<PAGE>
As filed with the Securities and Exchange Commission on March 24, 2000
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
---------------
MOTOROLA, INC.
(Exact name of registrant as specified in its charter)
Delaware 3663 36-1115800
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
1303 East Algonquin Road
Schaumburg, Illinois 60196
(847) 576-5000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------
Carl F. Koenemann
Executive Vice President and Chief Financial Officer
Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
(847) 576-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
With copies to:
Donald F. McLellan, Esq. Oscar A. David, Esq. Peter B. Tarr, Esq.
Motorola, Inc. Brian T. Black, Esq. Hale and Dorr LLP
1303 East Algonquin Road Winston & Strawn 60 State Street
Schaumburg, Illinois 35 West Wacker Drive Boston, Massachusetts
60196 Chicago, Illinois 60601 02109
(847) 576-5000 (312) 558-5600 (617) 526-6000
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective time of the merger of a wholly owned subsidiary
of the registrant with and into C-Port Corporation, which shall occur as soon
as practicable after the effective date of this registration statement and the
satisfaction of all conditions to the closing of such merger.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
CALCULATION OF REGISTRATION FEE
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed
Proposed maximum
Title of each class of Amount maximum aggregate Amount of
securities to be to be offering price offering registration
registered registered per share(3) price(3) fee(4)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $3 par
value (and associated
preferred stock 2,907,862
purchase rights)(1)... shares(2) Not applicable Not applicable $2,558
</TABLE>
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(1) Each share of Motorola common stock is accompanied by a right to purchase
Junior Participating Preferred Stock, Series B of Motorola. Prior to the
occurrence of certain events, none of which has occurred as of this date,
the rights will not be exercisable or evidenced separately from the common
stock.
(2) Represents the maximum number of shares of Motorola common stock that may
be issued to former C-Port Corporation stockholders pursuant to the
proposed merger described herein, giving effect to the exercise of
outstanding options, warrants or other rights to purchase C-Port common
stock and assuming an exchange ratio of 0.1022485 of a share of Motorola
common stock for each share of C-Port common stock pursuant to the merger
described herein. On February 29, 2000, Motorola declared, subject to
approval by its stockholders, a 3-for-1 common stock split in the form of a
stock dividend payable on June 1, 2000 to holders of Motorola common stock
of record as of May 15, 2000. The applicable exchange ratio terms of the
merger agreement will automatically adjust in certain circumstances to
reflect the Motorola stock split. To the extent the proposed merger is
completed after May 15, 2000, this registration statement will be deemed to
cover, pursuant to Rule 416 under the Securities Act of 1933, as amended,
8,723,586 shares of Motorola common stock (including the associated stock
purchase rights), which includes the 5,815,724 maximum additional shares of
Motorola common stock that may be issued to former C-Port stockholders
pursuant to the merger agreement to give effect to the Motorola stock
split.
(3) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act, and calculated pursuant to
Rule 457(f) under the Securities Act. C-Port is a privately held
corporation and there is no market for its securities. Pursuant to Rule
457(f)(2) under the Securities Act of 1933, as amended, the proposed
maximum aggregate offering price is based upon the book value of the
securities of C-Port being acquired in the proposed merger, which is
$9,686,238, computed as of the latest practicable date prior to the date of
filing this registration statement.
(4) Calculated by multiplying .000264 by the proposed maximum aggregate
offering price.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this proxy statement/prospectus is not complete and may be +
+changed. We may not offer or sell these securities until the registration +
+statement filed with the Securities and Exchange Commission is effective. +
+This proxy statement/prospectus is not an offer to sell these securities and +
+it is not soliciting an offer to buy these securities in any state where the +
+offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, Dated March 24, 2000
C-Port Corporation
One High Street
North Andover, Massachusetts 01845
[ ], 2000
Dear Stockholders:
You are cordially invited to attend a special meeting of stockholders of C-
Port Corporation which we will hold at [ ].m., local time, on
[ ], [ ], 2000, at the offices of Hale and Dorr LLP, 60 State
Street, Boston, Massachusetts 02109.
C-Port Corporation has signed a merger agreement with Motorola, Inc. If the
merger is completed, C-Port will become a wholly owned subsidiary of Motorola.
At the special meeting, we will ask you to vote on the merger agreement and
the merger of C-Port and Motorola. Your board of directors has unanimously
approved the merger agreement and the merger and unanimously recommends that
you approve and adopt the merger agreement and the merger at the special
meeting.
If C-Port's stockholders approve the merger agreement and the merger, then
each of your C-Port common shares will be exchanged in the merger for 0.1022485
of a share of Motorola common stock. If the merger occurs after May 15, 2000,
the record date for the three-for-one stock split of Motorola's common stock
approved by the Motorola board of directors on February 29, 2000, the 0.1022485
exchange ratio will automatically adjust under the merger agreement to
0.3067455 to reflect the stock split. Please note that the exchange ratio will
not be adjusted in the event of any increase or decrease in the market price of
Motorola common stock. You should therefore obtain a current market quotation
for Motorola common stock before voting on the merger.
Approximately 10% of the Motorola common stock that you would otherwise be
entitled to receive in the merger will be deposited in an escrow account and
may be used to compensate Motorola in the event that it is entitled to
indemnification under the merger agreement. Shares of Motorola common stock
subject to issuance under options granted under C-Port's 1997 stock incentive
plan will not be included in the escrow account. To the extent that some or all
of the escrowed shares are not required to indemnify Motorola, the escrowed
shares will be distributed within five business days following the first
anniversary of the merger. Motorola common stock is listed on the New York
Stock Exchange under the trading symbol "MOT" and on [ ], 2000, Motorola
common stock closed at $[ ] per share. You will receive cash instead of any
fractional share of Motorola common stock which you would otherwise receive in
the merger.
In order to complete the merger, C-Port's charter requires that the merger
agreement and the merger be approved by:
. holders of a majority of the outstanding shares of C-Port common stock and
C-Port Series A, Series B and Series C preferred stock, voting together as
a single class; and
. holders of at least fifty-five percent (55%) of the outstanding shares of
C-Port Series A, Series B and Series C preferred stock, voting together as
a single class.
- -----
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of this transaction or the Motorola
common stock to be issued in the merger, or determined that this proxy
statement/prospectus is accurate or complete. Any person who tells you
otherwise is committing a crime.
<PAGE>
I, together with other stockholders of C-Port holding in the aggregate
approximately 55.7% of the outstanding C-Port common stock and preferred stock,
voting together as a single class, and approximately 69.8% of the outstanding
C-Port preferred stock, voting together as a single class, have agreed to vote
all of our shares in favor of the approval of the merger agreement and the
merger. Consequently, approval of the merger agreement and the merger is
assured.
C-Port stockholders who properly preserve their rights are entitled to an
appraisal under Delaware law if the merger is completed.
Only stockholders who hold shares of C-Port stock at the close of business
on [ ], 2000, the record date for the special meeting, will be
entitled to vote at the special meeting of C-Port stockholders.
You should consider the matters discussed under "Risk Factors" commencing on
page 14 of the enclosed proxy statement/prospectus before voting. Please review
carefully the entire proxy statement/prospectus.
It is important that your shares be represented and voted at the special
meeting, whether or not you are able to attend personally. If you do not return
your proxy card, the effect will be a vote against the merger. You are
therefore urged to complete, sign, date and return the enclosed proxy card
promptly in the accompanying envelope, which requires no postage if mailed in
the United States. You are, of course, welcome to attend the meeting and vote
in person, even if you have previously returned your proxy card.
I look forward to your support.
Sincerely,
Laurence G. Walker
President and Chief Executive
Officer
2
<PAGE>
C-Port Corporation
One High Street
North Andover, Massachusetts 01845
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On [ ], 2000
A special meeting of stockholders of C-Port Corporation will be held on
[ ], [ ], 2000, at [ ].m., local time, at the offices of
Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109.
The special meeting will be conducted:
1. To consider and vote upon a proposal to adopt the Agreement and Plan
of Merger, dated as of February 17, 2000, by and among Motorola, CP
Acquisition Corp., a wholly owned subsidiary of Motorola, and C-Port,
pursuant to which, among other things, CP Acquisition Corp. will merge with
and into C-Port, as a result of which C-Port will become a wholly owned
subsidiary of Motorola, and Laurence G. Walker will be appointed as the
stockholder representative under the merger agreement.
2. To transact such other business as may properly come before the
meeting.
If C-Port's stockholders approve the merger agreement and the merger, then
each of your C-Port common shares will be exchanged in the merger for 0.1022485
of a share of Motorola common stock. If the merger occurs after May 15, 2000,
the record date for the three-for-one stock split of Motorola's common stock
approved by the Motorola board of directors on February 29, 2000, the 0.1022485
exchange ratio will automatically adjust under the merger agreement to
0.3067455 to reflect the stock split.
In order to complete the merger, C-Port's charter requires that the merger
agreement and the merger be approved by:
. holders of a majority of the outstanding shares of C-Port common stock
and C-Port Series A, Series B and Series C preferred stock, voting
together as a single class; and
. holders of at least fifty-five percent (55%) of the outstanding shares of
C-Port Series A, Series B and Series C preferred stock, voting together
as a single class.
Stockholders of C-Port holding in the aggregate approximately 55.7% of the
outstanding C-Port common and preferred stock, voting together as a single
class, and approximately 69.8% of the outstanding C-Port preferred stock,
voting together as a single class, have agreed to vote all of their shares in
favor of the adoption of the merger agreement and the merger. Consequently,
approval of the merger agreement and the merger by the C-Port stockholders is
assured.
C-Port stockholders who properly preserve their rights are entitled to an
appraisal under Delaware law if the merger is completed.
Only stockholders who hold shares of C-Port stock at the close of business
on [ ], 2000, the record date for the special meeting, will be
entitled to vote at the special meeting.
You should consider the matters discussed under "Risk Factors" commencing on
page 14 of the enclosed proxy statement/prospectus before voting. Please review
carefully the entire proxy statement/prospectus and the merger agreement
attached as Appendix A.
<PAGE>
Your board of directors unanimously recommends that you vote "For" approval
and adoption of the merger agreement and the merger, as described in detail in
the accompanying proxy statement/prospectus.
For the Board of Directors,
Laurence G. Walker
Secretary
North Andover, Massachusetts
[ ], 2000
Whether or not you plan to attend the special meeting, please complete, sign
and date the enclosed proxy and promptly return it in the accompanying envelope
which requires no postage if mailed in the United States. You may revoke your
proxy at any time before it is voted by delivery to C-Port of a subsequently
executed proxy card or a written notice of revocation or by voting in person at
the special meeting.
You should not send stock certificates with your proxy card. A transmittal
letter for your stock will be sent to you by the exchange agent after the
merger.
2
<PAGE>
Motorola is a Delaware corporation and its shares of common stock trade on
the New York Stock Exchange under the symbol "MOT." This proxy
statement/prospectus incorporates by reference important business and financial
information about Motorola that is not included in, or delivered with, this
proxy statement/prospectus. Motorola will provide you with copies of the
information relating to Motorola that has been incorporated by reference,
without charge, upon written or oral request to:
Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
Tel: (800) 762-8509
Attn: Investor Relations
Website: www.motorola.com/investor
For additional information concerning how you can obtain additional
information on Motorola, see "Where You Can Find More Information" on page 67.
If you would like to request documents, please do so by [ ],
2000 in order to obtain them before the special meeting of C-Port stockholders.
C-Port is a privately held corporation with fewer than 170 stockholders that
is not subject to the reporting requirements of the Securities Exchange Act of
1934, as amended, and therefore does not incorporate information in this proxy
statement/prospectus by reference unless such information appears in an
Appendix to this proxy statement/prospectus.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER..................................... 1
SUMMARY.................................................................... 4
The Companies............................................................ 4
Risk Factors............................................................. 5
The C-Port Special Meeting............................................... 5
Record Date; Stockholders Entitled to Vote............................... 5
Vote Required............................................................ 5
Voting Agreement......................................................... 6
Recommendation of the C-Port Board of Directors.......................... 6
Opinion of C-Port's Financial Advisor.................................... 6
Accounting Treatment..................................................... 6
Interests of C-Port Officers and Directors in the Merger................. 6
Material Federal Income Tax Consequences of the C-Port Merger............ 7
Regulatory Matters....................................................... 7
Statutory Appraisal Rights............................................... 7
Management and Operations of C-Port after the Merger..................... 7
What You Will Receive in the Merger...................................... 7
Ownership of Shares after the Merger..................................... 8
The Merger............................................................... 8
Effects of the Merger on the Rights of C-Port Stockholders............... 8
Listing of Motorola Common Stock......................................... 8
Conditions to the Merger................................................. 8
Termination.............................................................. 9
Fees and Expenses........................................................ 9
Appointment of Stockholder Representative................................ 9
Indemnification; Escrow Agreement........................................ 9
Forward-Looking Statements............................................... 10
SUMMARY SELECTED FINANCIAL INFORMATION..................................... 11
Motorola Selected Historical Supplemental Consolidated Financial Data.... 11
Motorola Per Share Data.................................................. 12
Market Price and Dividend Information.................................... 12
RISK FACTORS............................................................... 14
Risks Relating to the Merger............................................. 14
Risks Related to C-Port.................................................. 15
THE COMPANIES.............................................................. 17
Motorola................................................................. 17
C-Port................................................................... 17
THE C-PORT SPECIAL MEETING................................................. 18
Date, Time and Place..................................................... 18
Matters to be Considered at the Special Meeting.......................... 18
Board of Directors Recommendation........................................ 18
Record Date.............................................................. 18
Quorum................................................................... 18
Stockholders Entitled to Vote............................................ 18
Vote Required............................................................ 19
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Voting Agreement........................................................ 19
Proxies................................................................. 19
Revocability of Proxies................................................. 19
Solicitation of Proxies and Expenses.................................... 20
Dissenters' Rights to Appraisal......................................... 20
THE MERGER................................................................ 21
Structure of the Merger................................................. 21
Background.............................................................. 21
Motorola's Reasons for the Merger....................................... 22
C-Port's Reasons for the Merger......................................... 22
Recommendation of the C-Port Board of Directors......................... 24
Opinion of Financial Advisor to C-Port.................................. 24
Accounting Treatment.................................................... 29
Effectiveness of Merger................................................. 29
Merger Consideration.................................................... 29
Treatment of C-Port Stock Options and Restricted Stock.................. 30
Interests of C-Port Directors and Officers in the Merger................ 31
Material Federal Income Tax Consequences of the C-Port Merger........... 32
Regulatory Matters...................................................... 33
Statutory Appraisal Rights.............................................. 34
Appraisal Rights Procedures............................................. 34
Resale of Motorola Common Stock......................................... 36
Management and Operations of C-Port after the Merger.................... 37
THE MERGER AGREEMENT...................................................... 38
The Merger.............................................................. 38
Treatment of C-Port Common Stock........................................ 38
Treatment of C-Port Preferred Stock..................................... 38
Treatment of C-Port Stock Options....................................... 40
Treatment of C-Port Restricted and Founders Stock....................... 40
Fractional Shares....................................................... 40
Exchange of Certificates................................................ 41
Listing of Motorola Common Stock........................................ 41
Representations and Warranties of C-Port................................ 42
Representations and Warranties of Motorola and CP Acquisition Corp...... 42
Certain Covenants and Agreements........................................ 43
Conditions to the Merger................................................ 45
Additional Conditions to the Obligations of Motorola and CP Acquisition
Corp................................................................... 45
Additional Conditions to the Obligations of C-Port...................... 46
Termination............................................................. 46
Fees and Expenses....................................................... 46
Amendment............................................................... 47
Waiver.................................................................. 47
Voting Agreement........................................................ 47
Appointment of Stockholder Representative............................... 48
Indemnification of Motorola; Escrow Agreement........................... 48
DESCRIPTION OF MOTOROLA CAPITAL STOCK..................................... 50
Motorola Common Stock................................................... 50
Motorola Preferred Stock................................................ 50
Motorola Rights Plan.................................................... 51
Transfer Agent; Registrar and Exchange Agent............................ 52
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
COMPARISON OF CERTAIN RIGHTS OF COMMON STOCKHOLDERS OF MOTOROLA AND
STOCKHOLDERS OF C-PORT................................................... 53
Capitalization.......................................................... 53
Voting Stock............................................................ 53
Number of Directors..................................................... 53
Classification of Board of Directors.................................... 54
Quorum for Meeting of Directors......................................... 54
Election of Directors................................................... 54
Removal of Directors.................................................... 54
Amendments to Charter................................................... 54
Filling Vacancies On The Board Of Directors............................. 54
Amendments to By-Laws................................................... 55
Rights Plan............................................................. 55
Special Stockholder Meetings............................................ 55
Stockholder Action By Written Consent................................... 55
Limitation of Personal Liability of Directors and Indemnification....... 55
Dividends............................................................... 56
Liquidation............................................................. 57
Conversion.............................................................. 57
CERTAIN INFORMATION CONCERNING C-PORT..................................... 59
Executive Officers and Key Employees of C-Port.......................... 59
C-Port Director Compensation............................................ 60
C-Port Executive Compensation........................................... 61
Security Ownership of Directors, Executive Officers and Principal
Stockholders of C-Port................................................. 63
Related Party Transactions.............................................. 65
EXPERTS................................................................... 66
LEGAL AND TAX MATTERS..................................................... 66
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS......................... 66
WHERE YOU CAN FIND MORE INFORMATION....................................... 67
</TABLE>
APPENDICES TO THE PROXY STATEMENT/PROSPECTUS
<TABLE>
<C> <S> <C>
Appendix A --Agreement and Plan of Merger................................. A-1
Appendix B --Opinion of Deutsche Bank Securities Inc. .................... B-1
Appendix C --Voting Agreement............................................. C-1
Appendix D --Section 262 of the Delaware General Corporation Law.......... D-1
Appendix E --Form of Escrow Agreement..................................... E-1
</TABLE>
iii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: What is the proposed transaction?
A: A wholly owned subsidiary of Motorola, Inc. will merge into C-Port
Corporation. As a result, C-Port will become a wholly owned subsidiary of
Motorola, and C-Port stockholders will exchange their C-Port shares for shares
of Motorola common stock.
Q: Why are the companies proposing the merger?
A: Motorola's Semiconductor Products Sector offers multiple DigitalDNA(TM)
solutions which enable its customers to create new business opportunities in a
variety of markets. Part of the challenge of the network environment is to
provide upgrade solutions through software rather than frequent rewiring and
equipment upgrades. Motorola and C-Port believe that the combination of
Motorola's host and integrated communications processors with C-Port's network
processor will enable Motorola to offer a scalable family of solutions for the
intelligent programmable functions inside network equipment manufacturers'
products.
Q: What will I receive in the merger?
A: Each of your C-Port common shares will be exchanged in the merger for
0.1022485 of a share of Motorola common stock. If the merger occurs after May
15, 2000, the record date for the three-for-one stock split of Motorola's
common stock approved by the Motorola board of directors on February 29, 2000,
the 0.1022485 exchange ratio will automatically adjust under the merger
agreement to 0.3067455 to reflect the stock split.
Approximately 10% of the shares of Motorola common stock that you would
otherwise be entitled to receive in the merger will be deposited in an escrow
account and may be used to compensate Motorola in the event that it is entitled
to indemnification under the merger agreement. Shares of Motorola common stock
subject to issuance under options granted under C-Port's 1997 stock incentive
plan to be assumed by Motorola in the merger will not be included in the escrow
account.
In addition, you will receive cash payments instead of any fractional
Motorola shares you would have otherwise received. After giving effect to the
merger, former C-Port stockholders will hold less than 1% of the outstanding
Motorola shares.
Q: What happens as the market price of Motorola stock fluctuates?
A: The exchange ratio is a fixed number and will not be adjusted in the
event of any increase or decrease in the price of Motorola common stock. The
value of the shares of Motorola common stock you will receive in the merger
will therefore fluctuate as the price of Motorola common stock increases or
decreases. You should therefore obtain a current market quotation for Motorola
common stock before voting on the merger.
Q: What impact will the Motorola stock split have on what I will receive in
the merger?
A: On February 29, 2000, the Motorola board of directors approved a three-
for-one stock split of Motorola's common stock payable on June 1, 2000 in the
form of a stock dividend to Motorola stockholders of record on May 15, 2000.
Under the merger agreement, if the merger occurs after May 15, 2000, the
exchange ratio will automatically adjust to give effect to the Motorola stock
split.
Q: What is the escrow fund and how does it work?
A: If the merger is completed, Motorola will deposit 290,786 shares of
Motorola common stock into an escrow account. In the event that the merger
occurs after May 15, 2000, the number of shares to be deposited
1
<PAGE>
into the escrow account will be increased to 872,358, in order to give effect
to the three-for-one split of Motorola's common stock payable in the form of a
stock dividend on June 1, 2000 to all Motorola stockholders of record on May
15, 2000.
Shares of Motorola common stock subject to issuance under options under C-
Port's 1997 stock incentive plan to be assumed by Motorola in the merger will
not be included in the escrow account.
The escrowed shares will be available to compensate Motorola in the event
that it is entitled to indemnification from the C-Port stockholders under the
merger agreement. To the extent that some or all the escrowed shares are not
required to indemnify Motorola, those escrowed shares will be distributed to
the C-Port stockholders entitled to receive those shares within five business
days following the first anniversary of the consummation of the merger.
Q: Who must approve the merger?
A: In addition to the approvals by the Motorola board of directors and the
C-Port board of directors, each of which has already been obtained, and
governmental and other regulatory approvals, the merger agreement and the
merger must be approved by C-Port's stockholders.
Q: What stockholder vote is required to approve the merger agreement and the
merger?
A: A majority of the outstanding shares of C-Port common stock entitled to
vote constitutes a quorum for the C-Port special meeting. The affirmative vote
of the holders of at least a majority of the outstanding shares of C-Port
common and preferred stock voting as a single class and 55% of the outstanding
shares of C-Port preferred stock is required to approve the merger agreement
and the merger. Certain stockholders of C-Port holding in the aggregate enough
shares to approve the merger agreement and the merger have entered into a
voting agreement under which they have agreed to vote all of their shares of C-
Port stock in favor of the merger agreement and the merger. Consequently,
approval of the merger agreement and the merger is assured.
Q: Does the C-Port board of directors recommend approval of the merger
agreement and the merger?
A: Yes. After careful consideration, the C-Port board of directors
unanimously recommends that its stockholders vote in favor of the merger
agreement and the merger. For a more complete description of the recommendation
of the C-Port board of directors, see the section entitled "The Merger--C-
Port's Reasons for the Merger" on page 22 and "The Merger--Recommendation of
the C-Port Board of Directors" on page 24.
Q: What if the merger is not completed?
A: It is possible the merger will not be completed. That might happen if,
for example, a required condition to the closing of the merger set forth in the
merger agreement is not satisfied. Should that occur, none of Motorola, C-Port
or any third party is under any obligation to make or consider any alternative
proposals regarding the purchase of your shares of C-Port stock.
Q: What do I need to do now?
A: We urge you to read this proxy statement/prospectus, including the
appendices, carefully, and to consider how the merger will affect you as a
stockholder of C-Port. You also may want to review the documents referenced
under "Where You Can Find More Information" on page 67.
Q: How do I vote?
A: You may vote by mailing a signed proxy card in the enclosed return
envelope as soon as possible so that those shares may be represented at the
special meeting. You may also attend the special meeting and vote in person.
2
<PAGE>
Q: Can I change my vote?
A: Yes. You may change your vote by delivering a later-dated, signed proxy
card to C-Port's secretary before the special meeting of C-Port stockholders,
or by attending the special meeting and voting in person.
Q: Is the merger taxable?
A: It is a condition of the merger that each of Motorola and C-Port receives
an opinion from its respective tax counsel stating that the merger will qualify
as a reorganization for U.S. federal income tax purposes. As a result of the
merger qualifying as a reorganization for U.S. federal income tax purposes, C-
Port stockholders will generally not recognize any gain or loss for U.S.
federal income tax purposes on the exchange of their C-Port shares solely for
Motorola shares in the merger, except for cash received in lieu of fractional
shares of Motorola stock.
We describe the material U.S. federal income tax consequences of the merger
in more detail on pages 32-33. The tax consequences to you will depend on the
facts of your own situation. Please consult your tax advisor for a full
understanding of the tax consequences to you of the merger.
Q: Am I entitled to appraisal rights?
A: Yes. You will be entitled to appraisal rights in connection with the
merger provided that you give written demand for appraisal and comply with all
relevant provisions of Section 262 of the Delaware General Corporation Law
explained on pages 34-36 and in Appendix D to this proxy statement/prospectus.
Q: When do you expect to complete the merger?
A: We expect to complete the merger during the second quarter of this year.
Because the merger is subject to governmental approvals, however, we cannot
predict the exact timing. We are awaiting the expiration of the waiting period
under the Hart-Scott-Rodino Act.
Q: Should I send in my C-Port stock certificates now?
A: No. After we complete the merger, Motorola's exchange agent will send
instructions to you regarding your C-Port shares that were converted in the
merger. These instructions will explain how to exchange your C-Port share
certificates for Motorola share certificates and, if applicable, cash instead
of any fractional shares of Motorola stock that you would otherwise receive in
the merger. Please do not send in your C-Port stock certificates with your
proxy card.
Q: When and where is the special meeting?
A: The special meeting will be held at [ ].m., local time, on
[ ], 2000 at the offices of Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts 02109.
Q: What else will happen at the meeting?
A: We know of no other matters which are expected to come before the special
meeting.
Q: Whom can I call with questions?
A: If you have any questions about the merger or any related transactions,
please call C-Port at (978) 773-2395 (and ask for John Gavin, C-Port's Chief
Financial Officer) or Motorola's Investor Relations Department at (800) 262-
8509.
If you would like copies of any of the documents we refer to in this proxy
statement/prospectus, you should call Motorola at (800) 262-8509.
3
<PAGE>
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus and may not contain all of the information that is
important to you. To better understand the merger, and for a more complete
description of the legal terms of the transaction, you should read this entire
proxy statement/prospectus carefully, as well as those additional documents to
which we refer you. In particular, you should read the documents attached to
this proxy statement/prospectus, including the merger agreement which is
attached as Appendix A, the opinion of Deutsche Bank Securities Inc., which is
attached as Appendix B, the voting agreement, which is attached as Appendix C,
your appraisal rights under Delaware law, which are attached as Appendix D, and
the form of escrow agreement, which is attached as Appendix E. Also, see "Where
You Can Find More Information" on page 67. We have included page references
parenthetically to direct you to a more complete description of the topics
presented in this summary.
The Companies
Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
Tel: (847) 576-5000
website: www.motorola.com
Motorola is a global leader in providing integrated communications solutions
and embedded electronic solutions. These include:
. Software-enhanced wireless telephone, two-way radio, messaging and
satellite communications products and systems, as well as networking and
Internet-access products, for consumers, network operators, and
commercial, government and industrial customers.
. Embedded semiconductor solutions for customers in networking,
transportation, wireless communications and imaging and entertainment
markets.
. Embedded electronic systems for automotive, communications, imaging,
manufacturing systems, computer and industrial markets.
. Digital and analog systems and set-top terminals for broadband cable
television operators.
Motorola is a corporation organized under the laws of the State of Delaware.
Motorola's sales in 1999, after giving effect to the January 5, 2000 merger of
General Instrument Corporation with Motorola that has been accounted for as a
pooling of interests, were $33.1 billion. Shares of Motorola common stock trade
on the New York Stock Exchange under the symbol "MOT."
C-Port Corporation
One High Street
North Andover, Massachusetts 01845
Tel: (978) 773-2300
website: www.cportcorp.com
C-Port is a provider of microprocessor technology to the network equipment
industry, including:
. High-end, fully programmable network processors used in internet switches
and routers.
. The C-5 network processor, a fully programmable processor which will
result in faster time-to-market for network system OEMs and longer time-
in-market for service providers and end users.
4
<PAGE>
C-Port is a corporation organized under the laws of the State of Delaware.
Risk Factors (see page 14)
See "Risk Factors" for a discussion of certain risks that should be
considered by C-Port stockholders in evaluating whether to approve the merger
and the merger agreement and thereby become holders of Motorola common stock.
The C-Port Special Meeting (see page 18)
The special meeting of the C-Port stockholders will be held on
[ ], [ ], 2000, at [ ].m., local time, at the
offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109. At
the special meeting, C-Port stockholders will be asked:
. to approve the merger agreement and the merger and, in so doing, to
appoint Laurence G. Walker as stockholder representative under the merger
agreement; and
. to act on other matters that may be properly submitted to a vote at the
C-Port special meeting.
Record Date; Stockholders Entitled to Vote (see page 18)
You can vote at the special meeting if you owned C-Port shares at the close
of business on [ ], 2000, the record date.
On the record date, there were [ ] shares of C-Port common stock,
[ ] shares of C-Port Series A preferred stock, [ ] shares of C-
Port Series B preferred stock and [ ] shares of C-Port Series C
preferred stock outstanding and entitled to vote at the special meeting. C-
Port stockholders will have one vote at the special meeting for each share of
C-Port common stock that they owned on the record date, and will have the
number of votes equal to the number of shares of C-Port common stock into
which each share of C-Port preferred stock that they owned on the record date
was convertible, whether when voting together with the common stock as a
single class or as a separate vote of the preferred stock voting together as a
single class.
As of March 23, 2000, each share of C-Port Series A, Series B and Series C
preferred stock was convertible into one whole share of C-Port common stock.
