expenses (including the cost of any
investigation and preparation incurred in connection therewith), subject to the
providing by such Indemnified Person of an undertaking to reimburse all amounts
so advanced in the case of a final nonappealable determination by a court of
competent jurisdiction that such Indemnified Person is not entitled to be
indemnified therefor.
(b) The Certificate of Incorporation and the By-Laws of the
Surviving Corporation shall contain provisions no less favorable with respect to
indemnification and exculpation from liability than are set forth in Article VI
of the Certificate of Incorporation of the Company, which provisions shall not
be amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of the persons referred to therein.
(c) For three years from the Effective Time, Parent shall
cause the Surviving Corporation to maintain in effect the current directors' and
officers' liability insurance policy covering those persons who are currently
covered by the Company's directors' and officers' liability insurance policy to
the extent that it provides coverage for events occurring prior to the Effective
Time (a copy of which has been heretofore delivered to Parent), so long as the
annual premium therefor would not be in excess of 125% of the most recent
12-month premium paid prior to the date of this Agreement (the "Company's
Current Premium"). If such premiums for such insurance would at any time exceed
125% of the Company's Current Premium, then the Surviving
<PAGE> 38
Corporation shall cause to be maintained policies of insurance which in the
Surviving Corporation's good faith determination, provide the maximum coverage
available at an annual premium equal to 125% of the Company's Current Premium.
The Company represents to Parent that the Company's Current Premium is $481,400.
SECTION V.7 Notification of Certain Matters. The Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate and (ii) any failure of
the Company, Parent or Sub, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.7 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
SECTION V.8 Further Action; Reasonable Best Efforts. Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
its reasonable best efforts to take, or cause to be taken, all appropriate
action, and to do or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable after the
date hereof, including but not limited to (i) cooperation in the preparation and
filing of the Form S-4, the Proxy Statement, and required filings under the HSR
Act and any amendments to any thereof and (ii) using its reasonable best efforts
to make all required regulatory filings and applications and to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and parties to contracts with the Company and
its subsidiaries as are necessary for the consummation of the transactions
contemplated by this Agreement and to fulfill the conditions to the Merger. In
furtherance and not in limitation of the foregoing, each party hereto agrees to
make, to the extent it has not already done so, an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby as promptly as practicable and in any event
within ten business days of the date hereof and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall use their reasonable best efforts to take all such necessary action. In
the event that a suit or objection is instituted by any person or governmental
authority challenging this Agreement and the transactions contemplated hereby as
violative of applicable competition and antitrust laws, each of Parent and the
Company shall use their reasonable best efforts to resist or resolve such suit
or objection. Notwithstanding the foregoing, in connection with any such
objection or suit instituted by such person or governmental authority
(including, but not limited to, the Federal Trade Commission or the Antitrust
Division of the Department of Justice), neither Parent nor Sub shall be required
to provide any undertakings or agree to any condition that could reasonably be
expected to (a) result in a substantial detriment to Parent's or the Company's
business, financial condition, results of operations or
<PAGE> 39
prospects or (b) materially diminish the strategic or financial benefits of the
transactions contemplated hereby.
SECTION V.9 Public Announcements. Parent and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Merger and shall 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 its securities exchange.
SECTION V.10 Stock Exchange Listing. Parent shall use its
reasonable best efforts to have approved for listing on the NYSE prior to the
Effective Time, subject to official notice of issuance, the Parent Common Stock
to be issued pursuant to the Merger.
SECTION V.11 Affiliates. Prior to the Closing Date, the
Company shall deliver to Parent a letter identifying all persons who are, at the
time this Agreement is submitted for adoption by the stockholders of the
Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use its best efforts to cause each such person
to deliver to Parent on or prior to the Closing Date a written agreement
substantially in the form attached as Exhibit A hereto.
SECTION V.12 Amendments to the Rights Agreement. Except as
expressly contemplated by Section 2.24 of this Agreement, the Company agrees
that it will not amend, modify or waive any provision of the Rights Agreement
and shall not take any action to redeem the Rights or render the Rights
inapplicable to any transaction.
SECTION V.13 Cisco Shares. The Company will not sell, pledge,
assign, distribute, exchange, hypothecate or otherwise transfer, or enter into
any hedging agreement or other arrangement (in addition to the Existing Hedging
Transactions) to change its economic interest in respect of, any of the Cisco
Shares. The Company will not amend, terminate or otherwise modify the Existing
Hedging Transactions in any respect.
SECTION V.14 Tax Matters. To the extent requested by Parent,
the Company will use commercially reasonable efforts to cooperate to minimize
the tax consequences of the Cisco Shares, the Stock Rights and net operating
losses; provided that, nothing in this Section 5.14 shall require the Company to
violate any of its contractual obligations or any applicable law.
SECTION V.15 Operating Expenses. The Company shall cause its
operating expenses to not exceed the amounts set forth in Section 5.15(a) of the
Company Disclosure Schedule. The Company shall not waive or amend, nor take any
actions materially inconsistent with, the terms of the letter attached as
Section 5.15(b) of the Company Disclosure Schedule.
ARTICLE VI
CONDITIONS OF MERGER
<PAGE> 40
SECTION VI.1 Conditions to Obligation of Each Party to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction (or, to the extent permitted by applicable law,
waiver) at or prior to the Closing Date of the following conditions:
(a) This Agreement shall have been adopted by the affirmative
vote of the holders of a majority of the outstanding shares of Company Common
Stock.
(b) No statute, rule, regulation, executive order, decree,
ruling, injunction or other order (whether temporary, preliminary or permanent)
shall have been enacted, entered, promulgated or enforced by any court or
governmental authority of competent jurisdiction which prohibits, restrains,
enjoins or restricts the consummation of the Merger; provided, however, that the
parties shall use their reasonable best efforts to cause any such decree,
ruling, injunction or other order to be vacated or lifted.
(c) Any waiting period applicable to the Merger under the HSR
Act and any applicable foreign antitrust or competition laws shall have
terminated or expired.
(d) The Form S-4 and any required post-effective amendment
thereto shall have become effective under the Securities Act and shall not be
the subject of any stop order or proceedings seeking a stop order, and any
material "blue sky" and other state securities laws applicable to the
registration of the Parent Common Stock to be exchanged for Company Common Stock
in the Merger shall have been complied with.
(e) The shares of Parent Common Stock issuable to the holders
of Company Common Stock pursuant to this Agreement shall have been approved for
listing on the NYSE, subject to official notice of issuance.
SECTION VI.2 Conditions to Obligations of the Company to
Effect the Merger. The obligation of the Company to effect the Merger shall be
subject to the satisfaction (or, to the extent permitted by applicable law,
waiver) at or prior to the Closing Date of the following additional conditions:
(a) Parent and Sub shall have performed or complied with in
all material respects their agreements and covenants contained in this Agreement
required to be performed or complied with at or prior to the Closing Date and
the representations and warranties of Parent and Sub contained in this Agreement
qualified as to materiality shall be true in all respects, and those not so
qualified shall be true in all material respects, in each case when made and on
and as of the Closing Date with the same force and effect as if made on and as
of such date (except to the extent in any case that such representations and
warranties speak as of another date), except as expressly contemplated or
otherwise expressly permitted by this Agreement. The Company shall have received
a certificate signed on behalf of Parent by the chief executive officer or chief
financial officer of Parent to such effect.
(b) At any time on or after the date of this Agreement there
shall not have occurred any material adverse change in the business, assets
<PAGE> 41
(including intangible assets), liabilities (including contingent liabilities),
financial condition or results of operations of Parent and its subsidiaries
taken as a whole, except for changes resulting from (i) the United States
economy in general and not relating specifically to the business of Parent and
its subsidiaries taken as a whole or (ii) revenue declines attributable to
long-standing customers of Parent becoming customers of the Company after the
date hereof.
(c) The opinion, based on appropriate representations of the
Company and Parent, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the
Company, to the effect that (i) the Merger will be treated for Federal income
Tax purposes as a reorganization within the meaning of Section 368(a) of the
Code and (ii) Parent, Sub and the Company will each be a party to the
reorganization within the meaning of Section 368(b) of the Code, dated the
Closing Date, shall have been delivered.