On March 14, 2000, holders of at least 55% of the issued and outstanding
shares of C-Port preferred stock approved and adopted, by written consent in
lieu of a meeting, a resolution electing not to treat the merger as a
"liquidation, dissolution or winding up" of C-Port under the provisions of C-
Port's charter and a resolution to convert each issued and outstanding share
of C-Port preferred stock into C-Port common stock, immediately prior to the
effective time of the merger. Therefore, at the effective time of the merger,
C-Port will have no shares of preferred stock issued and outstanding.
Vote Required (see page 19)
The affirmative vote of each of the following is required to approve the
merger agreement and the merger:
. a majority of the outstanding shares of C-Port common stock and C-Port
preferred stock on the record date, voting together as a single class;
and
. at least fifty-five percent (55%) of the outstanding shares of C-Port
Series A, Series B and Series C preferred stock, voting as a single class
on an as converted into common stock basis.
5
<PAGE>
Voting Agreement (see page 47)
Certain officers, directors and stockholders of C-Port have entered into a
voting agreement with Motorola, pursuant to which they have agreed, among
other things, to vote the C-Port stock they own "FOR" approval of the merger
agreement and the merger. Each of these stockholders has also granted an
irrevocable proxy and a power of attorney to Motorola representatives to vote
his, her or its shares of C-Port stock "FOR" approval of the merger agreement
and the merger.
On the record date, these C-Port stockholders collectively owned and were
entitled to vote approximately:
. 55.7% of the outstanding shares of C-Port common stock and preferred
stock, voting together as a single class; and
. 69.8% of the C-Port preferred stock, voting together as a single class.
Recommendation of the C-Port Board of Directors (see page 24)
The C-Port board of directors has unanimously approved the merger
agreement, the merger and the transactions contemplated in the merger
agreement and recommends that C-Port stockholders vote "FOR" approval of the
merger agreement and the merger.
Opinion of Financial Advisor to C-Port (see page 24)
Deutsche Bank Securities Inc., C-Port's financial advisor, has rendered a
written opinion dated February 17, 2000 to the C-Port board of directors that,
as of the date of the opinion, the exchange ratio was fair, from a financial
point of view, to C-Port's stockholders. The full text of the written opinion
of Deutsche Bank is attached as Appendix B to this proxy statement/prospectus.
We encourage you to read the opinion carefully in its entirety to understand
the procedures followed, assumptions made, matters considered and limitations
on the review undertaken by Deutsche Bank in providing its opinion. The
opinion of Deutsche Bank is directed to the C-Port board of directors and does
not constitute a recommendation to any C-Port stockholder with respect to any
matter relating to the merger.
Accounting Treatment (see page 29)
Motorola will account for the merger as a purchase of a business, which
means that the assets and liabilities of C-Port, including intangible assets,
will be recorded at their fair value with the remaining purchase price
reflected as goodwill and the results of operations and cash flows of C-Port
will be included in Motorola's results prospectively after the merger.
Interests of C-Port Officers and Directors in the Merger (see page 31)
When considering the merger agreement and the merger, C-Port's board of
directors was aware that certain of the officers and directors of C-Port may
have interests and arrangements that are different from your interests as
stockholders. These include rights under certain stock-based employee benefits
awards, as well as arrangements with Motorola regarding employment following
the merger. In addition, C-Port officers and directors have customary rights
to indemnification against certain liabilities.
6
<PAGE>
Material Federal Income Tax Consequences of the C-Port Merger (see page 32)
The merger is intended to qualify as a reorganization within the meaning of
the Internal Revenue Code. It is a condition of the merger that each of
Motorola and C-Port receive an opinion from its tax counsel stating that the
merger will qualify as a reorganization for U.S. federal income tax purposes.
As a result of the merger qualifying as a reorganization for U.S. federal
income tax purposes, C-Port stockholders generally will not recognize any gain
or loss for U.S. federal income tax purposes on the exchange of their C-Port
shares solely for Motorola shares in the merger, except for cash received in
lieu of fractional shares of Motorola stock.
Regulatory Matters (see page 33)
Motorola and C-Port must make certain filings and take other actions
necessary to obtain approvals from U.S. governmental authorities in connection
with the merger, including antitrust authorities. Motorola and C-Port have
agreed to use reasonable best efforts to obtain any required governmental
consents and approvals, but Motorola is not required to agree to any
conditions, divestitures or expenditures of money to a third party in exchange
for any consent that, in any such case, would be materially adverse to
Motorola, its subsidiaries and C-Port, taken as a whole.
The waiting period during which the U.S. antitrust authorities review the
merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, will expire on April 16, 2000. We expect to obtain all other material
required governmental approvals and, if all other conditions to the merger are
satisfied, complete the merger in the second quarter of 2000. We cannot be
certain, however, that Motorola and C-Port will obtain all required
governmental approvals, or that we will obtain these approvals without
conditions that would be detrimental to Motorola or C-Port.
Statutory Appraisal Rights (see page 34)
Appraisal rights are provided for under Delaware law. C-Port stockholders
who do not vote for the merger and who satisfy certain other conditions
described on pages 35-37 and in Appendix D to this proxy statement/prospectus
are entitled to be paid the "fair value" of their shares of C-Port common or
preferred stock, as determined by the Delaware chancery court. Since appraisal
rights are only available to C-Port stockholders who satisfy certain
conditions, you should carefully review the section of this proxy
statement/prospectus titled "The Merger--Appraisal Rights Procedures" beginning
on page 34 and the copy of the Delaware appraisal rights statute attached as
Appendix D to this proxy statement/prospectus.
Management and Operations of C-Port after the Merger (see page 37)
After the merger, Motorola plans to operate C-Port as a part of Motorola's
Network and Computing Systems Group within the Semiconductor Products Sector of
Motorola. Motorola expects that Laurence G. Walker, President and Chief
Executive Officer of C-Port, will continue to lead the business and that the
other members of current C-Port management and C-Port employees will continue
to work at C-Port after the merger. The headquarters of C-Port is expected to
remain in North Andover, Massachusetts.
What You Will Receive in the Merger (see page 38)
Under the merger agreement, each of your C-Port common shares will be
exchanged for 0.1022485 of a share of Motorola common stock. As previously
announced by Motorola, on February 29, 2000, Motorola's board of directors
declared a three-for-one stock split of its common stock payable on June 1,
2000 in the form of a stock dividend to its common stockholders of record as of
the close of business on May 15, 2000. If the effective time of the merger
occurs after May 15, 2000, the 0.1022485 exchange ratio will automatically
adjust under the merger agreement to 0.3067455 to reflect the stock split.
7
<PAGE>
Because the number of Motorola shares that you will receive in the merger is
fixed, the value of the Motorola shares you will receive in the merger will
fluctuate as the market price of Motorola common stock changes. You should
therefore obtain a market quotation of the price of Motorola common stock
before voting on the merger.
You will have to surrender your C-Port common stock certificates to receive
Motorola common stock certificates. However, please do not send any C-Port
common stock certificates until you receive written instructions from
Motorola's exchange agent after the merger is completed.
Ownership of Shares after the Merger
After giving effect to the merger, the former C-Port stockholders will hold
less than 1% of the outstanding Motorola common stock as a result of the
merger, based upon the number of issued and outstanding shares of Motorola
stock as of March 23, 2000.
The Merger (see page 38)
We propose that a wholly owned subsidiary of Motorola formed for the purpose
of the merger merge with and into C-Port. As a result, C-Port will become a
wholly owned subsidiary of Motorola.
We have attached the merger agreement, which is the legal document that
governs the merger, as Appendix A to this proxy statement/prospectus. We
encourage you to read the merger agreement. We have also filed other related
agreements as exhibits to Motorola's registration statement on Form S-4
containing this proxy statement/prospectus. Please see the section titled
"Where You Can Find More Information" on page 67 for instructions on how to
obtain copies of these exhibits.
Effects of the Merger on the Rights of C-Port Stockholders (see page 38)
The rights of C-Port stockholders who receive Motorola shares in the merger
will continue to be governed by Delaware law, but will also be governed by
Motorola's charter and Motorola's by-laws. The rights of C-Port stockholders
under Motorola's charter and by-laws will differ in certain respects from the
rights under C-Port's charter and by-laws. See "Comparison of Certain Rights of
Common Stockholders of Motorola and Stockholders of C-Port" on pages 53-58 for
a discussion of the material differences between the rights of holders of
Motorola common stock and of C-Port stock.
Listing of Motorola Common Stock (see page 41)
It is a condition to the completion of the merger that the Motorola shares
to be issued to the C-Port stockholders in the merger be authorized for listing
on the New York Stock Exchange.
Conditions to the Merger (see page 45)
We will complete the merger only if certain conditions are satisfied or
waived, including:
. the requisite approval of the C-Port stockholders;
. the expiration or termination of all applicable waiting periods, and any
extensions of these periods, under the Hart-Scott-Rodino Act;
. the receipt of legal opinions that the merger will be treated as a
reorganization for U.S. federal income tax purposes;
. effectiveness of the registration statement on Form S-4 that contains
this proxy statement/prospectus;
. the approval of the listing on the New York Stock Exchange of the
Motorola common stock to be issued to the C-Port stockholders in the
merger; and
. the satisfaction of other customary contractual conditions set forth in
the merger agreement.
8
<PAGE>
Termination (see page 46)
Either Motorola or C-Port may terminate the merger agreement if:
. the merger is not completed by May 31, 2000 (subject to extension to June
30, 2000 under certain circumstances described in the merger agreement);
. a final and nonappealable governmental order is entered enjoining or
prohibiting the completion of the merger;
. the merger agreement fails to receive requisite C-Port stockholder
approval after a vote; or
. the other party breaches its representations, warranties or agreements in
certain circumstances and the breaching party fails to cure the breach
within 30 days of receiving written notice of the breach.
Motorola and C-Port may also mutually agree to terminate the merger
agreement without completing the merger.
Fees and Expenses (see page 46)
Whether or not the merger is completed, Motorola will pay its own fees,
expenses and disbursements incurred by it in connection with the negotiation
and preparation of the merger agreement and Motorola's performance and
compliance thereunder. If the merger is completed, the C-Port stockholders
shall pay, from the escrow fund, the fees, expenses and disbursements of C-Port
and the C-Port stockholders, in excess of $2.5 million in the aggregate for all
such fees, expenses and disbursements, incurred by them in connection with the
negotiation and preparation of the merger agreement and their performance and
compliance thereunder.
If the merger is not completed, C-Port shall pay all of the fees, expenses
and disbursements incurred by C-Port and the C-Port stockholders in connection
with the negotiation and preparation of the merger agreement and their
performance and compliance thereunder.
Appointment of Stockholder Representative (see page 48)
As provided by the terms of the merger agreement, the approval by the C-Port
stockholders of the merger agreement and the merger will constitute the
approval of the appointment of Laurence G. Walker as the stockholder
representative under the merger agreement and will be deemed to be the approval
by the C-Port stockholders of the performance by the stockholder representative
of all rights and obligations conferred on the stockholder representative under
the merger agreement and the escrow agreement.
Indemnification; Escrow Agreement (see page 48)
The merger agreement provides that 290,786 shares of Motorola common stock
will be deposited in escrow with an escrow agent as soon as practicable after
the closing date of the merger. In the event that the merger occurs after May
15, 2000, the number of shares of Motorola common stock to be deposited in the
escrow account will be increased to 872,358 in order to give effect to a three-
for-one split of Motorola's common stock approved by Motorola's board of
directors on February 29, 2000. The number of shares of Motorola common stock
to be received by each C-Port stockholder in the merger will be reduced by
approximately 10% of the shares of Motorola common stock such C-Port
stockholders would otherwise be entitled to receive. Shares of Motorola common
stock subject to issuance under options granted under C-Port's 1997 stock
incentive plan to be assumed by Motorola in the merger will not be included in
the escrow account.
The escrow account will be the only source available to compensate Motorola
for the indemnification obligations of each C-Port stockholder under the merger
agreement, other than for any claim of fraud. The escrow will terminate one
year after the date of the merger at which time all shares of Motorola stock
that are
9
<PAGE>
in the escrow account and are not the subject of any claim by Motorola will be
released to the C-Port stockholders entitled to receive those shares. Any
shares of Motorola stock that are the subject of a claim will be retained in
the escrow account pending resolution of the claim and thereafter any shares
not used to satisfy Motorola's claims for indemnification will be released to
the C-Port stockholders entitled to receive those shares.
Forward-Looking Statements (see page 66)
Motorola and C-Port have made forward-looking statements in this proxy
statement/prospectus and in the documents to which we have referred you. These
statements are subject to risks and uncertainties, and therefore may not prove
to be correct. Forward-looking statements include assumptions as to how
Motorola may perform after the merger and, accordingly, it is uncertain whether
any of the events anticipated by the forward-looking statements will transpire
or occur, or, if any of them do transpire or occur, what impact they will have
on the results of operations and financial condition of Motorola or the price
of its stock. See "Special Note Regarding Forward-Looking Statements" on page
66 for further details.
When we use words like "believes," "expects," "anticipates" or similar
expressions, we are making forward-looking statements. For those statements,
Motorola and C-Port claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
10
<PAGE>
SUMMARY SELECTED FINANCIAL INFORMATION
Motorola Selected Historical Supplemental Consolidated Financial Data
The selected historical consolidated financial data of Motorola as of
December 31, 1999 and 1998 and for the years ended December 31, 1999, 1998 and
1997 has been derived from supplemental consolidated financial statements of
Motorola which reflect the merger of Motorola and General Instrument
Corporation on January 5, 2000 that has been accounted for as a pooling of
interests. These supplemental consolidated financial statements have been
audited by KPMG LLP, independent auditors, and incorporated by reference into
this proxy statement/prospectus. The selected historical supplemental
consolidated financial data of Motorola as of December 31, 1997, 1996 and 1995
and for the years ended December 31, 1996 and 1995 has been derived from
audited consolidated financial statements of Motorola and General Instrument
Corporation previously filed with the Securities and Exchange Commission, but
not incorporated by reference in this proxy statement/prospectus which have
been adjusted to reflect the merger of Motorola and General Instrument
Corporation. This information is qualified in its entirety by, and should be
read in conjunction with, the supplemental consolidated financial statements,
the notes thereto, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations Reflecting the Merger of Motorola, Inc. and
General Instrument Corporation" for Motorola incorporated by reference in this
proxy statement/prospectus.
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C>
Consolidated Statements of Operations
Data:
Net sales........................... $33,075 $31,340 $31,498 $29,657 $28,495
Cost and expenses:
Manufacturing and other costs of
sales.............................. 20,631 19,396 18,532 17,854 16,345
Selling, general and administrative
expenses........................... 5,446 5,656 5,373 5,027 4,916
Restructuring and other charges..... (226) 1,980 327 -- --
Research & development expenditures. 3,560 3,118 2,930 2,572 2,321
Depreciation expense................ 2,243 2,255 2,394 2,367 1,961
Interest expense, net............... 138 215 136 211 172
------- ------- ------- ------- -------
Total costs and expenses............ $31,792 $32,620 $29,692 $28,031 $25,715
------- ------- ------- ------- -------
Net gain on Nextel asset exchange... -- -- -- -- 443
Earnings (loss) before income taxes. 1,283 (1,280) 1,806 1,626 3,223
Income tax provision (benefit)...... 392 (373) 642 568 1,171
------- ------- ------- ------- -------
Net earnings (loss)................. $ 891 $ (907) $ 1,164 $ 1,058 $ 2,052
======= ======= ======= ======= =======
Per Share Data:
Net earnings (loss) per common share
Basic............................... $ 1.26 $ (1.31) $ 1.71 $ 1.56 $ 3.04
======= ======= ======= ======= =======
Diluted............................. $ 1.22 $ (1.31) $ 1.67 $ 1.52 $ 2.96
======= ======= ======= ======= =======
Weighted average common shares
outstanding
Basic............................... 706.5 690.3 680.3 677.2 674.4
Diluted............................. 734.0 690.3 697.6 694.3 694.4
======= ======= ======= ======= =======
Dividends declared per share........ $ 0.48 $ 0.48 $ 0.48 $ 0.46 $ 0.40
======= ======= ======= ======= =======
<CAPTION>
As of December 31,
-----------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet:
Total assets........................ $40,489 $30,951 $28,954 $25,665 $24,086
Working Capital..................... 4,679 2,532 4,597 3,696 2,938
Long-term debt and redeemable
preferred securities............... 3,573 2,633 2,144 1,931 1,949
Total debt and redeemable preferred
securities......................... 6,077 5,542 3,426 3,328 3,554
Total stockholders' equity.......... 18,693 13,913 14,487 12,843 11,911
</TABLE>
11
<PAGE>
Motorola Per Share Data
The following table sets forth certain historical per share data of Motorola
for the years ended December 31, 1999 and 1998, after giving effect to the
January 5, 2000 merger of General Instrument Corporation with Motorola that has
been accounted for as a pooling of interests.
<TABLE>
<CAPTION>
Year Ended
December 31,
-------------
1999 1998
------ ------
<S> <C> <C>
Historical--Motorola:
Net earnings (loss) per share
Basic................................................. $ 1.26 $(1.31)
Diluted............................................... $ 1.22 $(1.31)
Book value per common share (1) (at period end)......... $26.21 $19.93
</TABLE>
- --------
(1) Historical book value per common share is computed by dividing total
stockholders' equity by the number of common shares outstanding at the end
of each period.
Market Price and Dividend Information
The following table sets forth the high and low sale prices for a Motorola
share and the dividends declared for the periods indicated. The prices are as
reported on the New York Stock Exchange Composite Transaction Tape, based on
published financial sources.
<TABLE>
<CAPTION>
Motorola Common Stock
-----------------------------
Cash Dividend
High Low Per Share(1)
------- ------- -------------
<S> <C> <C> <C>
Fiscal Year 1998:
First Quarter............................. $ 65.88 $52.00 $.12
Second Quarter............................ 61.63 48.19 .12
Third Quarter............................. 55.00 39.88 .12
Fourth Quarter............................ 64.31 38.38 .12
Fiscal Year 1999:
First Quarter............................. $ 77.38 $62.56 $.12
Second Quarter............................ 99.13 73.75 .12
Third Quarter............................. 101.50 82.00 .12
Fourth Quarter............................ 149.50 85.00 .12
Fiscal Year 2000:
First Quarter (through March 23, 2000).... $184.63 $119.00 $.12
</TABLE>
- --------
(1) Dividend information for fiscal years 1998 and 1999 is provided for shares
of Motorola common stock outstanding prior to the merger on January 5, 2000
of General Instrument Corporation with a wholly owned subsidiary of
Motorola. The dividend information has not been restated to reflect the
General Instrument merger.
Motorola common stock is currently traded on the New York Stock Exchange
under the symbol "MOT." Motorola common stock is also listed and traded on the
Chicago, London and Tokyo stock exchanges. As of March 23, 2000, there were
approximately 717,314,579 issued and outstanding shares of Motorola common
stock.
As previously announced by Motorola, on February 29, 2000, Motorola's board
of directors approved a
three-for-one stock split of its common stock payable on June 1, 2000 in the
form of a stock dividend to its common stockholders of record as of the close
of business on May 15, 2000. If the merger occurs after May 15, 2000, the
record date for the three-for-one stock split, the 0.1022485 exchange ratio
will automatically adjust under the merger agreement to 0.3067455 to reflect
the Motorola stock split.
12
<PAGE>
Because the exchange ratio in the merger is fixed and because the market
price of Motorola common stock is subject to fluctuation, the market value of
the Motorola shares that you will receive in the merger may increase or
decrease before and after the special meeting of C-Port stockholders. We urge
C-Port stockholders to obtain current market quotations for Motorola common
stock. We cannot give any assurance as to the future prices or markets for
Motorola common stock.
On February 16, 2000, the last trading day prior to the execution of the
merger agreement, the closing sale price of a Motorola share on the New York
Stock Exchange was $147.88. On March 23, 2000, the most recent practicable date
prior to the printing of this proxy statement/prospectus, the closing price of
a Motorola share on the New York Stock Exchange was $161.50. We urge you to
obtain current market quotations prior to making any decision with respect to
the merger.
C-Port's capital stock is not listed for trading on any exchange or
automated quotation service. As of the record date, there were approximately
[ ] holders of record of C-Port capital stock. C-Port has never
declared or paid cash dividends on its common stock and does not plan to pay
any cash dividends prior to the merger.
13
<PAGE>
RISK FACTORS
You should carefully consider the following important factors, in addition
to the other information included and incorporated by reference in this proxy
statement/prospectus, to determine whether to vote for the proposals relating
to the merger. See "Where You Can Find More Information" on page 67.
Risks Relating to the Merger
C-Port Stockholders May Never Receive 10% Of The Motorola Common Stock. Ten
percent of the shares of Motorola common stock (290,786 shares, subject to
adjustment to give effect to the Motorola three-for-one stock split if the
merger is completed after May 15, 2000) that would otherwise be received by C-
Port stockholders in the merger will be placed in an escrow account to secure
the indemnification obligations of the C-Port stockholders under the merger
agreement. Shares of Motorola common stock subject to issuance under stock
options granted under C-Port's 1997 stock incentive plan to be assumed by
Motorola in the merger will not be included in the escrow account. The escrow
account will terminate one year after the date of the merger. If Motorola makes
no claims for indemnification, all of the shares held in escrow will be
released to the C-Port stockholders. However, Motorola may make claims against
the shares held in escrow for damages and liabilities (including reasonable
legal fees) arising out of:
. any inaccuracy in any representation or warranty made by C-Port in the
merger agreement or in the disclosure schedule to the merger agreement;
. any breach or default by C-Port of any of the covenants or agreements
given or made by it in the merger agreement;
. certain fees, expenses and disbursements incurred by C-Port in connection
with the merger in excess of $2.5 million;
. any governmental action, order or directive, administrative proceeding or
ruling;
. personal or bodily injuries or damage to any premises;
. any violation or alleged violation of environmental laws existing prior
to the effective time of the merger; and
. certain other matters described in the disclosure schedule to the merger
agreement.
There can be no assurance that the C-Port stockholders will receive any of
the shares held in the escrow account should they be required to indemnify
Motorola under the terms of the merger agreement. See "The Merger Agreement--
Indemnification of Motorola; Escrow Agreement" on page 48 and "The Merger--
Merger Consideration" on page 29.
No Adjustment To The Merger Terms Will Be Made As A Result Of Changes In The
Market Price Of Motorola's Common Stock. Under the merger agreement, each share
of C-Port stock will be converted into the right to receive 0.1022485 of a
share of Motorola common stock. This exchange ratio will be adjusted as
necessary to give effect to any reclassification, stock split, stock dividend,
reorganization or other similar exchange with respect to Motorola or C-Port
common stock occurring before the merger. The exchange ratio is a fixed number
and will not be adjusted in the event of any increase or decrease in the price
of Motorola common stock. The price of Motorola common stock at the closing of
the merger may vary from its price on the date of this proxy
statement/prospectus and on the date of the special meeting of C-Port
stockholders. The price of Motorola common stock may vary because of changes in
the business, operations or prospects of Motorola, the timing of the completion
of the merger, the prospects of post-merger operations, general market and
economic conditions and other factors. Because the date that the merger is
completed may be later than the date of the special meeting, the price of
Motorola common stock on the date of the special meeting may not be indicative
of its price on the date the merger is completed. We urge C-Port stockholders
to obtain current market quotations for Motorola common stock.
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Conditions To The Merger May Not Be Satisfied. The merger agreement contains
conditions that, if not satisfied, would result in the merger not occurring,
even though the C-Port stockholders approved it. We cannot assure you that all
of the closing conditions to the merger will be satisfied, that any unsatisfied
conditions will be waived or that the merger will occur. If the merger does not
occur, C-Port may incur significant expenses that could have a material adverse
affect on the financial and operating results of C-Port.
If The Merger Is Not Completed, C-Port May Be Unable To Attract Another
Strategic Partner On Equivalent Or More Attractive Terms Than Those Being
Offered By Motorola. If the merger agreement is terminated and C-Port's board
of directors determines that it is in the best interests of the C-Port
stockholders to seek a merger or business combination with another strategic
partner, C-Port cannot assure you that it will be able to find a partner
offering terms equivalent or more attractive than the price and terms offered
by Motorola in the merger.
C-Port May Lose An Opportunity To Enter Into A Merger Or Business
Combination With Another Party On More Favorable Terms Because Of Provisions In
The Merger Agreement Which Prohibit C-Port From Entering Into Such Transactions
Or Soliciting Such Proposals. While the merger agreement is in effect, C-Port
is prohibited from entering into or soliciting, initiating or encouraging any
inquiries or proposals that may lead to a proposal or offer for a merger, with
any person other than Motorola. As a result of this prohibition, C-Port may
lose an opportunity to enter into a transaction with another potential partner
on more favorable terms.
The Price Of Motorola Common Stock May Be Affected By Factors Different From
Those Affecting The Value Of C-Port Stock. Upon completion of the merger, C-
Port stockholders will become Motorola common stockholders. Motorola's business
differs from that of C-Port, and Motorola's results of operations, as well as
the price of Motorola common stock, may be affected by factors different from
those affecting C-Port's results of operations and the value of C-Port stock.
For a discussion of Motorola's business and certain factors to consider in
connection with its business, see Motorola's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999, which is incorporated by reference in this
proxy statement/prospectus.
Some Of C-Port's Directors And Officers Have Interests That Differ In
Several Respects From C-Port Stockholders. In considering the recommendation of
the C-Port board of directors to approve the merger agreement and the merger,
you should consider that some of C-Port's directors and officers have interests
that differ from, or are in addition to, their interests as C-Port stockholders
generally. These interests include the receipt of Motorola stock options,
benefits provided to them by Motorola under employment agreements and the
continuation of certain indemnification arrangements.
Clients Of Motorola And/Or C-Port May Delay Or Cancel Contracts As A Result
Of Concerns Over The Merger. The announcement and closing of the merger could
cause clients and potential clients of Motorola and C-Port to delay or cancel
contracts as a result of client concerns and uncertainty over the combined
company's offerings, personnel or services. Such a delay or cancellation could
have a material adverse effect on the business, operating results and financial
condition of Motorola and C-Port.
Risks Related to C-Port
C-Port Has A History Of Losses And Expects To Incur Future Losses. Since its
inception in November 1997, C-Port has not achieved profitability. Although its
revenue has grown in fiscal years 1999 and 2000, C-Port cannot assure you that
its revenue will continue to grow or that it will realize sufficient revenue to
achieve profitability. C-Port has incurred cumulative net losses of
approximately $22.7 million from inception through December 31, 1999, including
losses of approximately $5.5 million for fiscal year 1998 and $17.0 million for
fiscal year 1999. As of December 31, 1999, C-Port had an accumulated deficit of
approximately
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$24.0 million. If the merger with Motorola is not consummated, C-Port would
expect to increase its operating expenses to expand its sales and marketing
activities, develop new distribution channels, fund increased levels of
research and development and build its operational infrastructure. If C-Port's
future revenue does not increase substantially, these increased expenditures
would have a materially adverse effect on C-Port's future business, results of
operations and financial condition.
C-Port Will Need Additional Financing. If the merger with Motorola is not
consummated and C-Port continues as a stand-alone company, C-Port will not have
sufficient cash resources to continue its business operations as they are now
being conducted without obtaining significant additional debt and/or equity
funds to provide working capital for C-Port's continuing operations. While C-
Port believes that it would be able to raise the funds required to finance its
operations as a stand-alone company, it cannot assure you that the required
funds would be available when needed or that they can be obtained on terms
favorable to C-Port. If the required funds cannot be obtained, C-Port could be
forced to revise its business plans, including possible curtailment of its
future business operations, reduction of its planned future growth or a
combination with another company on terms less favorable than the terms
governing the merger with Motorola and C-Port.
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THE COMPANIES
Motorola
Motorola is a global leader in providing integrated communications solutions
and embedded electronic solutions. These include:
. Software-enhanced wireless telephone, two-way radio, messaging and
satellite communications products and systems, as well as networking and
Internet-access products, for consumers, network operators, and
commercial, government and industrial customers.
. Embedded semiconductor solutions for customers in networking,
transportation, wireless communications and imaging and entertainment
markets.
. Embedded electronic systems for automotive, communications, imaging,
manufacturing systems, computer and industrial markets.
. Digital and analog systems and set-top terminals for broadband cable
television operators.
As the world's #1 producer of embedded processors, Motorola's Semiconductor
Products Sector offers multiple Digital DNA(TM) technologies which enable its
customers to create "smart" products and new business opportunities in the
networking and computing, wireless communications, transportation, and imaging
and entertainment markets. Motorola's worldwide semiconductor sales in 1999
were $7.4 billion. Motorola's worldwide sales in 1999, after giving effect to
the January 5, 2000 merger of General Instrument Corporation with Motorola that
has been accounted for as a pooling of interests, were $33.1 billion.
Motorola is a Delaware corporation and the shares of Motorola common stock
trade on the New York Stock Exchange under the symbol "MOT".
Motorola's principal executive offices are located at 1303 East Algonquin
Road, Schaumburg, Illinois 60196, and its telephone number is (847) 576-5000.
Additional information regarding Motorola is included in Motorola's reports
filed under the Securities Exchange Act of 1934, as amended, that are
incorporated by reference in this document. See "Where You Can Find More
Information" on page 67. Additional information concerning Motorola can also be
found at Motorola's website at www.motorola.com.
C-Port
C-Port Corporation was incorporated in Delaware in 1997. C-Port is a
privately held corporation with fewer than 170 stockholders and no
subsidiaries. C-Port's business focuses on improving the networking industry's
ability to develop, deploy and provide communications services.
Combining expertise in full-custom microprocessors, networking, and software
development tools, C-Port's team offers the industry a fully programmable
communications platform, called C-Ware(TM). Leveraging the C-5 Digital
Communications Processor, the C-Ware(TM) platform enables vendors to develop
high-speed networking products quickly and cost-effectively, shrinking their
development cycles and freeing them to concentrate on delivering innovative
features and services for their enterprise and service provider customers.
C-Port's principal executive offices are located at One High Street, North
Andover, Massachusetts 01845, and its telephone number is (978) 773-2300.
Additional information about C-Port can be found at C-Port's website at
www.cportcorp.com.
C-Port currently has approximately 90 employees. C-Port occupies
approximately 40,000 square feet in its headquarters in North Andover,
Massachusetts and approximately 1,800 square feet in San Jose, California.
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THE C-PORT SPECIAL MEETING
We are furnishing this proxy statement/prospectus to C-Port stockholders in
connection with the solicitation of proxies from C-Port stockholders for use at
the special meeting of C-Port stockholders to be held on [ ], 2000 and
at any adjournment or postponement of the meeting. We are also furnishing this
proxy statement/prospectus to C-Port stockholders as a prospectus in connection
with the issuance by Motorola of shares of Motorola stock in the merger.
Date, Time and Place
The special meeting will be held on [ ], [ ], 2000, at [
].m. local time, at the offices of Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts 02109.
Matters to be Considered at the Special Meeting
At the special meeting of C-Port stockholders, and any adjournment of the
special meeting, C-Port stockholders will be asked:
. to consider and vote upon a proposal to approve and adopt the Agreement
and Plan of Merger by and among Motorola, CP Acquisition Corp. and C-
Port, dated as of February 17, 2000, and the merger under which C-Port
will become a wholly owned subsidiary of Motorola, and the appointment of
Laurence G. Walker as stockholder representative under the merger
agreement; and
. to consider and transact such other matters which may properly come
before the special meeting or any and all adjournments thereof.
Board of Directors Recommendation
The C-Port board of directors has unanimously approved the merger agreement
and the merger and recommends a vote "FOR" approval of the merger agreement and
the merger.
Record Date
The C-Port board of directors fixed the close of business on [ ],
2000 as the record date for the special meeting. Accordingly, only stockholders
of record of C-Port stock at the close of business on [ ], 2000 are
entitled to notice of and to vote at the special meeting.
Quorum
The presence at the special meeting, either in person or by proxy, of a
majority of the C-Port shares issued and outstanding on the record date is
necessary to constitute a quorum to transact business at that meeting. If a
quorum is not present, it is expected that the special meeting will be
adjourned or postponed in order to solicit additional proxies. Abstentions will
be counted for the purpose of determining whether a quorum is present.
Stockholders Entitled to Vote
At the close of business on the record date, [ ], 2000, there were
[ ] shares of C-Port common stock outstanding and entitled to vote held
by [ ] stockholders of record. At the close of business on the record
date, there were [ ] shares of C-Port preferred stock outstanding and
entitled to vote held by [ ] stockholders of record.
The holders of C-Port common stock are entitled to cast one vote for each
share of common stock they hold on each matter submitted to the common
stockholders for a vote at the special meeting. The holders of C-Port Series A
preferred stock, Series B preferred stock and Series C preferred stock are
entitled to cast one vote for each share of common stock into which their
preferred stock could then be converted on each matter as to which the
preferred stockholders are entitled to vote at the special meeting.
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Vote Required
Approval and adoption of the merger agreement and the merger requires the
affirmative vote of the holders of a majority of the C-Port common and
preferred shares outstanding on the record date voting as a single class and
the affirmative vote of the holders of at least 55% of the outstanding shares
of preferred stock voting as a single class.
Failure to vote and abstentions will not be deemed to be cast either "FOR"
or "AGAINST" the merger agreement and the merger. However, because approval and
adoption of the merger agreement and the merger requires the affirmative vote
of the holders of a majority of the outstanding C-Port shares, the failure to
vote and abstentions will have the same effect as a vote "AGAINST" the merger
agreement and the merger.
Voting Agreement
On February 17, 2000, certain stockholders of C-Port, including certain
officers and directors of C-Port, entered into a voting agreement, pursuant to
which, among other things, they agreed to vote their shares of C-Port stock
"FOR" approval of the merger agreement and the merger. A copy of the voting
agreement is attached as Appendix C to this proxy statement/prospectus. Each of
these stockholders has also granted an irrevocable proxy and a power of
attorney to Motorola representatives to vote his, her or its shares of C-Port
stock "FOR" approval of the merger agreement and the merger. On the record
date, the C-Port stockholders that are parties to the voting agreement
collectively owned and were entitled to vote approximately:
. 55.7% of the outstanding shares of C-Port common stock and preferred
stock, voting together as a single class; and
. 69.8% of the C-Port preferred stock, voting together as a single class.
Proxies
All shares represented by properly executed proxy cards received in time for
the special meeting will be voted at the special meeting in the manner
specified by the holders. Properly executed proxy cards that do not contain
voting instructions with respect to approval of the merger agreement and the
merger will be voted "FOR" approval of the merger agreement and the merger.
Shares of C-Port stock represented at the special meeting but not voting,
including shares of C-Port stock for which proxy cards have been received but
for which holders of shares have abstained, will be treated as present at the
special meeting for purposes of determining the presence or absence of a quorum
for the transaction of all business.
Only shares affirmatively voted for approval of the merger agreement,
including properly executed proxy cards that do not contain voting
instructions, will be counted as favorable votes for the merger proposal.
The persons named as proxies by a stockholder may propose and vote for one
or more adjournments of the special meeting, including adjournments to permit
further solicitations of proxies. No proxy voted against the proposal to
approve the merger agreement and the merger will be voted in favor of any
adjournment or postponement.
Revocability of Proxies
You may revoke your proxy at any time prior to its use:
. by delivering to the secretary of C-Port at the address set forth below a
signed notice of revocation or a later-dated, signed proxy card; or
. by attending the special meeting and voting in person.
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Attendance at the special meeting is not in itself sufficient to revoke a
proxy.
All written notices of revocation and other communications with respect to
revocation of proxies should be addressed to C-Port Corporation, One High
Street, North Andover, Massachusetts 01845, Attention: Secretary. A proxy
appointment will not be revoked by death or incapacity of the C-Port
stockholder executing the proxy card unless, before the shares are voted,
notice of such death or incapacity is filed with C-Port's secretary or other
person responsible for tabulating votes on C-Port's behalf.
Solicitation of Proxies and Expenses
C-Port will pay the cost of soliciting proxies from its stockholders. In
addition to solicitation by mail, C-Port's directors, officers and employees
may solicit proxies by telephone, fax, e-mail, telegram or in person.
Please do not send stock certificates with your proxy card. A transmittal
form with instructions concerning the surrender of C-Port stock certificates
will be mailed to you by Motorola's exchange agent promptly after completion of
the merger.
Dissenters' Rights to Appraisal
If you do not wish to accept Motorola common stock in the merger, you have
the right under Delaware law to have the fair value of your C-Port shares
determined by the Delaware chancery court. This right to appraisal is subject
to a number of restrictions and technical requirements. Generally, in order to
exercise your appraisal rights:
. you must send a written demand to C-Port for appraisal in compliance with
Delaware law before the vote on the merger;
. you must not vote in favor of the merger; and
. you must continuously hold your C-Port stock, from the date you make the
demand for appraisal through the closing of the merger.
Merely voting against the merger will not protect your rights to an appraisal.
Appendix D to this proxy statement/prospectus contains a copy of the Delaware
statute governing appraisal rights. Failure to follow all the steps required by
Delaware law will result in the loss of your rights to appraisal. The Delaware
law requirements for exercising appraisal rights are described in further
detail on pages 34-36. See "The Merger--Statutory Appraisal Rights" on page 34
and "The Merger--Appraisal Rights Procedures" on pages 34-36.
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<PAGE>
THE MERGER
This section of the proxy statement/prospectus, as well as the next section
titled "The Merger Agreement" beginning on page 38, describes certain aspects
of the proposed merger. These sections highlight key information about the
merger agreement and the merger, but they may not include all the information
that a stockholder would like to or should know. The merger agreement is
attached as Appendix A to this proxy statement/prospectus. We urge stockholders
to read the merger agreement in its entirety.
Structure of the Merger
If the merger is adopted by the holders of a majority of the outstanding C-
Port common and preferred shares voting as a single class and by 55% of the
outstanding C-Port preferred shares voting as a single class and the other
conditions to the merger are satisfied, CP Acquisition Corp., a wholly owned
subsidiary of Motorola formed for the purpose of the merger, will merge with
and into C-Port, with C-Port being the surviving corporation in the merger and
becoming a wholly owned subsidiary of Motorola.
Background
In August 1998, representatives of Motorola and C-Port met in Austin, Texas
to discuss a possible strategic relationship. These discussions did not lead to
an acquisition proposal.
In September 1999, representatives of Motorola and C-Port resumed
discussions concerning a possible relationship between the two companies and,
in October 1999, they entered into a non-disclosure agreement to facilitate
further discussions.
Following a visit to C-Port's headquarters in North Andover, Massachusetts
in October 1999, Motorola informed Laurence G. Walker, C-Port's President and
Chief Executive Officer, that Motorola was interested in exploring a possible
acquisition of C-Port.
In early December 1999, Daniel Artusi, Corporate Vice President and General
Manager of Motorola's Networking and Computing Systems Group, and Dr. Walker
met in Austin, Texas along with other representatives of Motorola and C-Port to
explore in further detail the possible acquisition of C-Port by Motorola. At
the end of the meeting, the parties agreed to continue their discussions, which
continued periodically thereafter.
The C-Port board of directors, which had previously been advised concerning
Dr. Walker's discussions with Motorola, was further briefed at its December 17,
1999 meeting. During the week of December 20, 1999, senior executives of
Motorola were briefed concerning discussions to date with C-Port. On December
23, 1999, Motorola sent a letter of intent to Dr. Walker describing an
acquisition proposal. This letter was followed by meetings between
representatives of both companies.
On January 4, 2000, C-Port retained Deutsche Bank to serve as its financial
advisor with respect to the merger.
During January, Motorola and C-Port, together with their advisors,
negotiated the principal terms of the merger and on January 25, 2000, the
parties entered into an exclusivity agreement to facilitate finalization of the
terms of the transaction.
In early February 2000, representatives of Motorola, C-Port and their
advisors met in Chicago, Illinois to negotiate the final terms of the merger
agreement and various other legal, financial and regulatory matters.
On February 6, 2000 and February 9, 2000, the C-Port board of directors met
with representatives of Hale and Dorr, C-Port's legal advisor, and Deutsche
Bank in attendance, in order to discuss the terms and conditions of the merger
and the status of the negotiations.
On February 14, 2000, the Motorola board of directors approved the merger
agreement and the merger at a telephonic meeting.
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<PAGE>
On February 16, 2000, the C-Port board of directors met twice with
representatives of Hale and Dorr and Deutsche Bank in attendance to discuss in
detail the terms and conditions of the merger.
On February 17, 2000, the C-Port board of directors met with representatives
of Hale and Dorr and Deutsche Bank in attendance. At that meeting, the C-Port
board of directors reviewed discussion materials prepared by Deutsche Bank with
regard to Motorola's offer and engaged in a detailed discussion of the merits
of the proposed transaction to C-Port's stockholders. Deutsche Bank delivered
its oral opinion to the C-Port board of directors to the effect that, as of
that date, based upon and subject to the assumptions made, matters considered
and limits of the review undertaken by Deutsche Bank, the exchange ratio
between C-Port and Motorola was fair, from a financial point of view, to C-Port
stockholders. Based on their discussions and the materials presented at the
meeting, C-Port's board of directors concluded that Motorola's proposal was in
the best interests of C-Port and its stockholders and authorized the merger
agreement, the voting agreement and the other related documents and the merger.
As of February 17, 2000, the merger agreement was executed by Motorola, CP
Acquisition Corp. and C-Port. In connection with the execution of the merger
agreement, certain stockholders of C-Port entered into a voting agreement
pursuant to which they agreed, among other things, to vote their shares of C-
Port stock in favor of the merger.
On February 22, 2000, before the opening of trading on the New York Stock
Exchange, Motorola and C-Port issued a joint press release announcing the
proposed merger.
Motorola's Reasons for the Merger
As part of its growth strategy, Motorola's Semiconductor Products Sector
seeks opportunities to develop smarter networks faster and strengthen its
product portfolio in the networking equipment industry. By combining Motorola's
Digital DNA(TM) technologies with C-Port's product and development offerings,
which enable high bandwidth network processing applications, Motorola seeks to
offer its customers a scalable family of solutions from the SOHO, to the edge,
to the core of the network. Through the acquisition of C-Port, Motorola
believes it can deliver a complete communications platform including host,
integrated communications and network processors, digital signal processors,
development environments and application software.
In particular, the transaction allows Motorola to benefit from C-Port's
pioneering advances in programmable network processor development. C-Port's C-
5(TM) DCP product is one of the industry's first totally programmable network
processors. When utilized with Motorola's other communications processors, C-
Port's processors allow network equipment manufacturers to build re-
programmable smart networking equipment. This gives service providers the
ability to create and offer new services quickly and efficiently to handle the
proliferation of e-commerce, multimedia content, and other Internet services.
C-Port's Reasons for the Merger
The C-Port board of directors has unanimously approved the merger agreement
and the transactions contemplated thereby and believes that the terms of the
merger agreement and the merger are fair to, and in the best interests of, C-
Port and its stockholders. The C-Port board of directors recommends that the C-
Port stockholders adopt the merger agreement and the merger. The C-Port board
of directors considered and reviewed with management the positive factors
listed below, among other factors, in reaching its decision to approve the
merger agreement and the merger:
. to enable C-Port to capitalize on Motorola's extensive international and
domestic sales, marketing, and distribution expertise and resources,
thereby increasing the visibility and accessibility of C-Port's products;
. to utilize Motorola's research and development resources to enable C-Port
to accelerate its development activities;
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. the strategic fit of combining C-Port's Communications Processor
expertise with that of Motorola's as well as Motorola's extensive product
lines in host processors, memories, and other semiconductor products
allowing C-Port's OEM customers an easier design capability for their
products and to quickly deliver them to market;
. to access additional financial resources to accelerate C-Port's growth
and access to the public markets to raise further capital;
. the fact that the merger was structured as a reorganization for federal
income tax purposes;
. the benefit to the stockholders of C-Port without enduring the time,
expense and uncertainty involved in an initial public offering; and
. the liquidity that the transaction would provide in light of the
consideration being shares of Motorola common stock, which are publicly
traded securities on the New York Stock Exchange and are more readily
marketable than shares of C-Port stock.
In the course of its deliberations, the C-Port board of directors reviewed
with C-Port management and C-Port's legal and financial advisers a number of
additional factors that the C-Port board of directors deemed relevant to the
merger, including, but not limited to:
. the strategic importance to C-Port of the proposed merger;
. the consideration to be received by C-Port stockholders in the merger;
. information concerning C-Port's and Motorola's respective businesses,
prospects, strategic business plans, financial performance and condition,
results of operations, technology positions, management and competitive
positions;
. C-Port management's view as to the financial condition, results of
operations, and business of C-Port before and after giving effect to the
merger;
. C-Port management's view as to the prospects of C-Port's continuing as an
independent company;
. C-Port management's view as to C-Port's ability to gain access to the
necessary capital to meet its strategic business goals in both the near
term and the long term as well as the relative costs associated with
obtaining the capital;
. current financial conditions and historical market prices, volatility and
trading information with respect to Motorola common stock;
. C-Port management's view as to the effect of the merger on the core
business of C-Port, including its research and development efforts,
potential synergy of Motorola's technologies with C-Port's technologies,
the breadth of Motorola's product offerings, and sales and marketing
infrastructure;
. the impact of the merger on C-Port's strategic marketing partners,
employees, and customers; and
. the compatibility of the managements of C-Port and Motorola.
During the course of its deliberations concerning the merger, the C-Port
board of directors also identified and considered a variety of potentially
negative factors that could materialize as a result of the merger, including,
but not limited to:
. the risk that the potential benefits sought in the merger might not be
fully realized;
. the transaction costs involved in connection with closing the merger;
. the possibility that the merger might not be consummated and the effect
of the public announcement of the merger on C-Port's partners, customers
and employees;
. the risks associated with obtaining the necessary approvals required to
complete the merger;
. the effects of the diversion of management resources necessary to respond
to due diligence inquiries and the negotiation and consummation of the
merger; and
. the other risks described under "Risk Factors."
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The foregoing factors are not intended to be an exhaustive list of all
factors considered. In view of the variety of factors considered, the C-Port
board found it impractical to and did not, quantify or otherwise assign
relative weights to the specific factors discussed above.
Recommendation of the C-Port Board of Directors
After extensive discussion among the members of the board of directors, the
C-Port board of directors concluded that the risks associated with the merger
were outweighed by the potential benefits of the merger and unanimously
determined that the merger is fair to, and in the best interests of, C-Port and
its stockholders. Some directors of C-Port may be deemed to have a conflict of
interest in the C-Port board of directors' approval of the merger and its
recommendation that the C-Port stockholders approve the merger. See "The
Merger--Interests of C-Port Directors and Officers in the Merger" on page 31.
Opinion of Financial Advisor to C-Port
Deutsche Bank Securities Inc. has acted as financial advisor to C-Port in
connection with the merger. At the February 17, 2000 meeting of the C-Port
board of directors, Deutsche Bank delivered its oral opinion, subsequently
confirmed in writing as of the same date, to the effect that, as of the date of
such opinion, based upon and subject to the assumptions made, matters
considered and limits of the review undertaken by Deutsche Bank, the exchange
ratio between C-Port and Motorola was fair, from a financial point of view, to
C-Port stockholders.
The full text of Deutsche Bank's written opinion, dated February 17, 2000
(the "Deutsche Bank Opinion"), which includes the assumptions made, matters
considered and limits on the review undertaken by Deutsche Bank in connection
with its opinion, is attached as Appendix B to this proxy statement/prospectus
and is incorporated herein by reference. C-Port stockholders are urged to read
the Deutsche Bank opinion in its entirety. The summary of the Deutsche Bank
opinion set forth in this proxy statement/prospectus is qualified in its
entirety by reference to the full text of the Deutsche Bank opinion.
In connection with Deutsche Bank's role as financial advisor to C-Port, and
in arriving at its opinion, Deutsche Bank has, among other things:
. reviewed certain publicly available financial information and other
information concerning C-Port and Motorola and certain internal analyses
and other information furnished to it by C-Port;
. held discussions with members of the managements of C-Port and Motorola
regarding the businesses and prospects of their respective companies and
the joint prospects of a combined enterprise;
. reviewed the reported prices and trading activity for the common stock of
Motorola;
. compared certain financial information for C-Port, and certain financial
and stock market information for Motorola, with similar information for
selected companies whose securities are publicly traded;
. reviewed the financial terms of selected recent business combinations
which it deemed comparable in whole or in part;
. reviewed the terms of the merger agreement and certain related documents;
and
. performed such other studies and analyses and considered such other
factors as it deemed appropriate.
In preparing its opinion, Deutsche Bank did not independently verify any
information concerning C-Port or Motorola, including any financial information,
forecasts or projections, considered in connection with the rendering of its
opinion. Accordingly, for purposes of its opinion, Deutsche Bank assumed and
relied upon the accuracy and completeness of all such information. Deutsche
Bank did not conduct a physical inspection of any of the properties or assets,
and did not prepare or obtain any independent evaluation or appraisal of any of
the assets or liabilities of C-Port or Motorola.
24
<PAGE>
With respect to the financial forecasts and projections made available to
Deutsche Bank and used in its analysis, Deutsche Bank assumed that they were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the management of C-Port. In rendering its opinion, Deutsche
Bank expressed no view as to the reasonableness of such forecasts and
projections or the assumptions on which they are based.
The Deutsche Bank opinion was necessarily based upon economic, market and
other conditions as in effect on, and the information made available to
Deutsche Bank as of, the date of such opinion.
For purposes of rendering its opinion, Deutsche Bank assumed that, in all
respects material to its analysis:
. the representations and warranties of C-Port and Motorola contained in
the merger agreement were and are true and correct;
. C-Port and Motorola will each perform all of the covenants and agreements
to be performed by it under the merger agreement and all conditions to
the obligation of each of C-Port and Motorola to consummate the merger
will be satisfied without any waiver thereof;
. all material governmental, regulatory or other approvals and consents
required in connection with the consummation of the transactions
contemplated by the merger agreement will be obtained;
. in connection with obtaining any necessary governmental, regulatory or
other approvals and consents, or any amendments, modifications or waivers
to any agreements, instruments or orders to which either C-Port or
Motorola is a party, no limitations, restrictions or conditions will be
imposed or amendments, modifications or waivers made that would have a
material adverse effect on C-Port or Motorola or materially reduce the
contemplated benefits of the merger; and
. the shares held in escrow pursuant to the merger agreement and the escrow
agreement will be released to the stockholders of C-Port on the first
anniversary of the closing of the transaction without any deduction for
any indemnification obligation.
In addition, Deutsche Bank was advised by C-Port, and accordingly assumed
for purposes of its opinion, that the merger will qualify as a reorganization
for federal income tax purposes and that the merger will be accounted for as a
purchase.
Set forth below is a brief summary of certain financial analyses performed
by Deutsche Bank in connection with its opinion and reviewed with the C-Port
board of directors at its meeting on February 17, 2000.
Historical Stock Performance. Deutsche Bank reviewed and analyzed recent and
historical market prices for Motorola common stock and compared such market
prices to certain stock market and industry indices. On the basis of this
analysis, Deutsche Bank calculated that, as of the close of trading on February
16, 2000, the per share price of Motorola common stock was
. 17.8% above its 90-day closing average;
. 7.8% above its 60-day closing average;
. 3.4% above its 30-day closing average;
. 8.4% below its 52-week high; and
. 133.6% above its 52-week low.
Analysis of Selected Publicly Traded Companies. Deutsche Bank compared
certain financial information and commonly used valuation measurements for
Motorola and C-Port to corresponding information and
25
<PAGE>
measurements for selected groups of publicly traded companies with operations
in markets similar to their own. Those companies are as follows:
<TABLE>
<CAPTION>
C-Port Comparable Companies Motorola Comparable Companies
--------------------------- -----------------------------
<S> <C>
. Applied Micro Circuits .ADC Telecommunications, Inc.
. Broadcom Corporation .Alcatel Alsthom
. Galileo Technology .Ericsson, Inc.
. HI/FN .Lucent Technologies, Inc.
. Maker Communications .Nokia Corporation
. MMC Networks Inc. .Nortel Networks
. PMC-Sierra, Inc. .Qualcomm, Inc.
. Transwitch Corp. .Siemens AG
. Vitesse Semiconductor Corp. .Tellabs, Inc.
.Texas Instruments, Inc.
</TABLE>
The financial information and valuation measurements analyzed by Deutsche
Bank included:
. common equity market value;
. operating performance;
. ratios of common equity market value as adjusted for debt and cash
("Enterprise Value") to revenues; and
. ratios of common equity market prices per share ("Equity Value") to
earnings per share ("EPS").
To calculate the trading multiples for Motorola and the comparable
companies, Deutsche Bank used publicly available information concerning
historical and projected financial performance, including earnings estimates
reported by the Institutional Brokers Estimate System ("IBES") or by individual
securities firms' equity research departments, including in certain cases
research from Deutsche Bank. IBES is a data service that monitors and publishes
compilations of earnings estimates by selected research analysts regarding
companies of interest to institutional investors.
The following table summarizes the Enterprise Value to Revenue and EBIT
multiples that Deutsche Bank calculated for C-Port (taking the exchange ratio
into effect), Motorola and their respective comparable companies:
<TABLE>
<CAPTION>
Enterprise Value to:
--------------------------
Trailing 2000 2001
C-Port Revenues Revenues Revenues
------ -------- -------- --------
<S> <C> <C> <C>
Comparable Companies
High......................................... 104.0x 66.3x 64.8x
Mean......................................... 54.3x 35.1x 26.6x
Median....................................... 46.3x 31.2x 21.3x
Low.......................................... 9.0x 6.4x 4.8x
C-Port......................................... * 86.0x 18.7x
</TABLE>
- --------
*Indicates a negative or not meaningful value.
<TABLE>
<CAPTION>
Enterprise Value to:
--------------------------
Trailing 2000 2001
Motorola Revenues Revenues Revenues
-------- -------- -------- --------
<S> <C> <C> <C>
Comparable Companies
High......................................... 21.7x 20.5x 18.0x
Mean......................................... 8.2x 7.1x 5.9x
Median....................................... 7.3x 6.2x 5.2x
Low.......................................... 1.4x 1.3x 1.1x
Motorola....................................... 3.6x 2.9x 2.4x
</TABLE>
26
<PAGE>
The following table summarizes the Equity Value to EPS multiples that
Deutsche Bank calculated for C-Port, Motorola and the comparable companies:
<TABLE>
<CAPTION>
Enterprise Value to:
----------------------
Trailing 2000 2001
C-Port Revenues EPS EPS
------ -------- ------ ------
<S> <C> <C> <C>
Comparable Companies
High............................................. 413.7x 262.3x 243.6x
Mean............................................. 204.6x 148.0x 122.6x
Median........................................... 138.7x 145.9x 107.0x
Low.............................................. 32.5x 26.3x 20.6x
C-Port............................................. * * *
</TABLE>
- --------
*Indicates a negative or not meaningful value.
<TABLE>
<CAPTION>
Enterprise Value to:
---------------------
Trailing 2000 2001
Motorola Revenues EPS EPS
-------- -------- ------ -----
<S> <C> <C> <C>
Comparable Companies
High.............................................. 116.5x 115.0x 90.8x
Mean.............................................. 64.0x 59.4x 48.6x
Median............................................ 54.5x 52.1x 42.0x
Low............................................... 37.7x 29.5x 26.9x
Motorola............................................ 71.4x 46.2x 33.6x
</TABLE>
None of the comparable companies is identical to Motorola or C-Port.
Accordingly, Deutsche Bank believes the analysis of publicly traded comparable
companies is not simply mathematical. Rather, it involves complex
considerations and qualitative judgments, reflected in Deutsche Bank's opinion,
concerning differences in financial and operating characteristics of the
comparable companies and other factors that could affect the public trading
value of the comparable companies.
Analysis of Selected Precedent Transactions. Deutsche Bank reviewed the
financial terms, to the extent publicly available, of 30 proposed, pending or
completed mergers and acquisition transactions since 1998 involving target
companies in the communications integrated circuit industry.
For the precedent transactions, Deutsche Bank calculated various financial
multiples based on publicly available information for each of the selected
transactions. Deutsche Bank then compared these financial multiples to the
corresponding financial multiples for the merger, based on the exchange ratio.
Of the precedent transactions, seven had publicly available financial data and
27 had publicly available headcount information, with respect to which Deutsche
Bank calculated the following multiples:
<TABLE>
<CAPTION>
Enterprise Value to:
----------------------------
Trailing Trailing Headcount
Revenues EBIT ($millions)
-------- -------- ----------
<S> <C> <C> <C>
Precedent Transactions
High...................................... 67.7x 282.3x 13.9
Mean...................................... 18.0x 109.6x 4.4
Median.................................... 9.5x 55.0x 3.8
Low....................................... 2.4x 46.0x 0.6
Merger...................................... * * 4.8
</TABLE>
- --------
*Indicates a negative or not meaningful value.
All multiples for the precedent transactions were based on public
information available at the time of announcement of such transaction, without
taking into account differing market and other conditions during the two-year
period during which the precedent transactions occurred.
27
<PAGE>
Because the reasons for, and circumstances surrounding, each of the
precedent transactions analyzed were so diverse, and due to the inherent
differences between the operations and financial conditions of Motorola and C-
Port and the companies involved in the precedent transactions, Deutsche Bank
believes that a comparable transaction analysis is not simply mathematical.
Rather, such analysis involves complex considerations and qualitative
judgments, reflected in Deutsche Bank's opinion, concerning differences between
the characteristics of these transactions and the merger that could affect the
value of the subject companies and businesses and Motorola and C-Port.
Contribution Analysis. Deutsche Bank analyzed the relative contributions of
Motorola and C-Port to the pro forma income statement of the combined company,
based on published earnings estimates for Motorola and management projections
for C-Port, as compared to C-Port's relative ownership of approximately 0.4% of
the outstanding capital of the combined company. This analysis showed that on a
pro forma combined basis (excluding the effect of any synergies that may be
realized as a result of the Merger and any non-recurring expenses relating to
the Merger), based on the 12-month period ending December 31, 2000:
. Motorola would account for approximately 100.0%, and C-Port would account
for approximately 0.0%, of the combined company's pro forma revenue; and
. Motorola would account for approximately 100.4%, and C-Port would account
for approximately -0.4%, of the combined company's pro forma net income.
Initial Public Offering Valuation Analysis. Deutsche Bank analyzed various
initial public offering valuation scenarios for C-Port based on the trading
characteristics of the comparable companies and financial projections provided
by management. Deutsche Bank assumed that an initial public offering would not
take place before the first quarter of 2001 and therefore determined that any
estimate of C-Port's value derived from such an analysis was purely
speculative.