SECTION VI.3 Conditions to Obligations of Parent and Sub to
Effect the Merger. The obligations of Parent and Sub to effect the Merger shall
be subject to the satisfaction (or, to the extent permitted by applicable law,
waiver) at or prior to the Closing Date of the following additional conditions:
(a) Except as expressly contemplated or otherwise expressly
permitted by this Agreement, (i) the Company shall have performed or complied
with in all material respects its agreements and covenants contained in this
Agreement required to be performed or complied with at or prior to the Closing
Date, (ii) the representations and warranties of the Company contained in this
Agreement qualified as to materiality shall be true in all respects, and those
not so qualified shall be true in all material respects, in each case when made
and on and as of the Closing Date with the same force and effect as if made on
and as of such date (except to the extent in any case that such representations
and warranties speak as of another date and except to the extent that the
aggregate effect of all inaccuracies in the Specified Representations (as
defined below), which Parent has notified in writing to the Company that Parent
has reasonably determined is adverse in any material respect to the business,
assets (including intangible assets), liabilities (including contingent
liabilities), financial condition or results of operations of the Company or the
realization of the benefits of the transactions contemplated hereby as set forth
in the press release attached as Exhibit B hereto, would not reasonably be
expected to result in costs, losses, liabilities, payments, damages or expenses
to the Company or Parent in excess of $25 million), and (iii) the aggregate
effect of all inaccuracies in the representations and warranties of the Company
contained in this Agreement (without giving effect to any qualifications as to
materiality) would not reasonably be expected to have a Material Adverse Effect.
Parent shall have received a certificate signed on behalf of the Company by the
chief executive officer or chief financial officer of the Company to such
effect. "Specified Representations" mean the representations and warranties set
forth in (i) the first two sentences of Section 2.2, (ii) the last sentence of
Section 2.3(b), (iii) Section 2.7(e), (iv) Sections 2.10(a), 2.10(b) and
2.10(c), (v) Section 2.19 and (vi) the first sentence of Section 2.21.
<PAGE> 42
(b) At any time on or after the date of this Agreement there
shall not have occurred any material adverse change in the business, assets
(including intangible assets), liabilities (including contingent liabilities),
financial condition or results of operations of the Company and its subsidiaries
taken as a whole, except for changes resulting from (i) the United States
economy in general and not relating specifically to the business of the Company
and its subsidiaries taken as a whole, (ii) revenue declines attributable to
long-standing customers of the Company becoming customers of Parent after the
date hereof or (iii) any events described in Section 2.1(a) of the Company
Disclosure Schedule.
(c) The opinion, based on appropriate representations of the
Company and Parent, of Simpson Thacher & Bartlett, counsel to Parent, to the
effect that (i) the Merger will be treated for Federal income Tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and (ii) Parent,
Sub and the Company will each be a party to the reorganization within the
meaning of Section 368(b) of the Code, dated the Closing Date, shall have been
delivered.
(d) There shall not be pending by any governmental authority
or any other third party any suit, action or proceeding (other than suits,
actions or proceedings by shareholders of the Company in their capacity as
shareholders), (i) challenging or seeking to enjoin or prohibit the consummation
of the Merger or seeking to obtain from Parent or any of its subsidiaries any
material damages in connection with the transactions contemplated hereby, (ii)
seeking to enjoin or prohibit the ownership or operation by the Company, Parent
or any of their respective subsidiaries of any material portion of the business
or assets of the Company, Parent or any of their respective subsidiaries, to
dispose of or hold separate any significant portion of the business or assets of
the Company, Parent or any of their respective subsidiaries, as a result of the
Merger or any of the other transactions contemplated by this Agreement, or (iii)
seeking to enjoin or prohibit Parent or any of its subsidiaries from controlling
in any material respect the business or operations of the Company or its
subsidiaries. Notwithstanding the foregoing, it shall not be a condition to
Closing if there shall be pending any suit, action or proceeding by any third
party (other than a governmental authority) seeking any of the relief specified
in clauses (i), (ii) or (iii) above, if such suit, action or proceeding shall
allege violations of federal, state or foreign antitrust or competition laws,
unless Parent's Board concludes, taking into account the advice of outside
counsel, that such third party has a reasonable probability of obtaining such
relief.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION VII.1 Termination. This Agreement may be terminated
and the Merger contemplated hereby may be abandoned at any time prior to the
Closing Date, whether before or after approval of matters presented in
connection with the Merger by the stockholders of the Company (except as
otherwise stated herein):
<PAGE> 43
(a) By mutual written consent of Parent and the Company;
(b) By either Parent or the Company, if the Merger shall not
have been consummated on or before March 31, 2001 (other than due to the failure
of the party seeking to terminate this Agreement to perform its obligations
under this Agreement required to be performed at or prior to the Effective
Time);
(c) By Parent or the Company, if any required approval of the
stockholders of the Company for this Agreement shall not have been obtained by
reason of the failure to obtain the required vote upon a vote held at a duly
held meeting of stockholders or at any adjournment thereof;
(d) [Intentionally Omitted];
(e) By Parent or the Company if any court or other
governmental body of competent jurisdiction shall have issued a final order,
decree or ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
is or shall have become final and nonappealable (provided that the terminating
party shall have used reasonable best efforts to resist or resolve any such
action);
(f) By the Company if prior to the Closing Date (i) there
shall have been a breach of any representation or warranty on the part of Parent
or Sub contained in this Agreement which would reasonably be expected to result
in a closing condition not being satisfied, or (ii) there shall have been a
breach of any covenant or agreement on the part of Parent or Sub contained in
this Agreement which would reasonably be expected to result in a closing
condition not being satisfied, which breach, in either case, shall not have been
cured prior to 30 days following notice thereof;
(g) By Parent if prior to the Closing Date (i) there shall
have been a breach of any representation or warranty on the part of the Company
contained in this Agreement which would reasonably be expected to result in a
closing condition not being satisfied, or (ii) there shall have been a breach of
any covenant or agreement on the part of the Company contained in this Agreement
which would reasonably be expected to result in a closing condition not being
satisfied, which breach, in either case, shall not have been cured prior to 30
days following notice thereof;
(h) [Intentionally Omitted];
(i) By Parent,(i) if the Board of Directors of the Company
shall have (a) failed to recommend or withdrawn, modified or amended in any
respect adverse to Parent or Sub its approval or recommendation of this
Agreement, the Merger or any of the other transactions contemplated herein or
resolved to do so, or (b) approved or recommended a Superior Proposal from a
person (other than Parent) or resolved to do so, or (ii) the Company breaches in
any material respect any of its agreements set forth in Section 5.4;
(j) By the Company (but only prior to adoption by the
stockholders of the Company of this Agreement), if the Board of Directors of the
Company, by majority vote, shall have determined that an Acquisition
<PAGE> 44
Proposal constitutes a Superior Proposal pursuant to, and in accordance with,
Section 5.4 hereof and shall have determined to approve such Superior Proposal;
provided, however, that (i) the Company shall have provided to Parent five
business days' notice of its intention to terminate this Agreement pursuant to
this Section 7.1(j)(which notice shall specify all material terms and conditions
of, and identify the party making, the Superior Proposal), (ii) the Company has
complied in all material respects with Section 5.4, (iii) the Superior Proposal
is pending at the time of such termination, (iv) the Board of Directors shall
have determined in good faith, after giving effect to all concessions and
modifications which may be offered by Parent pursuant to clause (v) below, on
the basis of the advice of its financial advisors and outside legal counsel,
that such proposal is a Superior Proposal, (v) within the five business-day
period referred to in clause (i) above, the Company shall afford Parent the
opportunity to modify the terms and conditions of this Agreement as would enable
the Company and Parent to proceed with the transactions contemplated hereby and
(vi) it shall be a condition precedent to the termination of this Agreement by
the Company pursuant to this Section 7.1(j) that the Company shall have made the
payment of the fee and expenses required by Section 7.3; or
(k) By Parent, if any person or group (as defined in Section
13(d)(3)of the Exchange Act)(other than Parent, Sub or any of their affiliates)
shall have become (x) the beneficial owner (as defined in Rule 13d-3 promulgated
under the Exchange Act) of (i) at least 15% of the outstanding shares of Company
Common Stock in a transaction or series of transactions approved by the board of
directors of the Company (or with respect to which the Rights have been rendered
inapplicable) or (ii) at least 25% of the outstanding shares of Company Common
Stock or (y) shall have acquired 20% or more of the assets of the Company and
its subsidiaries, taken as a whole.
SECTION VII.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto except as set forth in Sections 5.3(b), 7.3 and Article VIII; provided,
however, that nothing herein shall relieve any party from liability for any
willful breach hereof.