The foregoing summary describes all analyses and factors that Deutsche Bank
deemed material in its presentation to the C-Port board of directors, but is
not a comprehensive description of all analyses performed and factors
considered by Deutsche Bank in connection with preparing its opinion. The
preparation of a fairness opinion is a complex process involving the
application of subjective business judgment in determining the most appropriate
and relevant methods of financial analysis and the application of those methods
to the particular circumstances is not readily susceptible to summary
description. Deutsche Bank believes that its analyses must be considered as a
whole and that considering any portion of such analyses and of the factors
considered without considering all analyses and factors could create a
misleading view of the process underlying the opinion. In arriving at its
fairness determination, Deutsche Bank did not assign specific weights to any
particular analyses.
In conducting its analyses and arriving at its opinions, Deutsche Bank
utilized a variety of generally accepted valuation methods. The analyses were
prepared solely for the purpose of enabling Deutsche Bank to provide its
opinion to the C-Port board of directors as to the fairness to the stockholders
of C-Port of the exchange ratio. The analyses do not purport to be appraisals
or necessarily reflect the prices at which businesses or securities actually
may be sold, which are inherently subject to uncertainty. In connection with
its analyses, Deutsche Bank made, and was provided by C-Port management with,
numerous assumptions with respect to industry performance, general business and
economic conditions and other matters, many of which are beyond C-Port's or
Motorola's control. Analyses based on estimates or forecasts of future results
are not necessarily indicative of actual past or future values or results,
which may be significantly more or less favorable than suggested by such
analyses. Because such analyses are inherently subject to uncertainty, being
based upon numerous factors or events beyond the control of C-Port, Motorola or
their respective advisors, neither C-Port nor Deutsche Bank nor any other
person assumes responsibility if future results or actual values are materially
different from these forecasts or assumptions.
The terms of the merger were determined through negotiations between C-Port
and Motorola and were approved by the C-Port board of directors. Although
Deutsche Bank provided advice to C-Port during the
28
<PAGE>
course of these negotiations, the decision to enter into the merger was solely
that of the C-Port board of directors. As described above, the opinion and
presentation of Deutsche Bank to the C-Port board of directors were only one of
a number of factors taken into consideration by the C-Port board of directors
in making its determination to approve the merger agreement and the merger.
Deutsche Bank's opinion was provided to the C-Port board of directors to assist
it in connection with its consideration of the merger agreement and the merger
and does not constitute a recommendation to any stockholder of C-Port as to how
to vote with respect to the merger agreement and the merger.
C-Port selected Deutsche Bank as financial advisor in connection with the
merger based on Deutsche Bank's qualifications, expertise, reputation and
experience in mergers and acquisitions. C-Port retained Deutsche Bank pursuant
to a letter agreement dated January 4, 2000. As compensation for Deutsche
Bank's services in connection with the merger, C-Port agreed to pay Deutsche
Bank a cash fee of $375,000 upon the delivery of its opinion and an additional
cash fee that would total $3,450,000 if the merger were consummated at the
value implied by the exchange ratio on the announcement date. Regardless of
whether the merger is consummated, C-Port has agreed to reimburse Deutsche Bank
for reasonable fees and disbursements of its counsel and all of its reasonable
travel and other out-of-pocket expenses. C-Port has also agreed to indemnify
Deutsche Bank and certain related persons to the fullest extent lawful against
certain liabilities, including certain liabilities under the federal securities
laws arising out of its engagement or the merger.
Deutsche Bank is an internationally recognized investment banking firm
experienced in providing advice in connection with mergers and acquisitions and
related transactions. Deutsche Bank has in the past provided investment banking
services to Motorola. Deutsche Bank and its affiliates may actively trade
securities of Motorola for their own account or the account of their customers
and, accordingly, may from time to time hold a long or short position in such
securities.
Accounting Treatment
We anticipate that the merger will be accounted for as a purchase for
financial reporting and accounting purposes, under generally accepted
accounting principles. Under the purchase method of accounting, the purchase
price paid by Motorola for C-Port (including direct costs of the merger) will
be allocated to the identifiable assets and liabilities of C-Port based upon
the fair value of C-Port's identifiable assets and liabilities as of the
effectiveness of the merger and in process research and development, with the
excess of the purchase price over the fair value of net identifiable assets and
in process research and development being allocated to goodwill. After the
merger, the financial condition and results of operations of C-Port will be
included (but not separately reported) in the consolidated financial condition
and results of operations of Motorola.
Effectiveness of Merger
The merger will become effective upon the filing of a certificate of merger
with the Delaware secretary of state, or at such later time as is stated in the
certificate of merger. The filing of a certificate of merger will occur as soon
as practicable, but no later than the third business day after satisfaction or
waiver of the conditions to the completion of the merger described in the
merger agreement.
Merger Consideration
At the effective time of the merger, each issued and outstanding share of C-
Port stock (other than shares as to which dissenters' rights to appraisal have
been perfected) will be converted into the right to receive 0.1022485 of a
share of Motorola common stock for each share of C-Port common stock. As
previously announced by Motorola, on February 29, 2000 Motorola's board of
directors approved a three-for-one stock split of its common stock payable on
June 1, 2000 in the form of a stock dividend to its common stockholders of
record as of the close of business on May 15, 2000. If the effective time of
the merger occurs after May 15, 2000, the 0.1022485 exchange ratio will
automatically adjust under the merger agreement to 0.3067455 to reflect the
stock split.
29
<PAGE>
Shares of treasury stock held by C-Port will be cancelled. Former C-Port
stockholders will receive cash for any fractional Motorola shares which they
would have otherwise received in the merger. As of the effective time of the
merger, all shares of C-Port stock will no longer be outstanding, will
automatically be cancelled and will cease to exist. At that time, each holder
of a certificate representing shares of C-Port stock (other than shares as to
which dissenters' rights to appraisal have been perfected) will cease to have
any rights as a stockholder except the right to receive Motorola common stock,
the right to any dividends or other distributions in accordance with the merger
agreement and the right to receive cash for any fractional share of Motorola
common stock otherwise issuable in the merger. The exchange ratios were
determined through arm's-length negotiations between Motorola and C-Port.
Treatment of C-Port Stock Options and Restricted Stock
Under the merger agreement, at the effective time of the merger, Motorola
will assume C-Port's 1997 stock incentive plan and all stock options granted
under the plan to acquire shares of C-Port common stock. Each stock option
under the plan will be converted into a stock option to acquire Motorola common
stock on the same terms and conditions. The number of shares of Motorola common
stock to be subject to any option will be equal to the number of shares of C-
Port common stock subject to that C-Port stock option multiplied by the
0.1022485 exchange ratio and rounded down to the nearest whole share. The
exchange ratio will be adjusted to give effect to any reclassification, stock
split, stock dividend, reorganization or other similar exchange with respect to
Motorola or C-Port common stock occurring before the merger. The exercise price
per share of Motorola common stock under any stock option will be equal to the
exercise price per share of C-Port common stock subject to that C-Port stock
option divided by the exchange ratio and rounded up to the nearest whole cent.
The merger agreement provides that, prior to the effective time of the merger,
the C-Port board of directors will adopt, by resolution, an amendment, subject
to C-Port stockholder approval (as described in the following sentence), to the
C-Port 1997 stock incentive plan, the form of which will be approved by
Motorola, to provide that one-half of the C-Port stock options that are
unvested as of the effective time of the merger and held by any person
providing services to C-Port at the effective time of the merger shall become
fully vested and exercisable at the effective time of the merger and the other
one-half of the C-Port stock options shall become fully vested over the 12-
month period following the effective date of the merger on a pro-rata basis. C-
Port will also request, in a separate written action, that its stockholders
consent to the acceleration with respect to those option holders who may be
disqualified individuals within the meaning of Section 280G of the Internal
Revenue Code. This consent is expected to be obtained in a manner consistent
with the stockholder approval requirements of Section 280G of the Internal
Revenue Code.
Pursuant to their restricted stock agreements with C-Port, in the event of a
transaction such as the merger, holders of C-Port restricted stock are entitled
to acceleration of one-half of the unvested portion of their restricted stock
and vesting of the remaining one-half over the 12-month period following such
transaction. Prior to the stockholder approval described in the following
sentence, holders of C-Port restricted stock who may be disqualified
individuals within the meaning of Section 280G of the Internal Revenue Code may
elect to waive this preexisting right to acceleration of vesting upon the
merger. Thereafter, C-Port will request, in a separate written action, the
approval of its stockholders of the reinstatement of any waived acceleration of
vesting of the C-Port restricted stock in a manner intended to comply with the
stockholder approval requirements of Section 280G of the Internal Revenue Code.
As long as the approval requirements of Section 280G of the Internal Revenue
Code are complied with, the value of the acceleration of the vesting of C-Port
stock options and restricted stock should not be considered an "excess
parachute payment" subject to Sections 280G and 4999 of the Internal Revenue
Code.
No later than 15 calendar days after the effective time of the merger,
Motorola will prepare and file with the SEC a registration statement on Form S-
8 under the Securities Act of 1933 registering the shares of Motorola common
stock subject to the assumed C-Port stock options. That registration statement
will be kept effective (and the current status of the prospectus required by
the SEC shall be maintained in accordance with the requirements of the
Securities Act of 1933 and the Securities Exchange Act of 1934) for so long as
any assumed C-Port options remain outstanding. See "The Merger Agreement--
Treatment of C-Port Stock Options" on page 40.
30
<PAGE>
Interests of C-Port Directors and Officers in the Merger
In considering the recommendation of the C-Port board of directors in favor
of the merger agreement and the merger, you should be aware that certain
directors and executive officers of C-Port have interests in the merger that
are different from or in addition to, the interests of stockholders of C-Port.
These interests relate to or arise from, among other things:
. the continued indemnification of current directors and officers of C-
Port; and
. the retention of certain current officers of C-Port as employees of
Motorola following the merger.
These interests are described below, to the extent material, and except as
described below, those persons have, to the knowledge of C-Port, no material
interest in the merger apart from those of stockholders generally. The C-Port
board of directors was aware of, and considered the interests of, themselves
and C-Port's executive officers in approving the merger agreement and the
merger. You should also read the section entitled "Certain Information
Concerning C-Port" beginning on page 59.
Indemnification. The merger agreement provides that Motorola will, for a
period of two years following the effective date of the merger, fulfill and
honor in all respects the obligations of C-Port to indemnify each person who
is or was a director or officer of C-Port pursuant to any indemnification
provision contained in C-Port's charter or by-laws as each was in effect on
the date of the merger agreement.
Ownership and Voting of C-Port Stock. As of March 23, 2000, the directors
and executive officers of C-Port collectively owned directly approximately
4,330,000 shares of C-Port common stock and 377,518 shares of C-Port preferred
stock. As of March 23, 2000, directors and officers of C-Port and their
affiliates may be deemed to have beneficial ownership of approximately
4,330,000 shares of C-Port's issued and outstanding common stock, and
9,253,554 shares of C-Port's issued and outstanding preferred stock. These
officers and directors may be deemed to have beneficial ownership either by
themselves or with others. Certain of the C-Port directors have agreed to vote
their issued and outstanding shares over which they have voting control in
favor of the merger agreement and the merger. See also "Certain Information
Concerning C-Port" on page 59.
Employment Agreements. It is a condition to the merger that employment
agreements be entered into between Motorola and each of Laurence G. Walker,
David Husak, Peter Morris, Richard Hollingsworth, Kurt Hoff, Clint Ramsay and
John Burnham, each a current employee of C-Port. The term of each employment
agreement will be two years from the effective date of the merger, except for
Dr. Walker's employment agreement, which will have a term of three years
following the effective date of the merger. If, before the end of the
applicable term, the employee is terminated without cause, or the employee
terminates employment for good reason, he will be entitled to a severance
payment from Motorola equal to 50% of the annual salary that would have been
payable under the employment agreement. Each employment agreement provides
that Motorola will grant to the applicable employee options to purchase shares
of Motorola common stock. The Motorola stock options, the exercise price of
which will be set as of the date the option certificate is issued to each
applicable employee, will vest over a four year period, with 25% of the
options vesting on each of the first four anniversaries of the grant date of
the stock options. In order to exercise the options, the employee must be
employed by Motorola or its C-Port subsidiary on the date of exercise. In
addition, each employment agreement requires Motorola to grant shares of
Motorola restricted stock to the applicable employee within 30 days after such
employee's first date of employment under the employment agreement. Each
employee's rights in the restricted stock will vest on the fourth anniversary
of the grant date. Finally, each employment agreement requires that Motorola
pay to the applicable employee a retention bonus within 30 days after the
employee completes 24 months of consecutive employment with Motorola or with
C-Port following the merger. Dr. Walker's employment agreement will require
that he return the retention bonus paid to him if he terminates his employment
with C-Port voluntarily prior to the end of the three year term of his
employment agreement. Each employment agreement will also contain non-
competition and non-solicitation covenants.
You should also read the matters described under "Certain Information
Concerning C-Port" on page 59.
31
<PAGE>
Material Federal Income Tax Consequences of the C-Port Merger
In the opinion of Winston & Strawn, tax counsel to Motorola, and Hale and
Dorr LLP, tax counsel to C-Port, the following is a summary of the material
United States federal income tax consequences of the merger to C-Port
stockholders who exchange their C-Port shares for Motorola shares and, as
applicable, cash in lieu of fractional shares of Motorola stock pursuant to the
merger agreement. This discussion addresses only stockholders who hold their C-
Port shares as a capital asset and does not address all of the United States
federal income tax consequences that may be relevant to particular stockholders
in light of their individual circumstances or to stockholders who are subject
to special rules (including, without limitation, financial institutions, tax-
exempt organizations, insurance companies, dealers in securities or foreign
currencies, foreign holders, persons who hold their C-Port shares as a hedge
against currency risk, a constructive sale, or conversion transaction, or
holders who acquired their shares pursuant to the exercise of an employee stock
options or otherwise as compensation). The following summary is not binding on
the Internal Revenue Service or a court. It is based upon the Internal Revenue
Code, laws, regulations, rulings, and decisions in effect on the date hereof,
all of which are subject to change, possibly with retroactive effect. Tax
consequences under state, local, and foreign laws are not addressed.
The following discussion is not intended to be a complete analysis
or description of all potential United States federal income tax consequences
or any other tax consequences of the merger. In addition, the discussion does
not address tax consequences which may vary with, or are contingent on, your
individual circumstances. C-Port stockholders are strongly urged to consult
their own tax advisors as to the specific tax consequences to them of the
merger, including the applicability and effect of federal, state, local, and
foreign income and other tax laws on their particular circumstances.
No ruling has been, or will be, sought from the Internal Revenue Service as
to the United States federal income tax consequences of the merger. It is a
condition to the consummation of the merger that Motorola receive an opinion
from its counsel, Winston & Strawn, and that C-Port receive an opinion from its
counsel, Hale and Dorr LLP, stating that the merger will be treated for United
States federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code. The issuance of such opinions will
be conditioned on customary assumptions and representations made by Motorola,
CP Acquisition Corp. and C-Port. An opinion of counsel is not binding on the
Internal Revenue Service or a court. As a result, neither Motorola nor C-Port
can assure you that the tax considerations and opinions contained in this
discussion will not be challenged by the Internal Revenue Service or sustained
by a court if challenged by the Internal Revenue Service.
As a result of the merger qualifying as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code, C-Port stockholders who
exchange their C-Port shares for Motorola shares will not recognize gain or
loss for United States federal income tax purposes, except with respect to
cash, if any, they receive in lieu of fractional shares of Motorola stock. The
aggregate tax basis of a C-Port stockholder in the Motorola shares received in
exchange for C-Port shares pursuant to the merger will be the same as such
holder's aggregate tax basis in the C-Port shares surrendered in the merger,
decreased by the amount of any tax basis allocable to any fractional share
interest for which cash is received. The holding period of the Motorola shares
received in the merger by a C-Port stockholder will include the holding period
of the C-Port shares surrendered in the merger.
C-Port stockholders who receive cash in lieu of fractional shares of
Motorola stock in the merger generally will recognize gain or loss equal to the
difference between the amount of cash received and their tax basis in C-Port
shares that is allocable to the fractional shares. The gain or loss generally
will be capital gain or loss. In the case of an individual stockholder, capital
gain is subject to a maximum tax rate of 20% if the individual held his or her
C-Port shares for more than 12 months at the effective time of the merger. The
deductibility of capital losses is subject to limitations for both individuals
and corporations.
32
<PAGE>
C-Port stockholders who exchange C-Port shares for Motorola shares should be
treated as receiving the escrowed Motorola shares at the time of the merger and
should be treated as owners of such shares. Until such shares are released, the
interim basis of the Motorola stock received by a C-Port stockholder will be
determined as if such stockholder received the maximum number of Motorola
shares. No federal income tax consequences should result from the receipt of
any shares upon the termination of the escrow. It is the Internal Revenue
Service's position that the former C-Port stockholders would recognize capital
gain or loss to the extent the escrowed Motorola shares are used to satisfy a
claim. The amount of the gain or loss recognized should equal the difference
between the stockholder's basis in the escrowed Motorola shares used to satisfy
the claim and the fair market value of those shares. The value of such returned
shares will be added back to the tax basis of the Motorola stock retained by
the stockholder.
If the Internal Revenue Service were to successfully challenge the
"reorganization" status of the merger, each C-Port stockholder would recognize
taxable gain (or loss) with respect to the C-Port stock surrendered, measured
by the difference between (i) the fair market value, as of the time of the
merger, of the Motorola common stock received in the merger, and (ii) the
stockholder's tax basis in the C-Port stock surrendered therefor in the merger.
In such event, a stockholder's aggregate basis in the Motorola common stock so
received would equal its fair market value as of the time of the merger and the
holding period for such stock would begin the day after the merger.
C-Port stockholders will be required to attach a statement to their tax
returns for the year of the merger that contains the information listed in
Treasury Regulation Section 1.368-3(b). Such statement must include the
stockholder's tax basis in the stockholder's C-Port stock and a description of
the Motorola common stock received therefor. C-Port stockholders are urged to
consult their tax advisors with respect to this statement and any other tax
reporting requirements.
The opinions described above do not apply to stockholders who exercise
appraisal rights. A C-Port stockholder who exercises appraisal rights with
respect to the merger and receives cash for shares of C-Port stock will
generally recognize capital gain (or loss) measured by the difference between
the amount of cash received and the stockholder's basis in those shares,
provided that the payment is not treated as a dividend pursuant to Section 302
of the Internal Revenue Code or otherwise. A sale of shares based on an
exercise of appraisal rights will not be treated as a dividend if the
stockholder exercising appraisal rights owns no shares of C-Port immediately
after the merger, after giving effect to the constructive ownership rules
pursuant to the Internal Revenue Code. The capital gain or loss will be long-
term capital gain or loss if the holder's holding period for the shares is more
than one year.
A noncorporate C-Port stockholder may be subject to backup withholding at a
rate of 31% on cash payments received in lieu of a fractional share of Motorola
stock or upon the exercise of appraisal rights. Backup withholding will not
apply, however, to a stockholder who (1) furnishes a correct taxpayer
identification number and certifies that it is not subject to backup
withholding on the substitute W-9 or successor form included in the letter of
transmittal to be delivered to C-Port stockholders following the completion of
the merger, (2) provides a certification of foreign status on Form W-8BEN or
successor form, or (3) is otherwise exempt from backup withholding.
Regulatory Matters
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the merger
may not be consummated until notifications have been furnished to the Federal
Trade Commission and the Antitrust Division of the Department of Justice and
specified waiting period requirements have been satisfied. C-Port and Motorola
each filed a pre-merger notification and report form with the FTC and the
Antitrust Division on or about March 17, 2000 and March 13, 2000, respectively.
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At any time before the effective time of the merger, the FTC, the Antitrust
Division or a private person or entity could seek under antitrust laws, among
other things, to enjoin the merger and, any time after the effective time of
the merger, to cause Motorola to divest itself, in whole or in part, of the
surviving corporation of the merger or of certain businesses conducted by the
surviving corporation. There can be no assurance that a challenge to the merger
will not be made or that, if such a challenge is made, Motorola will prevail.
Statutory Appraisal Rights
The Delaware General Corporation Law grants appraisal rights in the merger
to the holders of C-Port common stock and preferred stock. Under the Delaware
General Corporation Law, C-Port stockholders may object to the merger, and
demand in writing that C-Port pay the fair value of their shares. Fair value
takes into account all relevant factors but excludes any appreciation or
depreciation in anticipation of the applicable merger. Stockholders who elect
to exercise appraisal rights must comply with all of the procedures to preserve
those rights. We have attached a copy of Section 262 of the Delaware General
Corporation Law (which sets forth the appraisal rights) as Appendix D to this
proxy statement/prospectus.
Section 262 sets forth the required procedure a stockholder requesting
appraisal must follow. Making sure that you actually perfect your appraisal
rights can be complicated. The procedural rules are specific and must be
followed completely. Failure to comply with the procedure may cause a
termination of your appraisal rights. We are providing you only a summary of
your rights and the procedure. The following information is qualified in its
entirety by the provisions of Section 262, a copy of which is attached as
Appendix D to this proxy statement/prospectus. Please review Section 262 for
the complete procedure. C-Port will not give you any notice other than as
described in this proxy statement/prospectus and as required by the Delaware
General Corporation Law.
Appraisal Rights Procedures
If you are a C-Port stockholder and you wish to exercise your appraisal
rights, you must satisfy the provisions of Section 262 of the Delaware General
Corporation Law. Section 262 requires the following:
You Must Make a Written Demand for Appraisal. You must deliver a written
demand for appraisal to C-Port before the vote on the merger agreement and the
merger is taken at the special meeting. This written demand for appraisal must
be separate from your proxy. In other words, a vote against the C-Port merger
agreement and the merger will not alone constitute demand for appraisal.
You Must Refrain from Voting for Approval of the Merger. You must not vote
for approval of the merger agreement and the merger. If you vote, by proxy or
in person, in favor of the merger agreement and the merger, this will terminate
your right to appraisal. You can also terminate your right to appraisal if you
return a signed proxy and (1) fail to vote against approval of the merger
agreement and the merger or (2) fail to note that you are abstaining from
voting. Your appraisal rights will be terminated even if you previously filed a
written demand for appraisal.
You Must Continuously Hold Your C-Port Shares. You must continuously hold
your shares of C-Port stock, from the date you make the demand for appraisal
through the closing of the merger. If you are the record holder of C-Port stock
on the date the written demand for appraisal is made but thereafter transfer
the shares prior to the merger, you will lose any right to appraisal in respect
of those shares. You should read the paragraphs below for more details on
making a demand for appraisal.
A written demand for appraisal of C-Port stock is only effective if it is
signed by, or for, the stockholder of record who owns such shares at the time
the demand is made. The demand must be signed as the stockholder's name appears
on his/her/its stock certificate(s). If you are the beneficial owner of C-Port
stock, but not the stockholder of record, you must have the stockholder of
record sign a demand for appraisal.
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If you own C-Port stock in a fiduciary capacity, such as a trustee, guardian
or custodian, you must disclose the fact that you are signing the demand for
appraisal in that capacity.
If you own C-Port stock with more than one person, such as in a joint
tenancy or tenancy in common, all of the owners must sign, or have signed for
them, the demand for appraisal. An authorized agent, which could include one or
more of the joint owners, may sign the demand for appraisal for a stockholder
of record; however, the agent must expressly disclose who the stockholder of
record is and that the agent is signing the demand as that stockholder's agent.
If you are a C-Port stockholder who elects to exercise appraisal rights, you
should mail or deliver a written demand to:
C-Port Corporation
One High Street
North Andover, Massachusetts 01845
Attention: Secretary
It is important that C-Port receive all written demands before the vote
concerning the merger agreement and the merger is taken at the special meeting.
As explained above, this written demand should be signed by, or on behalf of,
the stockholder of record. The written demand for appraisal should specify the
stockholder's name and mailing address, the number of shares of stock owned,
and that the stockholder is thereby demanding appraisal of that stockholder's
shares.
If you fail to comply with any of these conditions and the merger becomes
effective, you will only be entitled to receive the merger consideration
provided in the merger agreement.
Written Notice. Within ten days after the closing of the merger, C-Port must
give written notice that the merger has become effective to each stockholder
who has fully complied with the conditions of Section 262.
Petition with the Chancery Court. Within 120 days after the merger, either
the surviving corporation or any stockholder who has complied with the
conditions of Section 262, may file a petition in the Delaware Court of
Chancery. This petition should request that the chancery court determine the
value of the shares of stock held by all of the stockholders who are entitled
to appraisal rights. If you intend to exercise your rights of appraisal, you
should file such a petition in the chancery court. C-Port has no intention at
this time to file such a petition. Because C-Port has no obligation to file
such a petition, if you do not file such a petition within 120 days after the
closing, you will lose your rights of appraisal.
Withdrawal of Demand. If you change your mind and decide you no longer want
appraisal rights, you may withdraw your demand for appraisal rights at any time
within 60 days after the closing of the merger. You may also withdraw your
demand for appraisal rights after 60 days after the closing of your merger, but
only with the written consent of C-Port. If you effectively withdraw your
demand for appraisal rights, you will receive the merger consideration provided
in your merger agreement.
Request for Appraisal Rights Statement. If you have complied with the
conditions of Section 262, you are entitled to receive a statement from C-Port.
This statement will set forth the number of shares that have demanded appraisal
rights, and the number of stockholders who own those shares. In order to
receive this statement, you must send a written request to C-Port within 120
days after the merger. After the merger, C-Port has ten days after receiving a
request to mail you the statement.
Chancery Court Procedures. If you properly file a petition for appraisal in
the chancery court and deliver a copy to C-Port, C-Port will then have 20 days
to provide the chancery court with a list of the names and addresses of all
stockholders who have demanded appraisal rights and have not reached an
agreement with C-Port as to the value of their shares. The chancery court will
then send notice to all of the stockholders who have demanded appraisal rights.
If the chancery court thinks it is appropriate, it has the power to conduct a
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hearing to determine whether the stockholders have fully complied with Section
262 of the Delaware General Corporation Law and whether they are entitled to
appraisal rights under that section. The chancery court may also require you to
submit your stock certificates to the Registry in Chancery so that it can note
on the certificates that an appraisal proceeding is pending. If you do not
follow the chancery court's directions, you may be dismissed from the
proceeding.
Appraisal of Shares. After the chancery court determines which stockholders
are entitled to appraisal rights, the chancery court will appraise the shares
of stock. To determine the fair value of the shares, the chancery court will
consider all relevant factors except for any appreciation or depreciation due
to the anticipation or accomplishment of the merger. After the chancery court
determines the fair value of the shares, it will direct C-Port to pay that
value to the stockholders who are entitled to appraisal rights. The chancery
court can also direct C-Port to pay interest, simple or compound, on that value
if the chancery court determines that interest is appropriate. In order to
receive your fair value for your shares, you must then surrender your stock
certificates to C-Port.
The chancery court could determine that the fair value of shares of stock is
more than, the same as, or less than the merger consideration. In other words,
if you demand appraisal rights, you could receive less consideration than you
would under the merger agreement. You should also be aware that an opinion of
an investment banking firm that the merger is fair is not an opinion that the
merger consideration is the same as the fair value under Section 262.
Costs and Expenses of Appraisal Proceeding. The costs and expenses of the
appraisal proceeding may be assessed against C-Port and the stockholders
participating in the appraisal proceeding, as the chancery court deems
equitable under the circumstances. You can request that the chancery court
determine the amount of interest, if any, C-Port should pay on the value of
stock owned by stockholders entitled to the payment of interest. You may also
request that the chancery court allocate the expenses of the appraisal action
incurred by any stockholder pro rata against the value of all of the shares
entitled to appraisal.
Loss of Stockholder's Rights. If you demand appraisal rights, after the
closing of the merger you will not be entitled to:
. vote your shares of stock, for any purpose, for which you have demanded
appraisal rights;
. receive payment of dividends or any other distribution with respect to
such shares, except for dividends or distributions, if any, that are
payable to holders of record as of a record date prior to the effective
time of the merger; or
. receive the payment of the consideration provided for in the merger
agreement (unless you properly withdraw your demand for appraisal).
If no petition for an appraisal is filed within 120 days after the closing
of the merger, your right to an appraisal will cease. You may withdraw your
demand for appraisal and accept the merger consideration by delivering to C-
Port a written withdrawal of your demand, except that (1) any attempt to
withdraw made more than 60 days after the closing of the merger will require
the written approval of C-Port, and (2) an appraisal proceeding in the chancery
court cannot be dismissed unless the chancery court approves.
If you fail to comply strictly with the procedures described above you will
lose your appraisal rights. Consequently, if you wish to exercise your
appraisal rights, we strongly urge you to consult a legal advisor before
attempting to exercise your appraisal rights.
Resale of Motorola Common Stock
The issuance of the shares of Motorola common stock to C-Port stockholders
in the merger will have been registered under the Securities Act of 1933, as
amended. Upon issuance, these shares may be traded freely and without
restriction by those stockholders not deemed to be "affiliates" of C-Port as
that term is defined for
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purposes of Rule 145 under the Securities Act. An "affiliate" of C-Port for
this purpose is a person or entity that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, C-Port. Any subsequent transfer by an affiliate of C-Port must be one
permitted by the resale provisions of Rule 145 promulgated under the Securities
Act (or Rule 144 promulgated under the Securities Act, in the case of any
persons who become affiliates of Motorola) or as otherwise permitted under the
Securities Act. These restrictions are expected to apply to the directors,
executive officers and holders of 10% or more of the C-Port shares (as well as
to certain other related individuals or entities).
This proxy statement/prospectus does not cover resales of Motorola common
stock to be received by the stockholders of C-Port in the merger, and no person
is authorized to make any use of this proxy statement/prospectus in connection
with any such resale.
Management and Operations of C-Port after the Merger
After the merger, Motorola expects to operate C-Port as part of Motorola's
Networking and Computing Systems Group within Motorola's Semiconductor Products
Sector. Motorola expects that Laurence G. Walker will continue as C-Port's
President and Chief Executive Officer after the merger and that other members
of current C-Port management will remain at C-Port. The headquarters of C-Port
is expected to remain at C-Port's current headquarters in North Andover,
Massachusetts.
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THE MERGER AGREEMENT
The following is a summary, and is qualified in its entirety by, the terms
of the merger agreement. The following does not purport to describe all the
terms of the merger agreement. The full text of the merger agreement is
attached as Appendix A to this proxy statement/prospectus and is incorporated
herein by reference. We urge you to read the merger agreement in its entirety.
The Merger
Following the adoption of the merger agreement and approval of the merger by
C-Port stockholders and the satisfaction or waiver of the other conditions to
the merger, CP Acquisition Corp., a wholly owned subsidiary of Motorola, will
merge into C-Port. C-Port will survive the merger as a wholly owned subsidiary
of Motorola. If all conditions to the merger are satisfied or waived, the
merger will become effective at the time of the filing by the surviving
corporation of a duly executed certificate of merger with the Delaware
secretary of state or at such other time as may be specified in the certificate
of merger.
In addition, following the merger:
. the charter and by-laws of CP Acquisition Corp. will become the charter
and by-laws of C-Port; and
. the directors and officers of CP Acquisition Corp. will become the
directors and officers of C-Port.
Treatment of C-Port Common Stock
The merger agreement provides that, at the effective time of the merger,
generally, each issued and outstanding share of C-Port common stock will be
converted into the right to receive the following merger consideration:
. in the event that at least 55% of C-Port's preferred stockholders decide
to be treated as if they had converted each of their shares of preferred
stock into C-Port common shares immediately prior to the merger,
0.1022485 of a share of Motorola common stock for each share of C-Port
common stock; and
. in the event that at least 55% of C-Port's preferred stockholders decide
that the merger should be treated as a "liquidation, dissolution or
winding up" of C-Port as described in C-Port's charter, 0.2446233 of a
share of Motorola common stock for each share of C-Port common stock as
of February 17, 2000.
See "--Treatment of C-Port Preferred Stock" on page 38. All shares of C-Port
common stock held in treasury by C-Port will be cancelled without conversion.
Motorola will adjust the exchange ratio to provide for any reclassification,
stock split, stock dividend, reorganization or other similar exchange with
respect to Motorola or C-Port common stock occurring before the merger.
Because the holders of at least 55% of the issued and outstanding shares of
C-Port preferred stock approved and adopted, by written consent in lieu of a
meeting, a resolution electing not to treat the merger as a "liquidation,
dissolution or winding up" of C-Port under the provisions of C-Port's charter,
based on an exchange ratio of 0.1022485, and based on the number of shares of
C-Port common stock and options and warrants to purchase C-Port common stock
outstanding as of March 23, 2000, a total of approximately 2,817,916 shares of
Motorola common stock will be issued to the holders of C-Port common stock in
the merger, assuming that none of the outstanding stock options under C-Port's
1997 stock incentive plan are exercised prior to the effective time of the
merger. If the merger occurs after May 15, 2000, the record date for the three-
for-one stock split of Motorola's common stock approved by the Motorola board
of directors on February 29, 2000, approximately 8,453,958 shares of Motorola
common stock will be issued to the holders of C-Port common stock in the
merger, assuming that none of the outstanding stock options under C-Port's 1997
stock incentive plan are exercised prior to the effective time of the merger.
Treatment of C-Port Preferred Stock
The merger agreement provides that the per share merger consideration to be
paid to holders of C-Port preferred stock depends upon whether or not the
holders of 55% of the preferred stock of C-Port voting as a single class on an
as converted basis elect not to treat the merger as a "liquidation, dissolution
or winding up"
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of C-Port for purposes of Article Fourth of C-Port's charter. The holders of
approximately 64% of the issued and outstanding shares of C-Port preferred
stock, voting as a single class, approved and adopted, by a written consent in
lieu of a meeting dated March 14, 2000, a resolution electing not to treat the
merger as a "liquidation, dissolution or winding up" of C-Port.
If the holders of 55% of the preferred stock of C-Port voting as a single
class had not enacted the proposal that the merger not be treated as a
"liquidation, dissolution or winding up" of C-Port, then the preferred
stockholders would have received the following consideration:
. in the case of each share of Series A preferred stock of C-Port:
. a fraction of a share of Motorola common stock equal to (a) the Series
A Convertible Preferred Liquidation Amount (as defined in the C-Port
charter) divided by $147.875, and divided by (b) the aggregate number
of shares of Series A preferred stock outstanding at the effective time
and (y) a fraction of a share of Motorola common stock equal to (A) the
difference of three times the Original Purchase Price (as defined in
the C-Port charter) of the Series A preferred stock minus the Series A
Convertible Preferred Liquidation Amount (as defined in the C-Port
charter), divided by $147.875, divided by (B) the number of outstanding
shares of Series A preferred stock of C-Port at the effective time of
the merger;
. in the case of each share of Series B preferred stock of C-Port:
. a fraction of a share of Motorola common stock equal to (a) the Series
B Convertible Preferred Liquidation Amount (as defined in the C-Port
charter) divided by $147.875, and divided by (b) the aggregate number
of shares of Series B preferred stock of C-Port outstanding at the
effective time and (y) a fraction of a share of Motorola common stock
equal to (A) the difference of three times the Original Purchase Price
(as defined in the C-Port charter) of the Series B preferred stock
minus the Series B Convertible Preferred Liquidation Amount (as defined
in the C-Port charter), divided by $147.875, divided by (B) the number
of outstanding shares of Series B preferred stock of C-Port at the
effective time of the merger; and
. in the case of each share of Series C preferred stock of C-Port:
. a fraction of a share of Motorola common stock equal to (a) the Series
C Convertible Preferred Liquidation Amount (as defined in the C-Port
charter) divided by $147.875, and divided by (b) the aggregate number
of shares of Series C preferred stock of C-Port outstanding at the
effective time and (y) a fraction of a share of Motorola common stock
equal to (A) the difference of three times the Original Purchase Price
(as defined in the C-Port charter) of the Series C preferred stock
minus the Series C Convertible Preferred Liquidation Amount (as defined
in the C-Port charter), divided by $147.875, divided by (B) the number
of outstanding shares of Series C preferred stock of C-Port at the
effective time of the merger.
Because the holders of at least 55% of the issued and outstanding shares of C-
Port preferred stock have elected not to treat the merger as a "liquidation,
dissolution or winding up" of C-Port under the provisions of C-Port's charter,
and have further elected, immediately prior to the effective time, to
voluntarily convert each outstanding share of C-Port preferred stock into C-
Port common stock, the preferred stockholders will become holders of C-Port
common stock immediately prior to the merger and will therefore receive the
same consideration as the C-Port common stockholders. See "--Treatment of C-
Port Common Stock" on page 38. If the preferred stockholders had not elected to
convert their shares of C-Port preferred stock into C-Port common stock
immediately prior to the merger, the merger agreement provides that the C-Port
preferred stockholders would have received the following merger consideration:
. in the case of each share of Series A preferred stock of C-Port:
. a fraction of a share of Motorola common stock equal to 0.1022485 times
the number of shares of common stock of C-Port into which such share of
Series A preferred stock is then convertible pursuant to the C-Port
charter;
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. in the case of each share of Series B preferred stock of C-Port:
. a fraction of a share of Motorola common stock equal to 0.1022485 times
the number of shares of common stock of C-Port into which such share of
Series B preferred stock is then convertible pursuant to the C-Port
charter; and
. in the case of each share of Series C preferred stock of C-Port:
. a fraction of a share of Motorola common stock equal to 0.1022485 times
the number of shares of common stock of C-Port into which such share of
Series C preferred stock is then convertible pursuant to the C-Port
charter.
The merger agreement requires Motorola to adjust the exchange ratio to
provide for any reclassification, stock split, stock dividend, reorganization
or other similar exchange with respect to Motorola or C-Port common stock
occurring before the merger.
Treatment of C-Port Stock Options
At the effective time of the merger, Motorola will assume each unexpired and
unexercised option to purchase shares of C-Port common stock under C-Port's
1997 stock incentive plan and convert it into an option to purchase shares of
Motorola common stock subject to the same terms and conditions as were
applicable prior to the effective time of the merger. The number of shares of
Motorola common stock to be subject to each C-Port stock option assumed by
Motorola will be equal to the number of shares of C-Port common stock subject
to the C-Port stock option immediately prior to the merger multiplied by the
0.1022485 exchange ratio. Any fractional shares of Motorola common stock
resulting from such adjustment will be rounded down to the nearest whole number
of shares of Motorola common stock. The exercise price per share of Motorola
common stock issuable under each C-Port stock option will equal the per share
exercise price of the C-Port common stock specified under the C-Port option
divided by the 0.1022485 exchange ratio. The exercise price will be rounded up
to the nearest whole cent. Motorola will adjust this exchange ratio to provide
for any reclassification, stock split, stock dividend, reorganization or other
similar exchange with respect to Motorola or C-Port common stock occurring
before the merger.
At the effective time of the merger, Motorola will take all necessary
actions to assume C-Port's 1997 stock incentive plan. No later than 15 calendar
days following the effective time of the merger, Motorola will prepare and file
with the SEC a registration statement on Form S-8 registering the shares of
Motorola common stock subject to the assumed C-Port stock options. That
registration statement will be kept effective (and the current status of the
prospectus required by that registration statement will be maintained in
accordance with the relevant requirements of the Securities Act and the
Exchange Act) at least for so long as any assumed C-Port stock options remain
outstanding.
Treatment of C-Port Restricted and Founders Stock
At the effective time of the merger, each outstanding restricted share of C-
Port common stock issued by C-Port pursuant to a restricted stock agreement or
a founders stock agreement will be converted into restricted shares of Motorola
common stock based on the 0.1022485 exchange ratio and will remain subject to
the same terms, forfeiture and repurchase restrictions and vesting schedules as
were applicable prior to the effective time of the merger, unless otherwise
agreed to by Motorola and the holder of such shares. Motorola will adjust the
exchange ratio to provide for any reclassification, stock split, stock
dividend, reorganization or other similar exchange with respect to Motorola or
C-Port common stock occurring before the merger. Motorola will assume any
rights C-Port held prior to the effective time of the merger to repurchase
these unvested shares.
Fractional Shares
Motorola will not issue any fractional shares in the merger. In lieu of any
fractional Motorola shares, each C-Port stockholder who would otherwise have
been entitled to a fraction of a Motorola share pursuant to the merger
agreement will be paid an amount in cash, without interest, equal to such
holder's proportionate interest
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in the net proceeds from the sale or sales in the open market of the aggregate
fractional Motorola shares, if any, that would have been issued in the merger.
Harris Trust and Savings Bank or another bank or trust company selected by
Motorola to act as its exchange agent will sell such aggregate fractional
shares at the then prevailing prices on the New York Stock Exchange. These
sales will be executed through one or more member firms of the New York Stock
Exchange and will be executed in round lots to the extent practicable. C-Port
will pay all commissions, transfer taxes and other out-of-pocket transaction
costs of Motorola's exchange agent, including the expenses and compensation of
Motorola's exchange agent, incurred in connection with the sale of fractional
shares.
Exchange of Certificates
Promptly after the merger, Harris Trust and Savings Bank, Motorola's
exchange agent, will mail to each holder of record of certificates that
immediately prior to the merger represented outstanding C-Port shares both a
letter of transmittal and instructions for surrendering their C-Port stock
certificates. The letter of transmittal and instructions are for use by each
holder of record in surrendering C-Port stock certificates in exchange for
certificates representing that number of Motorola shares and cash for any
fractional shares thereof to which such holder would otherwise be entitled. We
request that you not surrender your C-Port stock certificates for exchange
until you receive the letter of transmittal and instructions. At and after the
merger and until so surrendered, the C-Port stock certificates will represent
only the right to receive the consideration described above. No dividends or
other distributions declared or made after the merger with respect to Motorola
shares will be paid to the holder of record of any unsurrendered C-Port stock
certificates. However, following surrender of any such C-Port stock
certificates, the holder of record will be paid, without interest, with respect
to each whole share of Motorola common stock which such person is entitled to
receive in the merger, (1) the amount of any dividends or other distributions
with a record date after the merger but a payment prior to surrender of such C-
Port stock certificates and (2) at the appropriate payment date, the amount of
dividends or distributions with a record date after the merger but prior to
surrender of such C-Port stock certificates and a payment after the surrender
of such C-Port stock certificates. No transfers of C-Port shares shall be made
after the merger.
If any C-Port stock certificate is lost, stolen or destroyed, a C-Port
stockholder must provide an appropriate affidavit of that fact. Motorola may
require a C-Port stockholder to deliver a bond as indemnity against any claim
that may be made against Motorola with respect to any lost, stolen or destroyed
certificate.
Listing of Motorola Common Stock
Motorola has agreed to prepare and submit to the New York Stock Exchange a
listing application covering the shares of Motorola common stock to be issued
in the merger and to use reasonable best efforts to cause such shares to be
approved for listing on such exchange, subject to official notice of issuance,
prior to the effective time of the merger. Approval for listing on the New York
Stock Exchange of the Motorola shares issuable to the C-Port stockholders in
the merger, subject only to official notice of issuance, is a condition to the
obligations of Motorola, CP Acquisition Corp. and C-Port to complete the
merger. See "--Conditions to the Merger" on page 45.
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Representations and Warranties of C-Port
The merger agreement includes customary representations and warranties by C-
Port to Motorola, including representations and warranties as to:
. corporate organization, standing . accounting and tax matters;
and power of C-Port;
. contracts, leases, agreements, or
. compliance with its charter and understandings of C-Port;
by-laws;
. pending or threatened litigation;
. capitalization of C-Port;
. environmental matters;
. power and authority of C-Port to
execute and deliver the merger
agreement and to perform its
obligations under, and to
complete the transactions
contemplated by, the merger
agreement;
. intellectual property matters;
. taxes;
. labor matters;
. insurance matters;
. no conflict with its charter or
by-laws, laws and orders and
required consents and
authorizations of governmental
entities and third parties;
. the required vote of C-Port
stockholders;
. brokers, finders or investment
bankers employed by C-Port;
. possession and validity of
necessary government permits and
compliance with applicable laws;
. year 2000 compliance;
. related party transactions;
. C-Port's financial statements;
. capital expenditures; and
. the absence of certain changes in
C-Port's business since December
31, 1998;
. undisclosed liabilities.
Representations and Warranties of Motorola and CP Acquisition Corp.
. C-Port's employee benefit plans
and executive compensation;
The merger agreement also contains customary representations and warranties
by Motorola and CP Acquisition Corp. to C-Port, including representations and
warranties as to:
. corporate organization, standing . Motorola's financial statements
and power of Motorola and CP and reports filed with the SEC;
Acquisition Corp.;
. the absence of any event or
. compliance with the charter and development since September 30,
by-laws of Motorola; 1999 which would reasonably be
expected to have a material
adverse effect on Motorola or
prevent or materially delay
Motorola's performance under the
merger agreement;
. capitalization of Motorola;
. power and authority of Motorola
to execute and deliver the merger
agreement and to perform its
obligations under, and to
complete the transactions
contemplated by, the merger
agreement;
. ownership, activities and assets
of CP Acquisition Corp.;
. brokers, finders or investment
bankers employed by Motorola; and
. authorization and validity of the
Motorola shares to be issued
pursuant to the merger agreement;
. New York Stock Exchange
requirements.
. no conflict with organization
documents, laws and orders and
required consents and
authorizations of governmental
entities and third parties;
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Certain Covenants and Agreements
Conduct of Business of C-Port Pending the Merger. Prior to the effective
time of the merger, C-Port has agreed to conduct its business in the ordinary
course consistent with past practice and to use its reasonable best efforts to
keep available the services of its current officers, consultants and key
employees and to preserve its current relationships with customers, suppliers
and others having significant business relations as is reasonably necessary in
order to preserve substantially intact its business organization. C-Port has
agreed that prior to the effective time of the merger it will not, in general
terms, do any of the following without Motorola's consent:
. amend or change its charter or . establish, adopt, enter into or
by-laws; amend any collective bargaining
agreement or employee benefit
arrangement; or
. sell or issue new stock or borrow
against its stock, other than the
issuance of C-Port common stock
upon the exercise of options or
warrants;
. take any action to accelerate
the vesting of any stock-based
compensation;
. sell, lease or license any . make any change in accounting
material property or assets, or policies or procedures, other
pledge them as security; than as required by GAAP or a
governmental entity;
. pay dividends or other
distributions on, split,
repurchase or redeem its stock;
. make any material tax election or
settle or compromise any material
federal, state, local or foreign
income tax liability;
. engage in any business
combination or acquire any
business or other person;
. waive, release, assign, settle or
compromise any material claims,
or any material litigation or
arbitration;
. borrow money, guaranty an
obligation or make a loan, except
that Motorola may not
unreasonably withhold its consent
to allow C-Port to borrow up to
$3 million to fund its ongoing
operations;
. modify, terminate or waive any
material rights under any
confidentiality or standstill
agreements;
. terminate, cancel or request any . write up, write down or write off
material change in, or agree to the book value of any assets,
any material change in, a individually or in the aggregate,
material contract, except in the in excess of $75,000, except for
ordinary course of business depreciation and amortization in
consistent with past practice; accordance with GAAP consistently
applied or any exception GAAP may
require;
. make or authorize any capital
expenditure in excess of its
budget, except capital
expenditures that are not, in the
aggregate, in excess of $1
million, subject to certain
exceptions;
. take any action that will cause
the merger agreement to become
subject to any state anti-
takeover law;
. take any action that is intended
. enter into or amend any contract, or would reasonably be expected
agreement, commitment or to result in any of the
arrangement that, if fully conditions to the merger not
performed, would not be permitted being satisfied, except as may be
under this section; required by applicable law;
. except as may be required by . enter into any agreement to
certain contractual commitments provide a customer more than
or corporate policies of C-Port 2,500 processor pieces without
with respect to severance or providing Motorola three business
termination pay: days' notice; or
. increase the compensation . authorize or enter into any
payable or to become payable to agreement or otherwise make any
its officers or employees commitment to do any of the
except in certain specified foregoing.
circumstances, except salary
increases consistent with past
practice which are not across
the board increases;
. grant any rights to severance
or termination pay to, or enter
into any employment or
severance agreement with, any
of its directors, officers or
other employees;
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<PAGE>
No Solicitation. The merger agreement provides that C-Port will not,
directly or indirectly, and will not authorize or permit any of its
representatives or affiliates to encourage, solicit, initiate or facilitate any
acquisition proposal, enter into any agreement with respect to any acquisition
proposal, participate in any discussion or negotiation regarding any
acquisition proposal or furnish information to any person to facilitate any
inquiries or the making of any proposal that could constitute an acquisition
proposal. C-Port will as promptly as practicable advise Motorola of its receipt
of and of the terms of any acquisition proposal and inquiries with respect to
any acquisition proposal.
An acquisition proposal means any offer or proposal concerning any:
. merger, consolidation, business combination or similar transaction
involving C-Port;
. sale, lease or other disposition directly or indirectly by merger,
consolidation, business combination, share exchange, joint venture or
otherwise of assets of C-Port representing 10% or more of the assets of
C-Port;
. issuance, sale or other disposition of securities representing 10% or
more of the voting power of C-Port; or
. transaction in which any person or "group" (as such term is defined under
the Securities Exchange Act of 1934) shall acquire beneficial ownership
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of
10% of more of the outstanding voting stock of C-Port.
Proxy Statement and Registration Statement. C-Port has agreed to prepare,
file and mail a proxy statement relating to the C-Port special meeting of
stockholders which will include the recommendation of the C-Port board of
directors to its stockholders to vote in favor of the merger agreement and the
merger.
Stockholders' Meeting. C-Port has agreed to call and hold a meeting of its
stockholders relating to the required stockholder approval of the merger as
promptly as possible and to use its best efforts to hold such meeting as soon
as practicable after the Motorola registration statement of which this proxy
statement/prospectus is a part becomes effective.
Appropriate Action; Consents and Filings. The merger agreement provides that
C-Port and Motorola will use their reasonable best efforts to:
. take, or cause to be taken, all appropriate action and do, or cause to be
done, all things necessary, proper or advisable under applicable law or
otherwise to complete the transactions contemplated by the merger
agreement as promptly as practicable;
. obtain any consents, licenses, approvals or other items from any
governmental entities that are required to be obtained, or to avoid any
action or proceeding by any governmental entity, in connection with the
merger agreement and the completion of the transactions contemplated by
the merger agreement; and
. make all necessary filings with respect to the merger agreement and the
merger required under applicable law.
Regardless of the agreements described in the preceding sentence, Motorola
is not obligated under the merger agreement to agree to the imposition of
conditions, the requirement of divestiture, or the requirement of expenditure
of money by Motorola to a third party in exchange for any such consent that, in
any case, would be materially adverse to Motorola, C-Port and their
subsidiaries, taken as a whole.
Plan of Reorganization. Each of Motorola, CP Acquisition Corp. and C-Port
have agreed to use its reasonable best efforts to cause the merger to qualify,
and will not knowingly take any action or cause any action to be taken that
could reasonably be expected to prevent the merger from qualifying, as a
reorganization under the provisions of Section 368(a) of the Code. After the
effective time of the merger, Motorola, the surviving corporation in the merger
and their affiliates will not knowingly take any action or knowingly cause any
action to be taken that could reasonably be expected to cause the merger to
fail to qualify as a reorganization under Section 368(a) of the Code.
44
<PAGE>
Conduct of Business of Motorola Pending the Merger. Motorola has agreed,
with certain exceptions, that it will not (unless required by applicable laws
or New York Stock Exchange regulations), and will not permit CP Acquisition
Corp. (unless required by applicable laws or New York Stock Exchange
regulations) to, between the date of the merger agreement and the effective
time of the merger, directly or indirectly take any action, without the consent
of C-Port, that is intended or could reasonably be expected to result in any of
the conditions to the merger not being satisfied.
Conditions to the Merger
Neither Motorola nor C-Port will be obligated to complete the merger unless
certain conditions are satisfied or are waived, including the following:
. the registration statement on Form S-4, of which this proxy
statement/prospectus forms a part, must become effective under the
Securities Act of 1933 and must not be the subject of any stop order or
proceedings seeking a stop order;
. approval of the merger agreement and the merger by the requisite vote of
the C-Port stockholders;
. receipt of certain consents, approvals and authorizations of governmental
entities and other persons necessary to complete the merger (in each
case, without the imposition of conditions, the requirement of
divestiture or the expenditure of money by Motorola or C-Port to a third
party in exchange for any such consent that, in any such case, would be
materially adverse to Motorola and its subsidiaries or C-Port) unless the
failure to obtain such consents would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on C-
Port or on Motorola after the merger;
. approval of Motorola common stock issuable to C-Port stockholders in the
merger for listing on the New York Stock Exchange, subject to official
notice of issuance;
. employment agreements must have been entered into between Motorola and
each of Laurence G. Walker, David Husak, Peter Morris, Richard
Hollingsworth, Kurt Hoff, Clint Ramsay, and John Burnham;
. no law, judgment, regulation, injunction, arbitration award, decree or
order may be in effect for either party that prevents or prohibits the
merger;
. the waiting period under applicable federal antitrust laws, and any
extension, must have expired or been terminated; and
. each of Motorola and C-Port must have received an opinion of its tax
counsel, Winston & Strawn and Hale and Dorr LLP, respectively, stating
that for United States federal income tax purposes the merger will
qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code.
Additional Conditions to the Obligations of Motorola and CP Acquisition Corp.
Neither Motorola nor CP Acquisition Corp. is obligated to complete the
merger unless the following additional conditions are satisfied or waived by C-
Port:
. C-Port's representations and warranties must remain true and correct in
all material respects on the closing date of the merger;
. C-Port must have performed in all material respects all of its
obligations and covenants required to be performed prior to the effective
time of the merger and must have delivered an officer's certificate to
such effect; and
. Motorola must have received "cold comfort" letters from
PricewaterhouseCoopers LLP dated the date on which the Registration
Statement on Form S-4, of which this proxy statement/prospectus forms a
part, becomes effective and a date at least two days prior to the
effective date of the merger.
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<PAGE>
Additional Conditions to the Obligations of C-Port
C-Port is not obligated to complete the merger unless the following
additional conditions are satisfied or waived by C-Port:
. the representations and warranties of Motorola must remain true and
correct in all material respects on the closing date of the merger;
. Motorola must have performed in all material respects all its
obligations; and covenants required to be performed prior to the
effective time of the merger and must have delivered an officer's
certificate to such effect; and
. all shares of Motorola common stock issuable to the stockholders of C-
Port shall have been registered under the Securities Act of 1933, as
amended.
Each of the foregoing conditions is waivable by Motorola or C-Port, as the
case may be, to the extent legally permissible.
Termination
The merger agreement may be terminated at any time prior to the effective
time of the merger, whether before or after approval and adoption of the merger
agreement and the merger by the C-Port stockholders:
. by mutual consent of Motorola and C-Port;
. by either Motorola or C-Port if:
. the company seeking to terminate under this provision is not then in
material breach of any representation, warranty, covenant or other
agreement contained in the merger agreement;
. there has been a breach by the other company of any of its
representations, warranties, covenants or agreements contained in the
merger agreement or any of its representations and warranties becomes
untrue;
. such breach or condition would prevent the satisfaction of the
closing conditions described under "--Representations and Warranties"
on page 42; and
. such breach or condition has not been promptly cured within 30 days
following receipt by such company of written notice of its breach;
. by either Motorola or C-Port if any decree, permanent injunction,
judgment, order or other action by any court of competent jurisdiction,
any arbitrator or any governmental entity preventing or prohibiting the
completion of the merger shall have become final and nonappealable, so
long as the party seeking termination is not in breach of its obligation
to use its reasonable best efforts to take appropriate action, obtain the
necessary consents and make all necessary filings in connection with the
merger agreement and the merger; or
. by either Motorola or C-Port if the merger has not been completed before
May 31, 2000 (subject to extension by either party to June 30, 2000 so
long as the party requesting extension is not then in material breach of
any representation, warranty or covenant in the merger agreement).
Effect of Termination. The merger agreement provides that no termination of
the merger agreement shall release any party of any liabilities under the
merger agreement for any breaches of the merger agreement prior to the
termination or intentional misrepresentations made in the merger agreement.
Fees and Expenses
Whether or not the merger is completed, each of Motorola and CP Acquisition
Corp. will pay its own fees, expenses and disbursements incurred by it in
connection with the negotiation and preparation of the merger agreement and its
performance and compliance thereunder. If the merger is completed, the C-Port
stockholders
46
<PAGE>
shall pay, from the escrow fund, the fees, expenses and disbursements of C-Port
and the C-Port stockholders, in excess of $2.5 million in the aggregate for all
such fees, expenses and disbursements, incurred by them in connection with the
negotiation and preparation of the merger agreement and their performance and
compliance thereunder.
If the merger is not completed, C-Port shall pay all of the fees, expenses
and disbursements incurred by C-Port and the C-Port stockholders in connection
with the negotiation and preparation of the merger agreement and their
performance and compliance thereunder.
Amendment
The merger agreement may be amended, either before or after the stockholders
of C-Port vote on the merger, by an instrument in writing signed by the
parties. However, after the stockholders of C-Port approve the merger, any
later amendment which by law requires stockholder approval may only be made
with such approval.
Waiver
The merger agreement provides that, at any time prior to the effective time
of the merger, Motorola, CP Acquisition Corp. or C-Port may:
. extend the time for the performance of any of the obligations or other
acts of the other parties to the merger agreement;
. waive any inaccuracies in the representations and warranties of the other
party contained in the merger agreement or in any document delivered
pursuant to the merger agreement;
. waive compliance by another party with any of the agreements or
conditions contained in the merger agreement; and
. any such extension or waiver will be valid only if it is set forth in a
written instrument signed by the party or parties to be bound thereby.
Such extension or waiver or failure to insist on strict compliance with
an obligation, agreement or condition will not operate as a waiver of, or
bar any claim with respect to, any subsequent or other failure.
Voting Agreement
On February 17, 2000, in connection with the merger agreement, Laurence G.
Walker, Bruce Sachs, Thomas Brightman, Robi Soni, Charles River Partnership
VIII, A Limited Partnership, Charles River VIII-A LLC, Bessemer Venture
Investors IV LP, Bessemer Venture Investors L.P., BVP IV Special Situations
L.P., Bessec Ventures IV L.P., Benchmark Capital Partners II, L.P., Robert H.