SECTION VII.3 Fees and Expenses.
(a) If:
(i) This Agreement is terminated pursuant to Sections 7.1(i),
(j) or (k); or
(ii) (x)(A) Parent or the Company terminates this Agreement
pursuant to Section 7.1(c) and either (I) an Acquisition Proposal shall
have been made at any time after the date hereof and either (X) shall
be pending on the date of the Company's stockholders meeting held to
vote upon the Merger or (Y) shall have become publicly announced at any
time during the 20 business day period preceding such stockholders
meeting (whether or not pending at the time of such stockholders
meeting) or (II) the Average Parent Share Price (as defined below)
exceeds $44
<PAGE> 45
(subject to equitable adjustment in the event of a share split, reverse
share split or share dividend or distribution involving the Parent
Common Stock), or (B) Parent terminates this Agreement pursuant to
Section 7.1(g) and (y) in the case of (A) or (B), within 12 months
thereafter, the Company enters into an agreement with respect to an
Alternative Transaction or an Alternative Transaction is consummated;
then the Company shall pay to Parent and Sub, (A) simultaneously with any
termination by the Company contemplated by Section 7.3(a)(j), (B) within one
business day following any termination by Parent contemplated by Section
7.3(a)(i) or (k), and (C) within one business day following the earlier to occur
of entering into such agreement or consummation described in clause (y) of
Section 7.3(a)(ii), a fee, in cash, of $25 million (the "Fee"), provided,
however, that the Company shall in no event be obligated to pay more than one
such fee with respect to all such occurrences and such termination. "Average
Parent Share Price" means the average closing price of the Parent Common Stock
on the NYSE (as reported on the Wall Street Journal or, if not reported therein,
another authoritative source mutually selected by Parent and the Company) for
the ten trading days immediately preceding the date of the Company's
stockholders meeting.
For purposes of this Section 7.3, "Alternative Transaction"
means any of the following events: (i) the acquisition of the Company by merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, dissolution or otherwise by any person other than Parent, Sub
or any affiliate thereof (a "Third Party"); (ii) the acquisition by a Third
Party of 20% or more of the assets of the Company and its subsidiaries, taken as
a whole; or (iii) the acquisition by a Third Party of (A) at least 15% of the
outstanding shares of Company Common Stock in a transaction or series of
transactions approved by the board of directors of the Company (or with respect
to which the Rights have been rendered inapplicable) or (B) at least 25% of the
outstanding shares of Company Common Stock.
(b) The Company and Parent agree that if this Agreement shall
be terminated pursuant to (i) Section 7.1(b), because of the failure to satisfy
any of the conditions to the Merger set forth in Sections 6.1(c), 6.1(d), 6.1(e)
or 6.2(a) (other than due to any inaccuracy or breach of the representations set
forth in clauses (i) and (ii) of Section 3.7) or (ii) Section 7.1(f) (other than
due to any inaccuracy or breach of the representations set forth in clauses (i)
and (ii) of Section 3.7), Parent shall pay to the Company an amount in cash
equal to $25 million; provided that, such fee shall not be payable if (1) the
Company shall not have complied in all material respects with its obligations
set forth in Section 5.4 or (2) the Company shall have breached its
representations or warranties or its agreements or covenants hereunder such that
the condition set forth in Section 6.3(a) would not be satisfied as of the date
of termination. The payment required to be made pursuant to this Section 7.3(b)
shall be made not later than one business day after the date of such
termination.
(c) Except as otherwise specifically provided herein, each
party shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby, except that each of Parent and the Company
<PAGE> 46
shall bear and pay one-half of the costs and expenses incurred in connection
with the filing, printing and mailing of the Form S-4 and the Proxy Statement.
SECTION VII.4 Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time before or after any required approval of matters presented
in connection with the Merger by the stockholders of the Company; provided,
however, that after any such approval, there shall be made no amendment that by
law requires further approval by such stockholders without the further approval
of such stockholders. This Agreement may not be amended except by an instrument
in writing signed by the parties hereto.