Buescher, the other stockholders of C-Port named therein, C-Port and Motorola
entered into a voting agreement pursuant to which the C-Port stockholders
parties to the voting agreement agreed to vote all of the C-Port shares that
they will beneficially own at the record date of the special meeting of C-Port
stockholders for the approval and adoption of the merger agreement, the merger
and the other transactions contemplated by the merger agreement, including the
appointment of Laurence G. Walker as stockholder representative under the
merger agreement. As of the date of the voting agreement, the stockholders
represented that they collectively held approximately 1,878,000 C-Port common
shares, 4,832,850 C-Port Series A preferred shares, 5,192,962 C-Port Series B
preferred shares and 3,327,551 Series C preferred shares, representing
approximately 55.7% of the C-Port common and preferred stock, voting together
as a single class, and approximately 69.8% of the C-Port Series A preferred
stock, Series B preferred stock and Series C voting stock, voting together as a
single class.
In the voting agreement, a copy of which is attached as Appendix C to this
proxy statement/prospectus, the stockholders agreed to cooperate fully with
Motorola and C-Port in connection with the merger agreement and the
transactions contemplated by the merger agreement. The stockholders also agreed
to not initiate, solicit
47
<PAGE>
or facilitate any discussions, inquiries or proposals with any third party that
constitute or may reasonably be expected to lead to an acquisition of C-Port.
The voting agreement also provides that each stockholder that is a party to
it will not, and will not agree to, contract to or sell or otherwise transfer
or dispose of any of his or its C-Port shares, or any interest in those shares,
or convertible securities, or any shares obtained upon the exercise of
convertible securities, or any other securities convertible into or
exchangeable for C-Port common stock or any voting rights with respect thereto,
other than:
. pursuant to the merger; or
. with the prior written consent of Motorola.
The voting agreement is intended to bind each stockholder that is a party to
it only with respect to the specific matters set forth in the voting agreement,
and shall not prohibit such stockholders from acting in accordance with their
fiduciary duties as officers and/or directors of C-Port.
The voting agreement is terminable at the option of any party at any time
after the earlier of:
. the termination of the merger agreement; and
. the day following the effective time of the merger.
Appointment of Stockholder Representative
Pursuant to the terms of the merger agreement, each holder of shares of C-
Port common stock who votes in favor of the merger or who receives or accepts
shares of Motorola common stock as the merger consideration will be deemed to
have appointed Laurence G. Walker as stockholder representative and will be
deemed to have consented to the performance by the stockholder representative
of all rights and obligations conferred on the stockholder representative under
the merger agreement and the escrow agreement. The stockholder representative
is not liable to the C-Port stockholders with respect to any action or inaction
taken or suffered by him, in the absence of willful misconduct or gross
negligence on the part of the stockholder representative. For more information
on the escrow agreement, see "--Indemnification of Motorola; Escrow Agreement"
on page 48.
Indemnification of Motorola; Escrow Agreement
The merger agreement provides that 290,786 shares of Motorola common stock
to be issued in connection with the merger will be deposited in escrow with an
escrow agent as soon as practicable after the closing date of the merger. If
the merger occurs after May 15, 2000, the record date for the three-for-one
stock split of Motorola's common stock approved by the Motorola board of
directors on February 29, 2000, the number of shares to be deposited in escrow
will increase to 872,358 in order to reflect the stock split. This represents
10% of the shares of Motorola common stock the stockholders would otherwise be
entitled to receive in the merger. The escrow account is the only source
available to compensate Motorola for the indemnification obligations of each C-
Port stockholder under the merger agreement, except that Motorola may elect not
to have recourse to the escrow account for any claim of fraud. Shares of
Motorola stock subject to issuance upon the exercise of stock options issued
under C-Port's 1997 stock incentive plan will not be included in the escrow
account.
The C-Port stockholders have agreed to indemnify Motorola and its directors,
officers, employees, agents and advisors, from and against any and all damages
and liabilities (including reasonable legal fees) arising out of:
. any inaccuracy in any representation or warranty made by C-Port in the
merger agreement or in the disclosure schedule to the merger agreement;
. the failure of C-Port to perform any of the covenants or agreements given
or made by it in the merger agreement;
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<PAGE>
. certain fees, expenses and disbursements incurred by C-Port in connection
with the merger in excess of $2.5 million;
. any governmental action, order or directive, administrative proceeding or
ruling;
. personal or bodily injuries or damage to any premises;
. any violation or alleged violation of environmental laws existing prior
to the effective time of the merger; and
. certain other matters described in the disclosure schedule to the merger
agreement.
With respect to claims for indemnification, Motorola may not seek
indemnification from the C-Port stockholders until the aggregate amount of all
damages for which Motorola is seeking indemnification, exclusive of legal fees
incurred in pursuing Motorola's claim and certain other amounts described in
the merger agreement, is at least $100,000.
The escrow fund will terminate on the first anniversary of the closing date
of the merger. On the first anniversary, all shares of Motorola common stock
remaining in the escrow fund will be released, except for shares as to which
Motorola has made a claim before the first anniversary and which claim is
unresolved. If Motorola has made a claim for indemnification prior to such
date, the escrow agent will retain in escrow shares and dividends that have a
value of 125% of the claimed amount. Escrowed shares that are released from the
escrow fund will be promptly delivered by the escrow agent to the C-Port
stockholders in accordance with each stockholder's percentage of the escrow
fund.
The merger agreement provides that Laurence G. Walker is appointed as
representative of, for and on behalf of C-Port stockholders to take all actions
necessary or appropriate in his judgment for the accomplishment of the terms of
the merger agreement. Notices of communications to or from the stockholders'
representative will constitute notice to or from each of the C-Port
stockholders. If the stockholders' representative dies or is otherwise no
longer able or willing to serve as the stockholder representative, a new
stockholder representative will be chosen by C-Port stockholders holding a
majority of Motorola common stock issued in connection with the merger.
The stockholder representative will not be liable for any act done or
omitted in the absence of willful misconduct or gross negligence pursuant to
the advice of counsel.
The stockholder representative has full power and authority to represent the
C-Port stockholders and their successors with respect to all matters under the
escrow agreement. All actions taken by the stockholder representative under the
escrow agreement will be binding upon the C-Port stockholders and their
successors. The escrow agent may rely on the stockholder representative as your
exclusive agent under the escrow agreement and will not incur any liability to
any party in so relying.
Any dividends distributed on the escrowed shares are to be held in the
escrow fund. Additionally, the stockholder representative has the right to
direct the escrow agent to exercise the voting rights of the escrow shares in
his sole discretion.
The value of the escrowed shares is the average of the last reported sale
price per share of Motorola common stock over the five consecutive trading days
preceding the date of distribution of the escrow shares. Motorola will pay the
fees and expenses of the escrow agent.
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DESCRIPTION OF MOTOROLA CAPITAL STOCK
The following description of certain terms of the capital stock of Motorola
does not purport to be complete and is qualified in its entirety by reference
to the Motorola charter. For more information as to how you can obtain the
Motorola charter, see "Where You Can Find More Information" on page 67.
Motorola Common Stock
The Motorola charter authorizes Motorola to issue up to 1.4 billion shares
of Motorola common stock, par value $3.00 per share. On May 1, 2000, the
Motorola stockholders will be asked to consider and approve an amendment to
Motorola's charter increasing the number of authorized shares of Motorola
common stock from 1.4 billion shares to 4.2 billion shares in order to provide
for, among other things, shares of Motorola common stock to be issued on June
1, 2000 to Motorola common stockholders of record as of May 15, 2000 as a
dividend in connection with a three-for-one split of Motorola's common stock
approved by the Motorola board of directors on February 29, 2000. Each Motorola
share is entitled to one vote, in person or by proxy, at any and all meetings
of the Motorola stockholders on all propositions before such meetings and on
all elections of directors of Motorola. The Motorola charter does not provide
for cumulative voting in the election of directors. Subject to any preferential
rights of any outstanding series of Motorola preferred stock created by the
Motorola board of directors from time to time, the holders of Motorola common
stock are entitled to dividends only if, when and as the dividends are declared
by the Motorola board of directors and as may be permitted by law, and, upon
liquidation, will be entitled to receive pro rata all assets of Motorola
available for distribution to such holders. As of March 23, 2000, approximately
717,314,579 Motorola shares were issued and outstanding, held by approximately
49,618 holders of record. For a description of voting requirements and change
of control restrictions, see "--Motorola Rights Plan" on pages 51-52 and
"Comparison of Certain Rights of Stockholders of Motorola and C-Port" on pages
53-58.
Motorola Preferred Stock
Motorola is also authorized to issue up to 500,000 shares of preferred
stock, par value $100 per share, from time to time in one or more series and
with such designation for each such series as determined by the Motorola board
of directors. The Motorola board of directors may, without further action by
the Motorola stockholders, issue a series of Motorola preferred stock and state
and fix the rights and preferences of those shares, including:
. the voting powers, if any, of the holders of stock of such series;
. the rate per annum and the times at and conditions upon which the holders
of stock of such series will be entitled to receive dividends, and
whether such dividends will be cumulative or noncumulative and, if
cumulative, the terms upon which such dividends will be cumulative;
. the price or prices and the time or times at and the manner in which the
stock of such series will be redeemable;
. the right to which the holders of the shares of stock of such series
shall be entitled upon any voluntary or involuntary liquidation,
dissolution or winding-up of Motorola;
. the terms, if any, upon which shares of stock of such series shall be
convertible into, or exchangeable for, shares of any stock of any other
class or classes or of any other series of the same or any other class or
classes, including the price or prices or the rate or rates of conversion
or exchange and the terms of adjustment, if any; and
. any other designations, preferences, and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof so far as they are not inconsistent with the
provisions of the Motorola certificate of incorporation, as amended, and
to the full extent now or hereafter permitted by the laws of Delaware.
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<PAGE>
On November 5, 1998, the Motorola board of directors designated a series of
Motorola preferred stock, Junior Participating Preferred Stock, Series B (the
"Motorola Series B Preferred Stock") and authorized 250,000 shares for issuance
in connection with the adoption of the Motorola rights plan. As of March 23,
2000, no shares of Motorola preferred stock of any series were outstanding.
Motorola Rights Plan
On November 5, 1998, the Motorola board of directors authorized the issuance
of one preferred share purchase right (a "Right") for each outstanding Motorola
share, pursuant to a Rights Agreement between Motorola and Harris Trust and
Savings Bank, as Rights Agent. Each Right entitles the registered holder to
purchase from Motorola one ten-thousandth of a share of Motorola Series B
Preferred Stock at an exercise price of $200 per one ten-thousandth of a share
of Motorola Series B Preferred Stock, subject to adjustment. The Rights become
exercisable on the earlier of:
. the tenth day after a public announcement that a person or group of
affiliated or associated persons has acquired or obtained the right to
acquire 10% or more of the outstanding Motorola shares (thereby becoming
an "Acquiring Person"); and
. the tenth business day after the commencement or public disclosure of an
intention to commence a tender offer or exchange offer by a person other
than an exempt person if, upon completion of the offer, such person could
become an Acquiring Person.
A majority of the Motorola board of directors may elect to defer the date on
which the Rights become exercisable. The Rights expire on November 20, 2008
unless earlier redeemed or exchanged by Motorola as described below.
If a person or group becomes an Acquiring Person, each holder of a Right
(except those held by the Acquiring Person and its affiliates and associates)
will have the right to purchase, upon exercise, Motorola shares (or, in certain
circumstances, shares of Motorola Series B Preferred Stock, common stock
equivalents or cash) having a value equal to two times the exercise price of
the Right. In addition, in the event that, at the time or after a person
becomes an Acquiring Person, Motorola is involved in a merger or other business
combination in which (1) Motorola is not the surviving corporation, (2)
Motorola common stock is changed or exchanged, or (3) 50% or more of Motorola's
consolidated assets or earning power are sold, then each Right (other than
Rights that are or were owned by the Acquiring Person and certain related
persons and transferees, which will thereafter be void) will thereafter be
exercisable for a number of shares of common stock of the acquiring company
having a market value of two times the exercise price of the Right. In
addition, at any time after any person or group becomes an Acquiring Person and
before any person acquires 50% or more of the outstanding Motorola shares and
before a business combination occurs, the Motorola board of directors may
exchange the Rights (other than Rights owned by the Acquiring Person which will
have become void), in whole or in part, at an exchange ratio of one Motorola
share, or one ten-thousandth of a share of Motorola Series B Preferred Stock
(or a common stock equivalent), per Right (subject to adjustment).
The Motorola board of directors may redeem all, but not less than all,
Rights at a redemption price of $.01 per Right at any time prior to the time
that a person or a group has become an Acquiring Person. Immediately upon
redemption, the right to exercise will terminate, and the only right of holders
will be to receive the redemption price. As long as the Rights are redeemable,
the terms of the Rights may be amended by the Motorola board of directors in
its discretion without the consent of the Rights holders. After that time, no
amendment may adversely affect the interests of the Rights holder (other than
the Acquiring Person).
The Rights will not prevent a takeover of Motorola. The Rights, however, may
have certain antitakeover effects. The Rights may cause substantial dilution to
a person or group that attempts to acquire Motorola on terms not approved by
the Motorola board of directors or make the acquisition of Motorola
substantially more costly, unless the Motorola board of directors redeems the
Rights prior to the person becoming an Acquiring
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<PAGE>
Person. The Rights should not interfere with any merger or other business
combination approved by the Motorola board of directors because of the board's
ability to redeem the Rights or amend the Motorola rights plan. A description
of the Motorola rights plan specifying the terms of the Rights and the
Motorola Series B Preferred Stock has been included in reports filed by
Motorola under the Securities Exchange Act of 1934, as amended. See "Where You
Can Find More Information" on page 67. This summary description is qualified
in its entirety by reference to the Motorola rights plan.
Each share of Motorola common stock issued in the merger will have a
corresponding Right attached to it.
Transfer Agent; Registrar and Exchange Agent
Harris Trust and Savings Bank is the transfer agent and registrar for the
Motorola common stock.
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<PAGE>
COMPARISON OF CERTAIN RIGHTS OF COMMON STOCKHOLDERS OF
MOTOROLA AND STOCKHOLDERS OF C-PORT
The rights of Motorola and C-Port stockholders are currently governed by the
Delaware General Corporation Law, and the respective charter and by-laws of
Motorola and C-Port. Upon completion of the merger, the rights of C-Port
stockholders who become stockholders of Motorola in the merger will be governed
by the Delaware General Corporation Law, Motorola's charter and Motorola's by-
laws.
The following description summarizes the material differences that may
affect the rights of common stockholders of Motorola and stockholders of C-Port
but does not purport to be a complete statement of all those differences, or a
complete description of the specific provisions referred to in this summary.
The identification of specific differences is not intended to indicate that
other equally or more significant differences do not exist. You should read
carefully the relevant provisions of the Delaware General Corporation Law,
Motorola's charter, Motorola's by-laws, C-Port's charter and C-Port's by-laws.
Capitalization
Motorola. Motorola's authorized capital stock is described above under
"Description of Motorola Capital Stock" on page 50.
C-Port. The authorized capital stock of C-Port consists of 30,000,000 shares
of common stock, par value $0.001 per share, and 19,716,667 shares of preferred
stock, par value $0.001 per share, of which 5,366,667 shares are designated
Series A convertible redeemable preferred stock, 5,900,000 shares are
designated Series B convertible redeemable preferred stock, 8,450,000 shares
are designated Series C convertible redeemable preferred stock. As of March 23,
2000, 8,198,182 shares of C-Port common stock are issued and outstanding,
5,266,266 shares of series A preferred stock are issued and outstanding,
5,409,736 shares of Series B preferred stock are issued and outstanding and
8,449,944 shares of Series C preferred stock are issued and outstanding and
226,031 shares of Series B preferred stock are issuable upon exercise of rights
under warrant agreements.
Voting Stock
Motorola. The outstanding voting securities of Motorola are the shares of
Motorola common stock.
C-Port. Each holder of C-Port common stock is entitled to one vote for each
share held at all meetings of stockholders and written actions in lieu of
meetings. C-Port's charter does not provide for cumulative voting. Each holder
of C-Port preferred stock is entitled to the number of votes equal to the
largest number of whole shares of common stock into which the shares of
preferred stock held are then convertible. Except as provided by law, and in
certain situations set forth in C-Port's charter, holders of preferred stock
vote together with the holders of common stock as a single class.
Number of Directors
Motorola. The Motorola by-laws provide that the Motorola board of directors
shall consist of 16 directors or such other number that the Motorola board of
directors may fix. The Motorola board of directors currently consists of 15
directors.
C-Port. The C-Port by-laws provide that the C-Port board of directors or
stockholders have the right to fix the number of directors by resolution, but
there must be at least one director. The C-Port board currently consists of
five members. The C-Port charter provides that at least 55% of the outstanding
preferred shares must approve any increase in the board of directors to more
than five directors.
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Classification of Board of Directors
Motorola. Motorola does not have a classified board of directors.
C-Port. C-Port does not have a classified board of directors.
Quorum for Meeting Directors
Motorola. The Motorola by-laws state that one-third of the number of
directors fixed in accordance with the provisions of the Motorola by-laws shall
constitute a quorum at all meetings of the board of directors.
C-Port. The C-Port by-laws provide that a majority of the C-Port board of
directors shall constitute a quorum at all meetings of the board of directors.
In the event one or more directors is disqualified to vote at a meeting, the
required quorum is reduced by one for each such disqualified person.
Election of Directors
Motorola. The Motorola by-laws provide that directors shall be elected by
the affirmative vote of a plurality of the Motorola shares represented at the
meeting and entitled to vote on the election of directors.
C-Port. The C-Port by-laws provide that directors are elected at the annual
meeting of C-Port stockholders by, when a quorum is present, by a plurality of
the shares voted at the meeting for the election of directors.
Removal of Directors
Motorola. The Motorola charter and the Motorola by-laws contain no specific
provision regarding removal. Delaware law provides that in the absence of such
a provision, directors of a corporation may be removed with or without cause by
the holders of a majority of the shares entitled to vote at an election of
directors.
C-Port. The C-Port charter provides that directors may be removed with or
without cause by the holders of a majority of the voting power of C-Port
capital stock entitled to vote in the election of directors, voting as a single
class, except that directors elected by the holders of a particular class or
series of stock may be removed without cause only by the vote of a majority of
the outstanding shares of such class or series.
Amendments to Charter
Motorola. Motorola's charter provides that Motorola reserves the right to
amend, alter or repeal any provision contained in its charter in accordance
with Delaware law.
C-Port. C-Port's charter may be amended in any manner provided for by law
except that any amendment that would materially adversely affect in the same
manner any of the rights, preferences, privileges of or limitations of the
preferred stock requires the consent of at least 55% of the then outstanding
shares of preferred stock voting as a single class on an as converted basis.
Filling Vacancies On The Board Of Directors
Motorola. A vacancy on the board of directors because of death, resignation,
removal, disqualification or otherwise, may be filled by the board of directors
for the unexpired portion of the term.
C-Port. C-Port's by-laws provide that, unless filled by the C-Port
stockholders, vacancies on the board of directors, however occurring, including
a vacancy resulting from an enlargement of the board, may be filled by a vote
of a majority of directors then in office, although less than a quorum, or by a
sole remaining director.
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Amendments to By-Laws
Motorola. The Motorola by-laws provide that the by-laws may be altered,
amended or repealed and new by-laws may be adopted at any meeting of the
Motorola board of directors by a majority vote of the directors present at the
meeting. Delaware law provides that stockholders entitled to vote also have the
power to adopt, amend or repeal the by-laws. Amendment of the Motorola by-laws
by the Motorola stockholders requires the affirmative vote of holders of a
majority of the shares of voting stock represented at the meeting and entitled
to vote on that subject matter.
C-Port. C-Port's charter authorizes the board of directors to adopt, amend
or repeal C-Port's by-laws. C-Port's by-laws further provide that the by-laws
may be altered, amended or repealed by the vote of a majority of directors
present at any regular or special meeting of the board at which a quorum is
present. The by-laws may be altered, amended or repealed by the vote of a
majority of the issued and outstanding shares of capital stock of C-Port.
Rights Plan
Motorola. As discussed in "Description of Motorola Capital Stock--Motorola
Rights Plan" on pages 51-52, each Motorola share has attached to it one Right
issued pursuant to the Motorola rights plan.
C-Port. C-Port has not adopted a rights plan.
Special Stockholder Meetings
Motorola. The Motorola by-laws provide that either the Motorola board of
directors or its chairman may call a special meeting.
C-Port. The C-Port by-laws provide that special meetings of the stockholders
may be called at any time by either the president or the board of directors of
C-Port.
Stockholder Action By Written Consent
Motorola. Motorola's by-laws do not provide for stockholder action by
written consent in lieu of a stockholder meeting.
C-Port. C-Port's by-laws provide that any action that must or may be
required to be taken by stockholders may be taken by a written action in lieu
of a meeting of stockholders.
Limitation of Personal Liability of Directors and Indemnification
Motorola. Motorola's charter provides that a director will not be personally
liable to the corporation or to its stockholders for monetary damages for
breach of fiduciary duty as a director, except, if required by law, for
liability:
. for any breach of the director's duty of loyalty to the corporation or
its stockholders;
. for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. under Section 174 of the Delaware General Corporation Law regarding
unlawful payment of dividends or unlawful stock purchases or redemptions;
and
. for any transaction from which the director derived an improper personal
benefit.
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Motorola's charter provides a right to indemnification to directors and
officers of Motorola to the fullest extent permitted by the Delaware General
Corporation Law.
In addition, Motorola must indemnify any present or former director or
officer of the corporation who is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation
who has been successful on the merits or otherwise in the defense of any claim
or proceeding for expenses (including attorneys' fees) actually and reasonably
incurred. Motorola will indemnify in connection with a proceeding initiated by
such indemnitee only if such proceeding was authorized by Motorola's board of
directors.
C-Port. C-Port's charter provides that a director will not be personally
liable to C-Port or its stockholders for monetary damages for breach of
fiduciary duty as a director, except, if required by law. C-Port's charter
further provides that C-Port will indemnify each person who was or is a party
or is threatened to be made a party to any suit by reason of the fact that he
is or was a director or officer of the Company or is or was serving at the
request of the Company as a director, officer or trustee of another Corporation
against all expenses (including attorneys' fees), judgements, and amounts paid
in settlements. These expenses incurred by the director or officer will be
indemnified only if he or she acted in good faith and in a manner he or she
reasonably believed to be in the best interests of the Company, and with
respect to any criminal action, had no reasonable cause to believe his or her
conduct was unlawful. C-Port will not indemnify in connection with a proceeding
initiated by any officer or director unless initiation was approved by the C-
Port board of directors. C-Port will indemnify any officer or director who was
or is a party to any suit by or in the right of the Company only if he or she
acted in good faith and in a manner he reasonably believed to be in the best
interests of the Company, except no indemnification will be made if the person
is held to be liable to the Company, unless the Delaware court of chancery
determines that despite such liability, he is fairly and reasonably entitled to
indemnity. C-Port's charter provides that if an indemnitee is successful, on
the merits or otherwise, of a suit, he shall be indemnified against all
expenses (including attorneys' fees) actually and reasonably incurred by him or
on his behalf and sets forth the conditions under which the officer or director
shall be considered to have been wholly successful.
C-Port is entitled to participate at its own expense and to assume the
defense with legal counsel reasonably acceptable to the applicable officer or
director.
Dividends
Motorola. Motorola's charter provides that the board of directors may, by
resolution, state the conditions upon which the holders of preferred stock
shall be entitled to receive dividends. The common stockholders shall be
entitled to dividends only if the board of directors declares dividends and as
may be permitted by law.
C-Port. C-Port's charter provides that dividends may be declared and paid on
the common stock from funds lawfully available therefor as and when determined
by the board of directors, out of assets legally available therefor, subject to
any preferential dividend rights of any then outstanding preferred stock. The
holders of the preferred stock are entitled, when, as and if declared by the
board of directors of C-Port, to dividends out of the corporation's assets
legally available therefor at the annual rate of 9.5% of $0.375 on the Series A
Preferred Stock; the prime rate plus 1% of $1.13 on the Series B preferred
stock; and the prime rate plus 1% of $2.73 on the Series C preferred stock.
Dividends may be declared and paid upon the common stock in any fiscal year
only if dividends have been paid to or declared and set apart for payment to
all shares of preferred stock at such annual rate for such fiscal year. After
the holders of preferred stock have received their dividend preference as set
forth above, the holders of preferred stock and common stock are entitled,
when, as and if declared by the board of directors, to dividends out of C-
Port's assets legally available therefor; provided, that no such dividends may
be declared or paid on any shares of common stock or preferred stock unless at
the same time an equivalent dividend is declared and paid on all outstanding
shares of common
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stock and preferred stock; and provided further that the dividend on each
series of preferred stock is payable at the same rate per share as would be
payable on the shares of common stock or other securities into which such
series of preferred stock is convertible immediately prior to the record date
for such dividend. The right to dividends on shares of the preferred stock is
cumulative, such that (subject to restrictions set forth in C-Port's charter),
if dividends in respect of any previous or current dividend period, have not
been paid or declared and a sum sufficient for the payment thereof set apart,
the deficiency must first be paid before any dividend or other distribution may
be paid on or declared and set apart for the Series A preferred stock. C-Port
may not declare or pay any dividends or other distributions on shares of common
stock unless the holders of the preferred stock then outstanding simultaneously
receives an equivalent dividend on each outstanding share of preferred stock in
an amount at least equal to the product of (i) the per share amount, if any, of
the dividends or other distributions to be declared, paid or set aside for the
common stock, multiplied by (ii) the number of whole shares of common stock
into which such share of preferred stock is then convertible.
Liquidation
Motorola. Motorola's charter provides that the board of directors may, by
resolution, state the right to which the preferred stockholders shall be
entitled upon any voluntary or involuntary liquidation, dissolution or winding
up of the corporation. Holders of Motorola common stock have no preferential
rights with respect to liquidation.
C-Port. C-Port's charter provides that in the event of any voluntary or
involuntary liquidation, dissolution or winding up of C-Port, the holders of
shares of C-Port preferred stock then outstanding are entitled to be paid out
of C-Port's assets available for distribution to its stockholders before any
payment may be made to the holders of C-Port common stock by reason of their
ownership thereof,
. an amount equal to the Series A Base Amount (as defined in C-Port's
charter) for each share of Series A preferred stock then held by them;
. an amount equal to the Series B Base Amount (as defined in C-Port's
charter) for each share of Series B preferred stock then held by them;
and
. an amount equal to the Series C Base Amount (as defined in C-Port's
charter) for each share of Series C preferred stock then held by them,
in each case subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization affecting
such preferred shares, plus any dividends declared or accrued but unpaid on
such preferred shares. In addition, after payment of the Series A Base Amount,
Series B Base Amount and Series C Base Amount, the holders of preferred stock
are entitled to share ratably with the holders of common stock in the remaining
net assets of C-Port, until each of the holders of preferred stock shall
received an amount per share equal to three times their original purchase price
per share. If upon any liquidation, dissolution or winding up of C-Port the
remaining assets of C-Port available for distribution to its stockholders are
insufficient to pay the holders of shares of C-Port preferred stock the full
amount to which they are entitled, the holders of shares of C-Port preferred
stock will share ratably in any distribution of the remaining assets and funds
of C-Port in proportion to the respective amounts which would otherwise be
payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to such shares were paid in full.
Conversion
Motorola. Motorola's charter provides that the board of directors may, by
resolution, state the terms upon which shares of preferred stock shall be
convertible into, or exchangeable for, shares of stock of any other class or
classes of any other series, including the price, the rate of conversion and
the terms of adjustment. Holders of Motorola common stock have no rights to
convert their shares into any other securities.
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C-Port. Holders of C-Port common stock have no rights to convert their
shares into any other securities. Subject to certain terms, conditions,
limitations and adjustments set forth in the C-Port's charter, holders of each
series of C-Port preferred stock have the right at their option to convert any
such shares, without the payment of additional consideration, into the number
of fully paid and nonassessable shares of C-Port common stock as is determined
by the formulae set forth in the charter. Based on the formula contained in C-
Port's charter, each share of C-Port preferred stock is currently convertible
into one share of C-Port common stock.
No fractional shares of common stock or scrip may be issued upon conversion
of shares of preferred stock. In lieu of any fractional shares to which the
holder would otherwise be entitled, C-Port will pay cash equal to the fair
market value of such fractional shares.
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CERTAIN INFORMATION CONCERNING C-PORT
Executive Officers and Key Employees of C-Port
The table below sets forth each of the executive officers and other key
employees of C-Port together with the respective ages and their expected
positions following the closing of the merger:
<TABLE>
<CAPTION>
Name Age Position with C-Port Post-Merger
---- --- --------------------------------
<S> <C> <C>
Laurence G. Walker 51 Chief Executive Officer
David J. Husak 37 Chief Technical Officer
John Gavin 40 Chief Financial Officer
Clint Ramsay 42 Vice President of Marketing
Peter J. Morris 38 Vice President of Engineering
Kurt Hoff 43 Vice President of Sales
Richard Hollingsworth 50 Vice President of Manufacturing
John Burnham 47 Vice President of Communications
</TABLE>
Laurence G. Walker. Dr. Walker is a co-founder of C-Port and has served as
its President and Chief Executive Officer and as a member of the C-Port board
of directors since C-Port's inception in November 1997. Following the merger,
Dr. Walker is expected to continue to serve as C-Port's President and Chief
Executive Officer. Prior to founding C-Port, Dr. Walker was the President and
Chief Executive Officer of CertCo, LLC from August 1996 until May 1997. Prior
to that time, Dr. Walker was the Vice President and General Manager of the
Network Products Business of Digital Equipment Corporation from January 1994
until July 1996. Dr. Walker is also a director of McData Corporation.