SECTION VII.5 Waiver. At any time prior to the Closing Date,
any party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein, subject to the requirements of
applicable law. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
SECTION VIII.1 Non-Survival of Representations, Warranties and
Agreements. Except as set forth in Section 7.2, the representations, warranties
and agreements in this Agreement shall terminate at the Effective Time or upon
the termination of this Agreement pursuant to Section 7.1, as the case may be.
SECTION VIII.2 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
cable, telecopy, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to Parent or Sub:
Symbol Technologies, Inc.
One Symbol Plaza
Holtsville, NY 11742
Attention: Chief Executive Officer
Fax: (631) 738-4362
with an additional copy to:
Simpson Thacher & Bartlett
<PAGE> 47
425 Lexington Avenue
New York, NY 10017
Attention: John Finley, Esq.
Fax: (212) 455-2502
if to the Company:
Telxon Corporation
1000 Summit Drive
Cincinnati, OH 45150
Attention: Chief Executive Officer
Fax: (330) 664-2888
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
P.O. Box 636
Wilmington, DE 19899
Attention: Steven Rothschild
Fax: (302) 651-3001
SECTION VIII.3 Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliate" shall have the meaning under Rule 12b-2
promulgated under the Exchange Act;
(b) "beneficial owner" with respect to any shares of Company
Common Stock means a person who shall be deemed to be the beneficial owner of
such shares of Company Common Stock (i) which such person or any of its
affiliates or associates beneficially owns, directly or indirectly, (ii) which
such person or any of its affiliates or associates (as such term is defined in
Rule 12b-2 of the Exchange Act) has, directly or indirectly, (A) the right to
acquire (whether such right is exercisable immediately or subject only to the
passage of time), pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement or
understanding, or (iii) which are beneficially owned, directly or indirectly, by
any other persons with whom such person or any of its affiliates or person with
whom such person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares;
(c) "control" (including the terms "controlled by" and "under
common control with") shall have the meaning under Rule 12b-2 promulgated under
the Exchange Act;
(d) "Environmental Laws" shall mean any federal, state or
local law, statute, ordinance, order, decree, rule or regulation relating to
releases, discharges, emissions or disposals to air, water, land or groundwater
of Hazardous Materials; to the use handling or disposal of polychlorinated
byphenyls, asbestos or urea formaldehyde or any other
<PAGE> 48
Hazardous Material; to the treatment, storage, disposal or management of
Hazardous Materials; to exposure to Hazardous Materials; and to the
transportation, release or any other use of Hazardous Materials, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9601, et seq. ("CERCLA"), the Resource Conservation and
Recovery Act, 42 U.S.C. 6901, et seq. ("RCRA"), the Toxic Substances Control
Act, 15 U.S.C. 2601, et seq. ("TSCA"), the Occupational, Safety and Health Act,
29 U.S.C. 651, et seq., the Clean Air Act, 42 U.S.C. 7401, et seq., the Federal
Water Pollution Control Act, 33 U.S.C. 1251, et seq., the Safe Drinking Water
Act, 42 U.S.C. 300f, et seq., the Hazardous Materials Transportation Act, 49
U.S.C. 1802 et seq. ("HMTA") and the Emergency Planning and Community Right to
Know Act, 42 U.S.C. 11001 et seq. ("EPCRA"), and other comparable state and
local laws and all rules and regulations promulgated pursuant thereto or
published thereunder;
(e) "Facility" shall mean each store, office, plant or
warehouse owned or leased by the Company or any of its subsidiaries;
(f) "generally accepted accounting principles" or "GAAP" means
the generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession in the
United States, in each case applied on a basis consistent with the manner in
which the audited financial statements for the fiscal year of the Company ended
March 31, 1999 were prepared, in the case of the Company, and the fiscal year
ended December 31, 1999, in the case of Parent;
(g) "Hazardous Materials" shall mean each and every element,
compound, chemical mixture, contaminant, pollutant, material, waste or other
substance which is defined, determined or identified as hazardous or toxic under
Environmental Laws or the release of which is regulated under Environmental
Laws. Without limiting the generality of the foregoing, the term includes:
"hazardous substances" as defined in CERCLA; "extremely hazardous substances" as
defined in EPCRA; "hazardous waste" as defined in RCRA; "hazardous materials" as
defined in HMTA; "chemical substance or mixture" as defined in TSCA; crude oil,
petroleum products or any fraction thereof; radioactive materials including
source, byproduct or special nuclear materials; asbestos or asbestos-containing
materials; chlorinated fluorocarbons ("CFCs"); and radon;
(h) "person" means an individual, corporation, limited
liability company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in Section 13(d)(3) of the Exchange Act);
(i) "Property" shall mean each improved or unimproved real
property owned or leased by the Company or any of its subsidiaries; and
(j) "subsidiary" or "subsidiaries" of the Company, the
Surviving Corporation, Parent or any other person means any corporation,
partnership, joint venture or other legal entity of which the Company, the
Surviving Corporation, Parent or such other person, as the case may be (either
alone or
<PAGE> 49
through or together with any other subsidiary), owns, directly or indirectly,
50% or more of the stock or other voting or economic equity interests.
SECTION VIII.4 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
SECTION VIII.5 Entire Agreement; Assignment. This Agreement,
together with the Confidentiality Agreement, constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof. This Agreement shall not
be assigned by operation of law or otherwise, except that Parent and Sub may
assign all or any of their respective rights and obligations hereunder to any
direct or indirect wholly owned subsidiary or subsidiaries of Parent, provided
that no such assignment shall relieve the assigning party of its obligations
hereunder if such assignee does not perform such obligations. Any attempted
assignment which does not comply with the provisions of this Section 8.5 shall
be null and void ab initio.
SECTION VIII.6 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and, except
as provided in the following sentence, nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement. The parties hereto expressly intend the provisions of Section 5.6 to
confer a benefit upon and be enforceable by, as third party beneficiaries of
this Agreement, the third persons referred to in, or intended to be benefitted
by, such provisions.
SECTION VIII.7 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware, without
regard to principles of conflicts of laws.
SECTION VIII.8 Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION VIII.9 Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
<PAGE> 50
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
SYMBOL TECHNOLOGIES, INC.
Attest:
_______________________ By: ______________________________________
Title:
TX ACQUISITION CORPORATION
Attest:
_______________________ By: ______________________________________
Title:
TELXON CORPORATION
Attest:
_______________________ By: ______________________________________
Title:
<PAGE> 51
----------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
Among
SYMBOL TECHNOLOGIES, INC.,
TX ACQUISITION CORPORATION
and
TELXON CORPORATION
Dated as of July 25, 2000
----------------------------------------------------------
<PAGE> 52
TABLE OF CONTENTS
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ARTICLE I THE MERGER................................................................................................... 1
SECTION 1.1 The Merger....................................................................................... 1
SECTION 1.2 Effective Time................................................................................... 1
SECTION 1.3 Effects of the Merger............................................................................ 2
SECTION 1.4 Certificate of Incorporation; By-Laws............................................................ 2
SECTION 1.5 Directors and Officers........................................................................... 2
SECTION 1.6 Conversion of Securities......................................................................... 2
SECTION 1.7 Treatment of Employee Options and Other Employee
Equity Rights........................................................................ 4
SECTION 1.8 Fractional Interests............................................................................. 7
SECTION 1.9 Surrender of Shares of Company Common Stock; Stock
Transfer Books....................................................................... 7
SECTION 1.10 Closing and Closing Date........................................................................ 9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................................... 10
SECTION 2.1 Organization and Qualification................................................................... 10
SECTION 2.2 Certificate of Incorporation and By-Laws......................................................... 10
SECTION 2.3 Capitalization; Subsidiaries..................................................................... 11
SECTION 2.4 Authority Relative to This Agreement............................................................. 13
SECTION 2.5 No Conflict; Required Filings and Consents....................................................... 14
SECTION 2.6 Compliance....................................................................................... 15
SECTION 2.7 SEC Filings; Financial Statements................................................................ 15
SECTION 2.8 Absence of Certain Changes or Events............................................................. 17
SECTION 2.9 Absence of Litigation............................................................................ 18
SECTION 2.10 Employee Benefit Plans.......................................................................... 18
SECTION 2.11 Tax Matters..................................................................................... 20
SECTION 2.12 Environmental Matters........................................................................... 21
SECTION 2.13 Form S-4; Proxy Statement....................................................................... 22
SECTION 2.14 Opinion of Financial Advisor.................................................................... 22
SECTION 2.15 Brokers......................................................................................... 22
SECTION 2.16 Affiliate Transactions.......................................................................... 23
SECTION 2.17 Vote Required................................................................................... 23
SECTION 2.18 DGCL Section 203; State Takeover Statutes....................................................... 23
SECTION 2.19 Material Contracts.............................................................................. 24
SECTION 2.20 Absence of Breaches or Defaults................................................................. 25
SECTION 2.21 Intellectual Property........................................................................... 26
SECTION 2.22 Reorganization Qualification.................................................................... 27
SECTION 2.23 Rights Agreement................................................................................ 27
SECTION 2.24 Cisco Shares.................................................................................... 27