David J. Husak. Mr. Husak is a co-founder of C-Port and has served as its
Chief Technical Officer since C-Port's inception in November 1997 and is
expected to serve C-Port in this capacity following the merger. Prior to
founding C-Port, Mr. Husak served as Senior Consulting Engineer with the
Switching Systems Division of 3Com Corporation from January 1994 to September
1997. Mr. Husak has also served in various engineering positions with
Synernetics Inc. from December 1988 to January 1994.
John Gavin. Mr. Gavin has served and, after the merger is expected to
continue to serve, as Chief Financial Officer and Treasurer of C-Port. He has
held this position since March 1999. Prior to that time, Mr. Gavin was a Vice
President of Finance for Compaq Computer Corporation, from May 1998 to October
1998. Prior to the merger of Compaq and Digital Equipment Corporation, Mr.
Gavin served as Vice President of Finance for Digital's North America business
from May 1997 to May 1998. Mr. Gavin had also served as Vice President of
Finance for the Semiconductor Business Unit of Digital Equipment Corporation
from March 1994 to May 1997.
Clint Ramsay. Mr. Ramsay joined C-Port as Vice President of Marketing in
December 1998 and will continue to serve C-Port in such capacity after the
closing of the merger. From February 1994 to October 1998, Mr. Ramsay was
employed by 3Com Corporation, most recently as Vice President, Marketing, Large
Enterprise Systems and prior to that as Vice President and Business Unit
Manager, LAN systems.
Kurt Hoff. Mr. Hoff joined C-Port in April 1999 as its Vice President of
Sales. Mr. Hoff is expected to continue to serve C-Port in such capacity after
the closing of the merger. Prior to joining C-Port, Mr. Hoff served as Vice
President, Worldwide Sales, of Philsar Electronics, a fabless semiconductor
company, from July 1998 until April 1999. From July 1993 until July 1998, Mr.
Hoff served various managerial and executive positions for Advanced Micro
Devices, including most recently as Director of Sales, Eastern Sector, and
prior to that as Field Sales Manager, Northern California.
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Peter J. Morris. Mr. Morris joined C-Port in February 1999 as C-Port's Vice
President of Software. Mr. Morris currently serves, and after the merger is
expected to continue to serve, as C-Port's Vice President of Engineering.
Prior to joining C-Port, Mr. Morris was employed at Hewlett Packard Company
since 1990, most recently as a Research and Development Section Manager of the
Massachusetts Language Laboratory.
Richard Hollingsworth. Mr. Hollingsworth is expected to be C-Port's Vice
President of Manufacturing following the merger. He has served C-Port as its
Director of Manufacturing since June 1999. Prior to joining C-Port, Mr.
Hollingsworth was Plant Manager at Intel Corporation, responsible for
manufacturing of semiconductor products from May 1998 until May 1999. From
March 1991 to May 1998, Mr. Hollingsworth was Vice President of Semiconductor
Manufacturing and Technology at Digital Equipment Corporation, responsible for
development of technologies for and production of semiconductor products.
John Burnham. Mr. Burnham currently serves and, following the merger is
expected to continue to serve, as C-Port's Vice President of Communications.
He has held this position since November 1998. Prior to joining C-Port, Mr.
Burnham was Director of Corporate Communications at New Oak Communications
from August 1997 to September 1998. Mr. Burnham has also served as Vice
President, Corporate Communications, at CertCo LLC from February 1997 to July
1998. From June 1996 to February 1997 he managed analyst relations and
communications programs at Bay Networks and from January 1995 to May 1996 he
managed analyst relations and public relations for Digital Equipment
Corporation's network product business.
None of the executive officers or key employees of C-Port will serve as a
director of Motorola or C-Port following the merger.
Messrs. Walker, Husak, Ramsay, Morris, Hoff, Hollingsworth and Burnham are
expected to enter into employment agreements with Motorola which will take
effect at the effective time of the merger. For a description of the terms of
the employment agreements, see "Interests of C-Port Directors and Officers in
the Merger--Employment Agreements" on page 31.
Each of the executive officers of C-Port serves at the discretion of the
board of directors. There are no family relationships among any of the
directors and executive officers of C-Port.
C-Port Director Compensation
Directors have received no cash compensation for services provided as
directors of C-Port and have not been reimbursed for out-of-pocket expenses
incurred in connection with attendance at any meeting of the board of
directors.
C-Port may, in its discretion, grant restricted stock, stock options and
other equity awards to its non-employee directors from time to time under its
1997 stock incentive plan. On December 24, 1998, C-Port granted the following
shares of restricted stock to Bruce Sachs under its 1997 stock incentive plan:
. 50,000 shares of C-Port common stock at a purchase price of $.113 per
share.
These shares vest monthly over the two year period commencing on December
24, 1998. Upon the occurence of an event such as the merger, all of Mr. Sachs'
unvested shares will accelerate and immediately vest.
The merger agreement limits C-Port's ability to make additional grants
under its 1997 stock incentive plan.
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C-Port Executive Compensation
The following table sets forth the total compensation received in the fiscal
year ended December 31, 1999 by the following C-Port executive officers and
other key employees.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
------------------------------
Restricted
Name and Principal Position Salary Bonus Stock Awards
- --------------------------- -------- ------ --------------
<S> <C> <C> <C>
Laurence G. Walker............................... $175,000 $ -- --
President and Chief Executive Officer
David J. Husak................................... 133,000 -- --
Chief Technical Officer
John Gavin....................................... 132,000 13,500 187,000 Shares
Chief Financial Officer
Clint Ramsay..................................... 170,000 32,500 400,000 Shares
Vice President of Marketing
Peter J. Morris.................................. 160,000 -- 50,000 Shares
Vice President of Engineering
Kurt Hoff........................................ 200,000 -- 285,000 Shares
Vice President of Sales
Richard Hollingsworth............................ 150,000 -- 150,000 Shares
Vice President of Manufacturing
John Burnham..................................... 159,500 13,000 --
Vice President of Communications
</TABLE>
Option Grants and Restricted Stock Awards in Last Fiscal Year. On January
27, 2000, C-Port granted an option to Mr. Burnham to purchase 60,000 shares of
C-Port common stock at a per share exercise price of $2.46. These options vest
25% on the first anniversary of his employment and monthly thereafter over the
next three years. On February 17, 2000 C-Port's board of directors approved a
resolution that provides for 50% of all unvested shares of C-Port common stock
subject to outstanding options to immediately vest at the effective time of the
merger, with the remaining 50% vesting ratably on a monthly basis over the 12
month period following the effective date of the merger. This acceleration of
unvested shares with regard to option holders who may be disqualified
individuals within the meaning of Section 280G of the Internal Revenue Code is
subject to stockholder approval. See "The Merger--Treatment of C-Port Stock
Options and Restricted Stock" on page 30.
In 1999, C-Port granted restricted stock awards to the following
individuals:
. John Gavin, 187,000 shares of C-Port common stock at $.113 per share;
. Kurt Hoff, 285,000 shares of C-Port common stock at $.113 per share;
. Clint Ramsay, 400,000 shares of C-Port common stock at $.113 per share;
. Peter Morris, 50,000 shares of C-Port common stock at $.113 per share;
and
. Richard Hollingsworth, 150,000 shares of C-Port common stock at $.273 per
share.
The restricted awards granted to Messrs. Gavin, Hoff, Ramsay and
Hollingsworth each vest 25% on the first anniversary of their employment with
the remaining 75% vesting ratably on a monthly basis over a three year period
thereafter. Mr. Morris' restricted stock award is fully vested. Each of their
restricted stock agreements also provides that, in the event of a transaction
such as the merger, each of them is entitled to acceleration of one-half of the
unvested portion of their restricted stock and vesting of the remaining one-
half over the 12 month period following such transaction.
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Each officer of C-Port has a provision in his or her respective restricted
stock agreement providing that if, within 365 days after the effective date of
the merger, such officer ceases to serve C-Port in his or her current capacity,
because he or she is terminated without cause or he or she resigns for good
reason, then the remaining one-half of such shares of restricted stock shall
immediately accelerate and vest in full. Under the terms of the merger
agreement, the directors and officers will receive the same consideration in
connection with the merger as other C-Port stockholders. The merger agreement
provides that each such share of C-Port common stock that is unvested at the
effective time of the merger shall be converted into 0.1022485 of a share of
Motorola common stock, or 0.3067455 of a share of Motorola common stock if the
merger occurs after May 15, 2000, but remains subject to the vesting,
forfeiture or repurchase restrictions set forth in the restricted stock
agreements as in effect prior to the merger.
Bruce Sachs, a director of C-Port and a general partner of Charles River
Partners, which provides management services to Charles River VII GP Limited
Partnership and Charles River Partnership VIII, A Limited Partnership, which
own in the aggregate 4,797,843 shares of C-Port preferred stock. Mr. Sachs is
also a member of Charles River VIII-A LLC, a stockholder of C-Port. Mr. Sachs
directly owns 100,000 shares of Series B preferred stock and 50,000 shares of
C-Port common stock, subject to a restricted stock agreement. At the effective
time of the merger, 100% of all unvested shares of common stock under his
restricted stock agreement will accelerate and immediately vest.
Michael Zak is a director of C-Port and a general partner of Charles River
VIII GP Limited Partnership, the general partner of Charles River Partnership
VIII, A Limited Partnership and an officer of Charles River Friends VII, Inc.,
the manager of Charles River VIII-A LLC. Mr. Zak has shared investment and
shared voting power with respect to shares held by Charles River Partnership
VIII, A Limited Partnership and Charles River VIII-A LLC.
Robi Soni is a director of C-Port and a manager of Deer IV & Co. LLC, the
general partner of Bessemer Venture Partners IV, L.P. Mr. Soni shares voting
power with respect to the shares listed and investment power with respect to
3,046,608 held by affiliated limited partnerships and certain affiliated
individuals and trusts.
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<PAGE>
Security Ownership of Directors, Executive Officers and Principal Stockholders
of C-Port
The following table sets forth information regarding the beneficial
ownership of C-Port's common stock as of March 23, 2000, by the directors,
executive officers and stockholders holding more than 5% of the stock of C-
Port. To the knowledge of C-Port and unless otherwise indicated, each person
named in the table has sole voting power and investment power, or shares such
power with his or her spouse, with respect to all shares of capital stock
listed as owned by such person. The address of each C-Port officer and director
is c/o C-Port Corporation, One High Street, North Andover, Massachusetts 01845.
The number of shares beneficially owned by each stockholder is determined
under rules promulgated by the SEC. The information is not necessarily
indicative of beneficial ownership for any other purpose. Under these rules,
beneficial ownership includes any shares as to which the individual has sole or
shared voting power or investment power and any shares as to which the
individual has the right to acquire beneficial ownership within 60 days after
March 23, 2000 through the exercise of any stock option, warrant or other
right. The inclusion in the following table of those shares, however, does not
constitute an admission that the named stockholder is a direct or indirect
beneficial owner of those shares.
<TABLE>
<CAPTION>
Number of Shares Beneficially Owned Percent of Class
--------------------------------------- ------------------------------------------------
Percentage
Series A Series B Series C Common Series A Series B Series C Aggregate
Name and Address of Common Preferred Preferred Preferred Stock Preferred Preferred Preferred Voting
Beneficial Owner Stock (1) Stock (2) Stock (3) Stock (4) (1) Stock (2) Stock (3) Stock (4) Power (5)
------------------- --------- --------- --------- --------- ------ --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bessemer Venture Partners
(6)..................... -- 1,892,670 1,158,760 1,026,763 -- 35.9% 21.4% 12.2% 14.9%
1400 Old Country Road,
Suite 407
Westbury, New York 11590
Robi Soni(7)............. -- 1,914,836 1,174,152 1,049,222 -- 36.4 21.7 12.4 15.1
Charles River Partners
(8)..................... -- 2,533,333 1,056,557 1,207,953 -- 48.1 19.5 14.3 17.6
1000 Winter Street,
Suite 3300
Waltham, Massachusetts
02154
Michael J. Zak(9)........ -- 2,533,333 1,056,557 1,207,953 -- 48.1 19.5 14.3 17.6
Bruce Sachs(10).......... 50,000 -- 100,000 -- * -- 1.8 -- *
Benchmark Capital........ -- -- 2,654,867 893,330 -- -- 49.1 10.6 13.0
2480 Sandhill Road,
Suite 200
Menlo Park, California
94025
SVM Star Ventures(11).... -- -- -- 1,465,201 -- -- -- 17.3 5.4
Managementgefellfchaft
mbh Nr. 3 Paffart Str.
9D-81679
Munchen, Germany
Laurence G. Walker....... 1,128,000 38,667 17,965 9,157 13.67% * * * 4.4
Thomas Brightman......... 700,000 58,666 27,257 9,157 8.54 1.1 * * 2.9
Kurt Hoff................ 285,000 -- -- -- 3.48 * * * 1.0
David Husak.............. 950,000 38,667 17,965 -- 11.59 * * * 3.7
Clint Ramsay............. 400,000 -- -- -- 4.88 * * * 1.5
Peter Morris............. 320,000 -- -- -- 3.90 -- -- -- 1.2
All executive officers
and directors as a group
(12 persons)............ 4,330,000 4,584,169 2,393,896 2,275,489 52.82% 87.00% 42.4% 26.9% 49.3%
</TABLE>
- --------
*Represents less than 1%.
(1) Based on 8,198,182 shares of common stock issued and outstanding as of
March 23, 2000.
(2) Based on 5,266,266 shares of Series A preferred stock issued and
outstanding as of March 23, 2000.
(3) Based on 5,409,736 shares of Series B preferred stock issued and
outstanding as of March 23, 2000.
(4) Based on 8,449,944 shares of Series C preferred stock issued and
outstanding as of March 23, 2000.
(5) Based on 27,324,128 shares of C-Port capital stock issued and outstanding
as of March 23, 2000. Each share of common stock, Series A preferred stock,
Series B preferred stock and Series C preferred stock is entitled to one
vote.
(6) Includes shares held by Bessemer Venture Investors LP, Bessemer Venture
Partners IV LP, Bessec Ventures IV, LP and BVP IV Special Situations LP.
Also includes shares held by members, employees and former employees, or
family partnerships of those persons, of the limited partner or general
partner of the foregoing limited partnerships.
63
<PAGE>
(7) Mr. Soni is a director of C-Port and owns directly 22,166 shares of Series
A preferred stock, 15,392 shares of Series B preferred stock, 22,459 shares
of Series C preferred stock. Mr. Soni's beneficial ownership includes
shares held by Bessemer Venture Investors LP, Bessemer Venture Partners IV
LP, Bessec Ventures IV, LP and BVP IV Special Situations LP and also
includes shares held by members, employees and former employees, or family
partnerships of those persons, of the limited partner or general partner of
the foregoing limited partnerships. Mr. Soni is also a manager of Deer IV &
Co. LLC, the general partner of Bessemer Venture Partners IV, L.P. Mr. Soni
shares voting power with respect to the shares listed and investment power
with respect to the shares held for the foregoing limited partnerships and
certain affiliated individuals and trusts. Mr. Soni disclaims beneficial
ownership of all other shares listed except to the extent of his pecuniary
interest in the shares held by the foregoing limited partnership and
certain affiliated individuals and trusts.
(8) Includes shares held by Charles River Partnership VIII, a limited
partnership and Charles River VIII-A LLC.
(9) Mr. Zak is a director of C-Port and a general partner of Charles River VIII
GP Limited Partnership, the general partner of Charles River Partnership
VIII, a Limited Partnership and an officer of Charles River Friends VII,
Inc., the manager of Charles River VIII-A LLC. Mr. Zak has shared
investment and shared voting power with respect to shares held by Charles
River Partnership VIII, a Limited Partnership and by Charles River VIII-A
LLC. Mr. Zak disclaims beneficial ownership of all other shares listed
except to the extent of his pecuniary interest in the shares held by the
foregoing entities.
(10) Mr. Sachs is a director of C-Port and owns directly 100,000 shares of
Series B preferred stock and 50,000 shares of common stock, subject to a
restricted stock agreement. Mr. Sachs is also a general partner of Charles
River Partners, which provides management services to Charles River
Partnership VIII, a Limited Partnership. Mr. Sachs is also a member of
Charles River VIII-A LLC, a stockholder of C-Port.
(11) Includes shares held by Star Growth Enterprise, a German Civil Law
Partnership (with limitation of liability) and Star Growth Ventures
Managementgesellschaft mbH Nr. 3.
64
<PAGE>
Related Party Transactions
The table sets forth below, for each director, executive officer, key
employees and affiliate of C-Port, the increase in value to be realized on each
of their purchases in the last fiscal year as a result of the merger. The table
assumes a value of $161.50 per share of Motorola common stock, the closing
price per share on the New York Stock Exchange on March 23, 2000.
<TABLE>
<CAPTION>
Number of Purchase Price Increase
Stockholder C-Port Shares Per Share in Value
----------- ------------- -------------- --------------
<S> <C> <C> <C>
Bessemer Venture Partners
Series C preferred stock.......... 1,207,954 $2.73 $16,645,606.12
Charles River Partners
Series C preferred stock.......... 1,207,953 2.73 16,645,592.34
Benchmark Capital
Series C preferred stock.......... 893,330 2.73 12,310,087.40
SVM Star Ventures
Series C preferred stock.......... 1,465,201 2.73 20,190,469.78
Laurence G. Walker
Series C preferred stock.......... 9,157 2.73 126,183.46
Thomas Brightman
Series C preferred stock.......... 9,157 2.73 126,183.46
Kurt Hoff
Common Stock...................... 285,000 .113 4,673,145.00
John Gavin
Common Stock...................... 187,000 .113 3,066,239.00
Peter Morris
Common Stock...................... 50,000 .113 819,850.00
Clint Ramsay
Common Stock...................... 400,000 .113 6,558,800.00
Richard Hollingsworth
Common Stock...................... 150,000 .273 2,435,550.00
John Burnham
Options to Purchase Common Stock.. 60,000 .273 843,000.00
</TABLE>
65
<PAGE>
EXPERTS
The consolidated financial statements and schedule of Motorola, Inc. and
subsidiaries as of December 31, 1999 and 1998, and for each of the years in the
three-year period ended December 31, 1999, as well as the supplemental
consolidated financial statements and schedules of Motorola, Inc. and
subsidiaries as of December 31, 1999 and 1998, and for each of the years in the
three year period ended December 31, 1999, all of which have been incorporated
by reference herein, have been audited by KPMG LLP, independent certified
public accountants. Such financial statements and schedules have been
incorporated by reference herein in reliance upon the reports with respect
thereto of KPMG LLP, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing.
LEGAL AND TAX MATTERS
The validity of the Motorola shares to be issued in connection with the
merger is being passed upon for Motorola by Donald F. McLellan, Esq., Vice
President, Transactions, Motorola Corporate Law Department. As of March 23,
2000, Mr. McLellan owned 183 Motorola shares and held options to purchase an
additional 6,650 Motorola shares (of which 3,150 were exercisable).
Certain of the tax consequences of the merger will be passed upon at the
effective time of the merger, as a condition to the merger, by Winston &
Strawn, counsel to Motorola, and by Hale and Dorr LLP, counsel to C-Port. See
"The Merger Agreement--Conditions to the Merger" on page 45.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, as amended. Such statements are identified by
the use of forward-looking words or phrases including, but not limited to,
"intended," "will be positioned," "expects," "expected," "anticipates," and
"anticipated." These forward-looking statements are based on current
expectations of Motorola or C-Port, as the case may be. All statements other
than statements of historical facts included in this proxy
statement/prospectus, including those regarding the financial position, results
of operations, cash flows, business strategy, projected costs, growth
opportunities for existing products, benefits from new technology and plans and
objectives of management for future operations of Motorola or C-Port, as the
case may be, are forward-looking statements. Although Motorola or C-Port
believes that the expectations of Motorola or C-Port, as the case may be,
reflected in such forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to have been correct. Because
forward-looking statements involve risks and uncertainties, the actual results
of Motorola and C-Port, as the case may be, could differ materially. Important
factors that could cause actual results to differ materially from the
expectations of Motorola or C-Port, as the case may be ("Cautionary
Statements"), are disclosed under "Risk Factors Relating to the Merger,"
"Reasons for the Merger," and elsewhere in this proxy statement/prospectus and
in Motorola's SEC filings listed on page 67. These forward-looking statements
represent the judgment of Motorola or C-Port, as the case may be, as of the
date of this proxy statement/prospectus. All subsequent written and oral
forward-looking statements attributable to Motorola or C-Port or persons acting
on behalf of Motorola or C-Port are expressly qualified in their entirety by
the Cautionary Statements. Motorola and C-Port disclaim, however, any intent or
obligation to update their respective forward-looking statements.
66
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Motorola files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any reports, statements or other information Motorola files at the SEC's
public reference rooms at the following locations:
Public Reference Room New York Regional Office
Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661-2511
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Motorola's SEC filings are also available to the public from
commercial document retrieval services and at the website maintained by the SEC
at www.sec.gov.
Motorola filed a registration statement on Form S-4 to register with the SEC
the Motorola common stock to be issued to C-Port stockholders in the merger.
This proxy statement/prospectus is a part of the Motorola registration
statement and constitutes both a prospectus of Motorola and a proxy statement
of C-Port for its special meeting.
As allowed by SEC rules, this proxy statement/prospectus does not contain
all the information you can find in the Motorola registration statement or the
exhibits to the Motorola registration statement.
The SEC allows us to "incorporate by reference" information into this proxy
statement/prospectus, which means that we can disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this proxy
statement/prospectus, except for any information superseded by information
contained directly in this proxy statement/prospectus. This proxy
statement/prospectus incorporates by reference the documents set forth below
that we have previously filed with the SEC. These documents contain important
information about Motorola and its financial condition.
<TABLE>
<CAPTION>
Motorola SEC Filings (File No. 1-07221) Period
--------------------------------------- -------------------------------------------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1999
Current Reports on Form 8-K Filed on January 6, 2000 (as amended
by Amendment No. 1 thereto filed on
Form 8-K/A filed on March 17, 2000) and
March 23, 2000 (as amended by
Amendment No. 1 thereto filed on Form 8-K/A
filed on March 24, 2000)
Proxy Statement Dated March 23, 2000
The description of Motorola's
common stock contained in
its Registration Statement
on Form 8-B dated July 2,
1973, including any
amendments or reports filed
for the purpose of updating
such description.
The description of the Rights
contained in its
Registration Statement on
Form 8-A dated November 5,
1998, including any
amendment or report filed
for the purpose of updating
such description.
</TABLE>
Motorola also incorporates by reference into this proxy statement/prospectus
additional documents that may be filed with the SEC from the date of this proxy
statement/prospectus to the date of the special meeting of C-Port stockholders.
These include periodic reports, such as Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K, as well as proxy statements.
67
<PAGE>
Motorola has supplied all information contained or incorporated by reference
in this proxy statement/prospectus relating to Motorola, and C-Port has
supplied all such information relating to C-Port.
If you are already a Motorola stockholder, we may already have sent you some
of the documents incorporated by reference, but you can obtain any of them
through us, the SEC or the SEC's website as described above. Documents
incorporated by reference are available from us without charge, excluding all
exhibits unless we have specifically incorporated by reference an exhibit in
this proxy statement/prospectus. Stockholders may obtain documents incorporated
by reference in this proxy statement/prospectus by requesting them in writing
or by telephone from the appropriate company at the following addresses:
Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
Tel: (800) 262-8509
Attn.: Investor Relations
website: www.motorola.com/investor
If you would like to request documents from us, please do so by
[ ], 2000 to receive them before the C-Port special meeting.
C-Port is a privately held corporation that is not subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, and therefore
does not incorporate information in this proxy statement prospectus by
reference unless such information appears in an Appendix to this proxy
statement/prospectus.
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus to vote on the transactions. We
have not authorized anyone to provide you with information that is different
from what is contained in this proxy statement/prospectus. This proxy
statement/prospectus is dated [ ], 2000. You should not assume that the
information contained in this proxy statement/prospectus is accurate as of any
date other than that date, and neither the mailing of this proxy
statement/prospectus to stockholders nor the issuance of Motorola common stock
in the merger shall create any implication to the contrary.
68
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MOTOROLA, INC.,
CP ACQUISITION CORP.