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB........................................................... 28
SECTION 3.1 Corporate Organization........................................................................... 28
SECTION 3.2 Capitalization................................................................................... 29
SECTION 3.3 Authority Relative to This Agreement............................................................. 30
SECTION 3.4 No Conflict; Required Filings and Consents....................................................... 30
SECTION 3.5 Compliance....................................................................................... 31
SECTION 3.6 SEC Filings; Financial Statements................................................................ 32
SECTION 3.7 Absence of Certain Changes or Events............................................................. 33
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SECTION 3.8 Form S-4; Proxy Statement........................................................................ 33
SECTION 3.9 Brokers.......................................................................................... 34
SECTION 3.10 Absence of Litigation........................................................................... 34
SECTION 3.11 Reorganization Qualification.................................................................... 34
SECTION 3.12 Knowledge....................................................................................... 35
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER...................................................................... 35
SECTION 4.1 Conduct of Business of the Company Pending the
Merger............................................................................... 35
SECTION 4.2 Conduct of Business of Parent Pending
the Merger........................................................................... 39
ARTICLE V ADDITIONAL AGREEMENTS........................................................................................ 40
SECTION 5.1 Preparation of Form S-4 and the Proxy Statement;
Stockholder Meeting.................................................................. 40
SECTION 5.2 Accountants' Letters............................................................................. 41
SECTION 5.3 Access to Information; Confidentiality........................................................... 42
SECTION 5.4 No Solicitation of Transactions.................................................................. 43
SECTION 5.5 Employee Benefits Matters........................................................................ 44
SECTION 5.6 Directors' and Officers' Indemnification;
Insurance............................................................................ 46
SECTION 5.7 Notification of Certain Matters.................................................................. 47
SECTION 5.8 Further Action; Reasonable Best Efforts.......................................................... 47
SECTION 5.9 Public Announcements............................................................................. 48
SECTION 5.10 Stock Exchange Listing.......................................................................... 48
SECTION 5.11 Affiliates...................................................................................... 48
SECTION 5.12 Amendments to the Rights Agreement.............................................................. 49
SECTION 5.13 Cisco Shares.................................................................................... 49
SECTION 5.14 Tax Matters..................................................................................... 49
SECTION 5.15 Operating Expenses.............................................................................. 49
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ARTICLE VI CONDITIONS OF MERGER........................................................................................ 49
SECTION 6.1 Conditions to Obligation of Each Party to
Effect the Merger.................................................................... 49
SECTION 6.2 Conditions to Obligations of the Company
to Effect the Merger................................................................. 50
SECTION 6.3 Conditions to Obligations of Parent and
Sub to Effect the Merger............................................................. 51
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.......................................................................... 53
SECTION 7.1 Termination...................................................................................... 53
SECTION 7.2 Effect of Termination............................................................................ 55
SECTION 7.3 Fees and Expenses................................................................................ 55
SECTION 7.4 Amendment........................................................................................ 57
SECTION 7.5 Waiver........................................................................................... 57
ARTICLE VIII GENERAL PROVISIONS........................................................................................ 57
SECTION 8.1 Non-Survival of Representations, Warranties
and Agreements....................................................................... 57
SECTION 8.2 Notices.......................................................................................... 57
SECTION 8.3 Certain Definitions.............................................................................. 58
SECTION 8.4 Severability..................................................................................... 60
SECTION 8.5 Entire Agreement; Assignment..................................................................... 61
SECTION 8.6 Parties in Interest.............................................................................. 61
SECTION 8.7 Governing Law.................................................................................... 61
SECTION 8.8 Headings......................................................................................... 61
SECTION 8.9 Counterparts..................................................................................... 61
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