and
C-PORT CORPORATION
Dated as of February 17, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE I THE MERGER..................................................... A1
SECTION 1.1 The Merger.............................................. A1
SECTION 1.2 Effective Time.......................................... A1
SECTION 1.3 Effect of the Merger.................................... A1
SECTION 1.4 Certificate of Incorporation; By-laws................... A2
SECTION 1.5 Directors and Officers.................................. A2
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES............ A2
SECTION 2.1 Conversion of Securities................................ A2
SECTION 2.2 Escrow.................................................. A4
SECTION 2.3 Exchange of Certificates................................ A5
SECTION 2.4 Stock Transfer Books.................................... A7
SECTION 2.5 Stock Options........................................... A7
SECTION 2.6 Restricted and Founders Stock........................... A8
SECTION 2.7 Appraisal Rights........................................ A8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................ A8
SECTION 3.1 Organization and Qualification; Subsidiaries............ A8
Certificate of Incorporation and By-laws; Corporate
SECTION 3.2 Books and Records....................................... A9
SECTION 3.3 Capitalization.......................................... A9
SECTION 3.4 Authority Relative to This Agreement.................... A10
SECTION 3.5 No Conflict; Required Filings and Consents.............. A10
SECTION 3.6 Permits; Compliance With Law............................ A11
SECTION 3.7 Financial Statements.................................... A11
SECTION 3.8 Absence of Certain Changes or Events.................... A11
SECTION 3.9 Employee Benefit Plans and Executive Compensation....... A12
SECTION 3.10 Contracts............................................... A15
SECTION 3.11 Litigation.............................................. A16
SECTION 3.12 Environmental Matters................................... A16
SECTION 3.13 Intellectual Property................................... A17
SECTION 3.14 Taxes................................................... A19
SECTION 3.15 Labor Matters........................................... A20
SECTION 3.16 Insurance............................................... A21
SECTION 3.17 Vote Required........................................... A21
SECTION 3.18 Brokers................................................. A21
SECTION 3.19 Year 2000 Compliance.................................... A21
SECTION 3.20 Related Party Transactions.............................. A21
SECTION 3.21 Investment Company Act.................................. A21
SECTION 3.22 Capital Expenditures.................................... A22
SECTION 3.23 Assets Register......................................... A22
SECTION 3.24 Disclosure.............................................. A22
SECTION 3.25 No Undisclosed Liabilities.............................. A22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB....... A22
SECTION 4.1 Organization and Qualification; Subsidiaries............ A22
Certificate of Incorporation and By-laws; Corporate
SECTION 4.2 Books and Records....................................... A22
SECTION 4.3 Capitalization.......................................... A23
</TABLE>
i
<PAGE>
<TABLE>
<C> <S> <C>
SECTION 4.4 Authority Relative to This Agreement..................... A23
SECTION 4.5 No Conflict; Required Filings and Consents............... A23
SECTION 4.6 SEC Filings; Financial Statements........................ A24
SECTION 4.7 Absence of Certain Changes or Events..................... A24
SECTION 4.8 Ownership of Merger Sub; No Prior Activities............. A24
SECTION 4.9 Brokers.................................................. A25
SECTION 4.10 Disclosure............................................... A25
SECTION 4.11 NYSE Requirements........................................ A25
ARTICLE V COVENANTS....................................................... A25
Conduct of Business by the Company Pending the Effective
SECTION 5.1 Time..................................................... A25
SECTION 5.2 Conduct of Business by Parent Pending the Effective Time. A27
SECTION 5.3 Cooperation.............................................. A27
SECTION 5.4 Employee Benefit Covenant................................ A27
SECTION 5.5 Audited Financial Statements............................. A27
ARTICLE VI ADDITIONAL AGREEMENTS.......................................... A28
SECTION 6.1 Registration Statement; Proxy Statement.................. A28
SECTION 6.2 Company Stockholders' Meetings........................... A29
SECTION 6.3 Access to Information; Confidentiality................... A29
SECTION 6.4 No Solicitation of Transactions.......................... A29
SECTION 6.5 Appropriate Action; Consents; Filings.................... A30
SECTION 6.6 Letters of Accountants................................... A31
SECTION 6.7 Certain Notices.......................................... A31
SECTION 6.8 Warrants................................................. A31
SECTION 6.9 Stock Exchange Listing................................... A31
SECTION 6.10 Plan of Reorganization................................... A31
SECTION 6.11 Indemnification.......................................... A32
SECTION 6.12 Stock Options............................................ A32
ARTICLE VII CLOSING CONDITIONS............................................ A32
Conditions to Obligations of Each Party Under This
SECTION 7.1 Agreement................................................ A32
Additional Conditions to Obligations of Parent and Merger
SECTION 7.2 Sub...................................................... A33
SECTION 7.3 Additional Conditions to Obligations of the Company...... A33
ARTICLE VIII INDEMNIFICATION.............................................. A34
SECTION 8.1 Survival of Representations and Warranties............... A34
SECTION 8.2 Indemnification by Parent................................ A34
SECTION 8.3 Indemnification by the Stockholders...................... A35
SECTION 8.4 Stockholder Representative; Approval of Stockholders..... A36
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER.............................. A37
SECTION 9.1 Termination.............................................. A37
SECTION 9.2 Effect of Termination.................................... A38
SECTION 9.3 Amendment................................................ A38
SECTION 9.4 Waiver................................................... A38
SECTION 9.5 Fees and Expenses........................................ A38
ARTICLE X GENERAL PROVISIONS.............................................. A38
SECTION 10.1 Notices.................................................. A38
SECTION 10.2 Certain Definitions...................................... A39
SECTION 10.3 Headings................................................. A39
SECTION 10.4 Severability............................................. A39
SECTION 10.5 Entire Agreement......................................... A39
SECTION 10.6 Assignment............................................... A39
SECTION 10.7 Parties in Interest...................................... A39
SECTION 10.8 Mutual Drafting.......................................... A39
SECTION 10.9 Governing Law............................................ A39
</TABLE>
ii
<PAGE>
<TABLE>
<C> <S> <C>
SECTION 10.10 Publicity................................................ A39
SECTION 10.11 Counterparts............................................. A39
SECTION 10.12 Time of the Essence...................................... A39
</TABLE>
EXHIBIT A VOTING AGREEMENT
EXHIBIT B ESCROW AGREEMENT
EXHIBIT C EMPLOYMENT AGREEMENT
iii
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<S> <C>
Acquisition Agreement...................................... Section 6.4(d)
Acquisition Proposal....................................... Section 6.4(c)
Affiliate.................................................. Section 10.2
Agreement.................................................. Preamble
Audited Financial Statements............................... Section 3.7(a)
Blue Sky Laws.............................................. Section 4.5(b)
Business Day............................................... Section 10.2
CERCLA..................................................... Section 3.12
Certificate of Merger...................................... Section 1.2
Certificates............................................... Section 2.3(b)
Claim Amount............................................... Section 8.2(c)
Claim Notice............................................... Section 8.2(c)
Code....................................................... Preamble
Company.................................................... Preamble
Company Benefit Plans...................................... Section 3.9(a)
Company By-laws............................................ Section 3.2
Company Capital Stock...................................... Section 2.1(a)
Company Certificate........................................ Section 3.2
Company Common Stock....................................... Section 2.1(a)
Company Disclosure Schedule................................ Article III Preamble
Company Material Adverse Effect............................ Section 3.1
Company Option............................................. Section 2.5
Company Permits............................................ Section 3.6
Company Preferred Stock.................................... Section 2.1(a)
Company Stock Option Plan.................................. Section 2.5
Company Stockholders' Meeting.............................. Section 6.2
Confidentiality Agreement.................................. Section 6.3(b)
Contract................................................... Section 3.10(c)
control.................................................... Section 10.2
DGCL....................................................... Preamble
Dissenting Shares.......................................... Section 2.7
Dissenting Stockholders.................................... Section 2.7
Effective Time............................................. Section 1.2
Environmental Laws......................................... Section 3.12
Environmental Permits...................................... Section 3.12
ERISA...................................................... Section 3.9(a)
Escrow Agent............................................... Section 2.1(d)
Escrow Agreement........................................... Section 2.1(d)
Escrow Fund................................................ Section 8.3(c)
Escrow Shares.............................................. Section 2.1(d)
Excess Shares.............................................. Section 2.3(e)(2)
Exchange Act............................................... Section 4.5(b)
Exchange Agent............................................. Section 2.3(a)
Exchange Agreement......................................... Section 2.3(a)
Exchange Fund.............................................. Section 2.3(a)
Exchange Ratio............................................. Section 2.1(a)(B)(i)
Financial Statements....................................... Section 3.7(a)
Founders Stock............................................. Section 2.6
Fully-Diluted Company Common Shares........................ Section 2.1(a)
GAAP....................................................... Section 3.7(b)
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
Governmental Entity........................................ Section 3.5(b)
Hazardous Materials........................................ Section 3.12
HSR Act.................................................... Section 4.5(b)
Initial Shares............................................. Section 2.1(d)
Intellectual Property...................................... Section 3.13
Investment Company Act..................................... Section 3.21
IRS........................................................ Section 3.9(a)
knowledge.................................................. Section 10.2
Law........................................................ Section 3.5(a)
Liquidation Common Stock Exchange Ratio.................... Section 2.1(a)
Merger..................................................... Preamble
Merger Common Stock Exchange Ratio......................... Section 2.1(a)
Merger Shares.............................................. Section 2.1(d)
Merger Sub................................................. Preamble
Multiemployer Plan......................................... Section 3.9(b)
Multiple Employer Plan..................................... Section 3.9(b)
NYSE....................................................... Section 2.3(e)(2)
Outstanding Series A Shares................................ Section 2.1(a)
Outstanding Series B Shares................................ Section 2.1(a)
Outstanding Series C Shares................................ Section 2.1(a)
Owned Software............................................. Section 3.13(i)
Parent..................................................... Preamble
Parent Common Stock........................................ Section 2.1(a)
Parent Indemnitees......................................... Section 8.3(a)
Parent Material Adverse Effect............................. Section 4.1
Parent Preferred Stock..................................... Section 4.3
Parent SEC Filings......................................... Section 4.6(a)
Parent Stock Price......................................... Section 2.1(a)(A)(i)
Preferred Stock Participation Amount....................... Section 2.1(a)
person..................................................... Section 10.2
Proxy Statement............................................ Section 6.1(a)
Registration Statement..................................... Section 6.1(a)
Representatives............................................ Section 6.3(a)
Restricted Stock........................................... Section 2.6
SEC........................................................ Section 6.1(a)
Securities Act............................................. Section 4.5(b)
Series A Liquidation Exchange Ratios....................... Section 2.1(a)
Series A Participation Amount.............................. Section 2.1(a)
Series A Preferred Stock................................... Section 2.1(a)
Series B Liquidation Exchange Ratios....................... Section 2.1(a)
Series B Participation Amount.............................. Section 2.1(a)
Series B Preferred Stock................................... Section 2.1(a)
Series C Liquidation Exchange Ratios....................... Section 2.1(a)
Series C Participation Amount.............................. Section 2.1(a)
Series C Preferred Stock................................... Section 2.1(a)
Share Issuance............................................. Section 4.4
Stockholder Representative................................. Section 8.4(a)
Stockholders............................................... Section 2.1(d)
subsidiary or subsidiaries................................. Section 10.2
Surviving Corporation...................................... Section 1.1
Tax........................................................ Section 3.14(a)
Unaudited Financial Statements............................. Section 3.7(a)
</TABLE>
v
<PAGE>
<TABLE>
<S> <C>
Warrant Agreements.................................................. Section 6.8
Warrants............................................................ Section 6.8
1999 Audited Financial Statements................................... Section 5.5
</TABLE>
vi
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of February 17, 2000 (this
"Agreement"), by and among Motorola, Inc., a Delaware corporation ("Parent"),
CP Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), and C-Port Corporation, a Delaware corporation (the
"Company").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved and declared advisable the merger of Merger Sub with and
into the Company (the "Merger") upon the terms and subject to the conditions of
this Agreement and in accordance with the General Corporation Law of the State
of Delaware (the "DGCL");
WHEREAS, the respective Boards of Directors of Parent and the Company have
determined that the Merger is in furtherance of and consistent with their
respective business strategies and is in the best interest of their respective
stockholders, and Parent has approved this Agreement and the Merger as the sole
stockholder of Merger Sub;
WHEREAS, as a condition to, and in connection with the execution of this
Agreement, certain stockholders of the Company have entered into a Voting
Agreement with Parent in the form attached hereto as Exhibit A; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, at the Effective Time
(as defined in Section 1.2), Merger Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Merger
Sub shall cease and the Company shall continue as the surviving corporation of
the Merger (the "Surviving Corporation").
SECTION 1.2 Effective Time. No later than three Business Days after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII, 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
such filing, or, if another date and time is specified in such filing, such
specified date and time, being the "Effective Time").
SECTION 1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, all the property, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.4 Certificate of Incorporation; By-laws. At the Effective Time,
the Certificate of Incorporation and the By-laws of the Surviving Corporation
shall be amended in their entirety to contain the
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provisions set forth in the Certificate of Incorporation and By-laws of Merger
Sub, as in effect immediately prior to the Effective Time.
SECTION 1.5 Directors and Officers. The directors of Merger Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation. The officers of Merger
Sub immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-laws of the Surviving Corporation.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Merger Sub, the Company or the
holders of any of the following securities:
(a) Each share of common stock, par value $.001 per share, of the
Company ("Company Common Stock") issued and outstanding immediately prior
to the Effective Time (other than any shares of Company Common Stock to be
cancelled pursuant to Section 2.1(b)) and each share of Series A
Convertible Redeemable Preferred Stock, par value $.001 per share, of the
Company ("Series A Preferred Stock"), Series B Convertible Redeemable
Preferred Stock, par value $.001 per share, of the Company ("Series B
Preferred Stock"), and Series C Convertible Redeemable Preferred Stock, par
value $.001 per share, of the Company ("Series C Preferred Stock" and,
together with the Series A Preferred Stock and the Series B Preferred
Stock, the "Company Preferred Stock" and, together with the Company Common
Stock, the "Company Capital Stock") issued and outstanding immediately
prior to the Effective Time, shall be converted, subject to Section 2.3(e),
into the right to receive:
(A) to the extent that the Merger is treated for purposes of Section
4 of the Company Certificate (as defined below) as a "liquidation,
dissolution or winding up" of the Company,
(i) in the case of each share of Company Common Stock, a fraction
of a share of common stock, par value $3.00 per share, of Parent,
including the corresponding percentage of a right to purchase shares
of Junior Participating Preferred Stock, Series B, par value $100
per share, of Parent pursuant to the Rights Agreement, dated
November 5, 1998, between Parent and Harris Trust and Savings Bank,
as Rights Agent (the "Parent Common Stock"), equal to (a)
$430,000,000 minus (x) the Preferred Stock Liquidation Amount (as
defined below) and (y) the Preferred Stock Participation Amount (as
defined below), divided by $147.875 (the "Parent Stock Price"), and
divided by (b) the difference of the number of Fully-Diluted Company
Common Shares (as defined below and as identified in Section 3.3(a))
minus the number of shares of Company Common Stock that would be
issued assuming the conversion of all shares of Company Preferred
Stock. The Preferred Stock Liquidation Amount is equal to the sum of
Series A Convertible Preferred Liquidation Amount, Series B
Convertible Preferred Liquidation Amount and Series C Convertible
Preferred Liquidation Amount (in each case as such terms are defined
in the Company Certificate). The fraction determined under this
Section 2.1, as may be adjusted from time to time as set forth
elsewhere herein, is called the "Liquidation Common Stock Exchange
Ratio." "Fully-Diluted Company Common Shares" is equal to, as of the
date hereof and without duplication with respect to clauses (i),
(ii) and (iii) immediately below, the sum of: (i) the total number
of shares of Company Common Stock outstanding, (ii) the total number
of shares of Company Common Stock consisting of outstanding
Restricted Stock and Founders Stock, (iii) the total number of
shares of Company Common Stock that would be issued assuming the
exercise, conversion or exchange, as applicable, of all outstanding
Warrants, Company Options, or other rights to subscribe for,
purchase or otherwise acquire any shares of Company Common Stock or
any evidences of indebtedness convertible into capital stock of the
Company, shares of stock, agreements, contracts or other securities
of any other type or form
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which are convertible into or exchangeable or exercisable for, with
or without payment of additional consideration, shares of Company
Common Stock, either immediately or upon the arrival of a specified
date or the happening of a specified event (in each case expressed
on a Company Common Stock equivalent basis), and (iv) an additional
10,000 shares of Company Common Stock;
(ii) in the case of each share of Series A Preferred Stock, (x) a
fraction of a share of Parent Common Stock equal to (a) the Series A
Convertible Preferred Liquidation Amount divided by the Parent Stock
Price, and divided by (b) the aggregate number of shares of Series A
Preferred Stock outstanding at the Effective Time (the "Outstanding
Series A Shares") and (y) a fraction of a share of Parent Common
Stock equal to (A) the difference of three (3) times the Original
Purchase Price (as defined in the Company Certificate) of the Series
A Preferred Stock minus the Series A Convertible Preferred
Liquidation Amount (such difference, the "Series A Participation
Amount"), divided by the Parent Stock Price, divided by (B) the
Outstanding Series A Shares (the exchange ratios set forth in
clauses (x) and (y) of this subparagraph are referred to
collectively as the "Series A Liquidation Exchange Ratios");
(iii) in the case of each share of Series B Preferred Stock, (x)
a fraction of a share of Parent Common Stock equal to (a) the Series
B Convertible Preferred Liquidation Amount divided by the Parent
Stock Price, and divided by (b) the aggregate number of shares of
Series B Preferred Stock outstanding at the Effective Time (the
"Outstanding Series B Shares") and (y) a fraction of a share of
Parent Common Stock equal to (A) the difference of three times the
Original Purchase Price of the Series B Preferred Stock minus the
Series B Convertible Preferred Liquidation Amount (such difference,
the "Series B Participation Amount"), divided by the Parent Stock
Price, divided by (B) the Outstanding Series B Shares (the exchange
ratios set forth in clauses (x) and (y) of this subparagraph are
referred to collectively as the "Series B Liquidation Exchange
Ratios"); and
(iv) in the case of each share of Series C Preferred Stock, (x) a
fraction of a share of Parent Common Stock equal to (a) the Series C
Convertible Preferred Liquidation Amount divided by the Parent Stock
Price, and divided by (b) the aggregate number of shares of Series C
Preferred Stock outstanding at the Effective Time (the "Outstanding
Series C Shares") and (y) a fraction of a share of Parent Common
Stock equal to (A) the difference of three times the Original
Purchase Price of the Series C Preferred Stock minus the Series C
Convertible Preferred Liquidation Amount (such difference, the
"Series C Participation Amount" and, together with the Series A
Participation Amount and the Series B Participation Amount, the
"Preferred Stock Participation Amount"), divided by the Parent Stock
Price, divided by (B) the Outstanding Series C Shares (the exchange
ratios set forth in clauses (x) and (y) of this subparagraph are
referred to collectively as the "Series C Liquidation Exchange
Ratios");
(B) to the extent that holders of at least fifty-five percent (55%)
of the Company Preferred Stock, voting together as a single class on an
as converted basis, elect pursuant to Section 4(c) of the Company
Certificate that the Merger not be treated as a "liquidation,
dissolution or winding up" of the Company,
(i) in the case of each share of Company Common Stock, a fraction
of a share of Parent Company Stock equal to 0.1022485 (the "Merger
Common Stock Exchange Ratio" and, together with the Liquidation
Common Stock Exchange Ratio, the Series A Liquidation Exchange
Ratios, the Series B Liquidation Exchange Ratios and the Series C
Liquidation Exchange Ratios, the "Exchange Ratios");
(ii) in the case of each share of Series A Preferred Stock, a
fraction of a share of Parent Company Stock equal to the product of
(a) the number of Company Common Shares into which
such share of Series A Preferred Stock is then convertible into
pursuant to Section 5(h) of the Company Certificate multiplied by
(b) the Merger Common Stock Exchange Ratio;
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(iii) in the case of each share of Series B Preferred Stock, a
fraction of a share of Parent Company Stock equal to the product of
(a) the number of Company Common Shares into which such share of
Series B Preferred Stock is then convertible into pursuant to
Section 5(h) of the Company Certificate multiplied by (b) the Merger
Common Stock Exchange Ratio; and
(iv) in the case of each share of Series C Preferred Stock, a
fraction of a share of Parent Company Stock equal to the product of
(a) the number of Company Common Shares into which such share of
Series C Preferred Stock is then convertible into pursuant to
Section 5(h) of the Company Certificate multiplied by (b) the Merger
Common Stock Exchange Ratio.
provided, however, that, in any event, if between the date of this Agreement
and the Effective Time the outstanding shares of Parent Common Stock, Company
Common Stock or Company Preferred Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination
or exchange of shares, each Exchange Ratio shall be correspondingly adjusted to
reflect such stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares. All such shares of Company Common
Stock or Company Preferred Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
certificate previously representing any such shares shall thereafter represent
the right to receive a certificate representing the shares of Parent Common
Stock into which such Company Common Stock or Company Preferred Stock was
converted in the Merger. Certificates previously representing shares of Company
Common Stock or Company Preferred Stock shall be exchanged for certificates
representing whole shares of Parent Common Stock issued in consideration
therefor upon the surrender of such certificates in accordance with the
provisions of Section 2.3, without interest.
(b) Each share of Company Common Stock held in the treasury of the
Company immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof and no payment shall be made
with respect thereto.
(c) Each share of common stock, par value $0.01 per share, of Merger Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one newly and validly issued, fully paid
and nonassessable share of common stock of the Surviving Corporation.
(d) 290,786 shares of Parent Common Stock which stockholders of record
of the Company (the "Stockholders") immediately prior to the Effective Time
shall be entitled to receive immediately as of the Effective Time and into
which their shares of Company Capital Stock were converted pursuant to this
Section 2.1 (the "Escrow Shares") shall be deposited in escrow pursuant to
Section 2.2 and shall be held and disposed of in accordance with the terms
of the Escrow Agreement (the "Escrow Agreement"), to be entered into on the
Effective Time, by and among Parent, the Stockholder Representative, as
defined below in Article VIII, and Harris Trust and Savings Bank or another
institution designated by Parent and the Company as the Escrow Agent (the
"Escrow Agent"), a form of which is attached hereto as Exhibit B; the
Stockholders shall be entitled to receive immediately as of the Effective
Time the remaining shares of Parent Common Stock into which the Company
Capital Stock were converted pursuant to this Section 2.1 (the "Initial
Shares"). The Escrow Shares and the Initial Shares shall together be
referred to herein as the "Merger Shares."
SECTION 2.2 Escrow. At the Effective Time, Parent shall deliver to the
Escrow Agent a certificate (issued in the name of the Escrow Agent or its
nominee) representing the Escrow Shares for the purpose of securing and as the
sole remedy for satisfying the indemnification obligations of the Stockholders
set forth in this Agreement. The Escrow Shares shall be held by the Escrow
Agent under the Escrow Agreement pursuant to the terms thereof. The Escrow
Shares shall be held as a trust fund and shall not be subject to any lien,
attachment, trustee process or any other judicial process of any creditor of
any party, and shall be held and disbursed solely for the purposes and in
accordance with the terms of this Agreement and the Escrow Agreement. The
adoption of this Agreement and the approval of the Merger by the Stockholders
shall
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constitute approval of the Escrow Agreement and of all of the arrangements
relating thereto, including without limitation the placement of the Escrow
Shares in escrow and the appointment of the Stockholder Representative.
SECTION 2.3 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall deposit, or shall
cause to be deposited, with Harris Trust and Savings Bank or another bank or
trust company designated by Parent and reasonably satisfactory to the Company
(the "Exchange Agent"), for the benefit of the holders of shares of Company
Capital Stock, for exchange in accordance with this Article II, through the
Exchange Agent, certificates representing the Initial Shares, together with
cash in lieu of fractional shares and any dividends or distributions with
respect thereto (the "Exchange Fund") issuable pursuant to Section 2.1 in
exchange for shares of Company Capital Stock that are subject to conversion as
provided herein. The Exchange Agent shall deliver the Parent Common Stock
contemplated to be issued pursuant to Section 2.1 out of the Exchange Fund in
accordance with the terms of the Exchange Agreement to be entered into on the
Effective Date between Parent and the Exchange Agent (the "Exchange
Agreement"). Except as contemplated by Section 2.2(e) hereof, the Exchange Fund
shall not be used for any other purpose.
(b) Exchange Procedures. Within five Business Days after the Effective Time,
but in any event after the receipt by the Exchange Agent from the Company of
the documents set forth in Section 1(a) of the Exchange Agreement, Parent shall
instruct the Exchange Agent to mail to each holder of record of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding shares of Company Capital Stock (the "Certificates") (1) a letter
of transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Exchange Agent and shall be in customary form) and (2)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common Stock. Upon surrender of
a Certificate for cancellation to the Exchange Agent together with such letter
of transmittal, duly executed, 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 (x) a certificate representing that number of
whole Initial Shares which such holder has the right to receive in respect of
the shares of Company Capital Stock formerly owned by such holder, (y) cash in
lieu of fractional shares of Parent Common Stock to which such holder is
entitled pursuant to Section 2.3(e), and (z) any dividends or other
distributions to which such holder is entitled pursuant to Section 2.3(c), and
the Certificate so surrendered shall forthwith be canceled. No interest will be
paid or accrued on any cash in lieu of fractional shares or on any unpaid
dividends and distributions payable to holders of Certificates. In the event of
a transfer of ownership of shares of Company Capital Stock which is not
registered in the transfer records of the Company, a certificate representing
the proper number of shares of Parent Common Stock may be issued to a
transferee if the Certificate representing such shares of Company Capital Stock
is presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this
Section 2.3, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the certificate
representing shares of Parent Common Stock, cash in lieu of any fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 2.3(e) and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.3(c).
(c) Distributions with Respect to Unexchanged Shares of Parent Common Stock.
No dividends or other distributions declared or made after the Effective Time
with respect to Parent Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to
the shares of Parent Common Stock represented thereby, and no cash payment in
lieu of fractional shares shall be paid to any such holder pursuant to Section
2.3(e), unless and until the holder of such Certificate shall surrender such
Certificate. Subject to the effect of escheat, tax or other applicable Laws,
following surrender of any such Certificate, there shall be paid to the holder
of the certificates representing whole shares of Parent Common
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Stock issued in exchange therefor, without interest, (1) promptly, the amount
of any cash payable with respect to a fractional share of Parent Common Stock
to which such holder is entitled pursuant to Section 2.3(e) and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock and
(2) at the appropriate payment date, the amount of dividends or other
distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such whole shares of Parent Common Stock.
(d) No Further Rights in Company Common Stock. All shares of Parent Common
Stock issued upon conversion of the shares of Company Capital Stock in
accordance with the terms hereof (including any cash paid pursuant to Section
2.3(c) or (e)) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Capital Stock.
(e) No Fractional Shares.
(1) No certificates or scrip representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to Parent Common
Stock shall be payable on or with respect to any fractional share and such
fractional share interests will not entitle the owner thereof to any rights
of a stockholder of Parent.
(2) As promptly as practicable after the Effective Time, the Exchange
Agent shall determine the excess of (A) the number of full shares of Parent
Common Stock delivered to the Exchange Agent by Parent pursuant to Section
2.3(a) over (B) the aggregate number of full shares of Parent Common Stock
to be distributed to holders of Company Capital Stock pursuant to Section
2.3(b) (such excess being herein called the "Excess Shares"). As soon as
practicable after the Effective Time, the Exchange Agent, as agent for such
holders of Parent Common Stock, shall sell the Excess Shares at then
prevailing prices on the New York Stock Exchange, Inc. (the "NYSE"), all in
the manner provided in paragraph (3) of this Section 2.3(e).
(3) The sale of the Excess Shares by the Exchange Agent shall be
executed on the NYSE through one or more member firms of the NYSE and shall
be executed in round lots to the extent practicable. Until the net proceeds
of any such sale or sales have been distributed to such holders of Company
Capital Stock, the Exchange Agent will hold such proceeds in trust for such
holders of Company Capital Stock as part of the Exchange Fund. The Company
shall pay all commissions, transfer taxes and other out-of-pocket
transaction costs of the Exchange Agent incurred in connection with such
sale or sales of Excess Shares. In addition, the Company shall pay the
Exchange Agent's compensation and expenses in connection with such sale or
sales. The Exchange Agent shall determine the portion of such net proceeds
to which each holder of Company Capital Stock shall be entitled, if any, by
multiplying the amount of the aggregate net proceeds by a fraction, the
numerator of which is the amount of the fractional share interest to which
such holder of Company Capital Stock is entitled (after taking into account
all shares of Parent Common Stock to be issued to such holder) and the
denominator of which is the aggregate amount of fractional share interests
to which all holders of Company Capital Stock are entitled.
(4) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Company Capital Stock with respect
to any fractional share interests, the Exchange Agent shall promptly pay
such amounts to such holders of Company Capital Stock subject to and in
accordance with the terms of Section 2.3(c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of Company Common Stock for eleven months
after the Effective Time shall be delivered to Parent, upon demand, and any
holders of Company Common Stock who have not theretofore complied with this
Article II shall thereafter look only to Parent for the shares of Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock to which
they are entitled pursuant to Section 2.3(e) and any dividends or other
distributions with respect to Parent Common Stock to which they are entitled
pursuant to Section 2.3(c), in each case, without any interest thereon.
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(g) No Liability. Neither Parent nor the Company shall be liable to any
holder of shares of Company Common Stock for any such shares of Parent Common
Stock (or dividends or distributions with respect thereto) or cash from the
Exchange Fund delivered to a public official pursuant to any abandoned
property, escheat or similar Law.
(h) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent,
the posting by such person of a bond, in such reasonable amount as Parent may
direct, as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of Parent Common Stock, any cash in
lieu of fractional shares of Parent Common Stock to which the holders thereof
are entitled pursuant to Section 2.3(e) and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section
2.3(c), in each case, without any interest thereon.
(i) Withholding. Parent or the Exchange Agent shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Company Common Stock such amounts as Parent or the
Exchange Agent are required to deduct and withhold under the Code, or any
provision of state, local or foreign tax law, with respect to the making of
such payment. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of Company Common Stock in respect
of whom such deduction and withholding was made by Parent or the Exchange
Agent. With respect to any Stockholder who is not a foreign person, Parent
shall receive a certificate of nonforeign status in the form of Exhibit
2.3(i)(A) on or prior to the Effective Time. Parent shall receive on or prior
to the Effective Time a certificate from the Company in the form of Exhibit
2.3(i)(B) that the Company is not a "United States Real Property Holding
Company" within the meaning of Code section 897(c)(2).
SECTION 2.4 Stock Transfer Books. 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 theretofore
outstanding on the records of the Company. From and after the Effective Time,
the holders of certificates representing 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 herein or by Law. On or after the Effective Time, any Certificates
presented to the Exchange Agent or Parent for any reason shall be converted
into the shares of Parent Common Stock, any cash in lieu of fractional shares
of Parent Common Stock to which the holders thereof are entitled pursuant to
Section 2.3(e) and any dividends or other distributions to which the holders
thereof are entitled pursuant to Section 2.3(c).
SECTION 2.5 Stock Options. Prior to the Effective Time, the Company and
Parent shall take such action as may be necessary to cause each unexpired and
unexercised option to purchase shares of Company Common Stock (each, a "Company
Option") under the 1997 Stock Incentive Plan (the "Company Stock Option Plan"),
a true and complete copy of which has heretofore been provided to Parent by the
Company, to be exercisable solely for such number of shares of Parent Common
Stock as is equal to the number of shares of Company Common Stock that could
have been purchased under such Company Option immediately prior to the
Effective Time multiplied by the Common Stock Exchange Ratio (rounded down to
the nearest whole number of shares of Parent Common Stock), at a price per
share of Parent Common Stock equal to the per-share option exercise price
specified in the Company Option divided by the Common Stock Exchange Ratio
(rounded up to the nearest whole cent). Such Company Option shall otherwise be
subject to the same terms and conditions (including provisions regarding
vesting and the acceleration thereof) as in effect at the Effective Time. At
the Effective Time, (1) all references to the Company in the Company Stock
Option Plan and in the related stock option agreements shall be deemed to refer
to Parent and (2) Parent shall assume all of the Company's obligations with
respect to Company Options as so amended.
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SECTION 2.6 Restricted and Founders Stock. The parties acknowledge that
shares of Company Common Stock awarded or issued pursuant to a restricted stock
agreement under the Company Stock Option Plan (the "Restricted Stock") or
pursuant to a founders stock agreement identified in Section 3.3(a) of the
Company Disclosure Schedule (the "Founders Stock") shall be converted into
Parent Common Stock in accordance with the provisions of Section 2.1(a);
provided, however, that the Restricted Stock and Founders Stock that will
remain unvested as of the Effective Time shall remain subject to the vesting,
forfeiture or repurchase restrictions and other provisions set forth in the
restricted stock agreements and the founders stock agreement, as applicable,
that applied to the Restricted Stock and Founders Stock prior to the Effective
Time.
SECTION 2.7 Appraisal Rights. Notwithstanding anything in this Agreement to
the contrary, shares of Company Capital Stock (the "Dissenting Shares") that
are issued and outstanding immediately prior to the Effective Time and are held
by stockholders of the Company who did not vote in favor of the Merger and who
comply with all of the relevant provisions of Section 262 of the DGCL (the
"Dissenting Stockholders") shall not be converted into or be exchangeable for
the right to receive any shares of Parent Common Stock, unless and until such
stockholders shall have failed to perfect or shall have effectively withdrawn
or lost their rights to appraisal under the DGCL. The Company shall give Parent
(i) prompt notice of any written demands for appraisal of any shares of Company
Capital Stock, attempted withdrawals of such demands and any other instruments
served pursuant to the DGCL and received by the Company relating to
stockholders' rights of appraisal, and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. Neither the Company nor the Surviving Corporation shall, except with the
prior written consent of Parent, voluntarily make any payment with respect to,
or settle or offer to settle, any such demand for payment. If any Dissenting
Stockholder shall fail to perfect or shall have effectively withdrawn or lost
the right to dissent, then (i) as of the occurrence of such event, such
holder's Dissenting Shares shall cease to be Dissenting Shares and shall be
converted into and represent the right to receive the Merger Shares issuable
pursuant to Section 2.1, and (ii) promptly following the occurrence of such
event, Parent shall deliver to the Exchange Agent a certificate representing
90% of the Merger Shares to which such holder is entitled pursuant to Section
2.1 and shall deliver to the Escrow Agent a certificate representing the
remaining 10% of the Merger Shares to which such holder is entitled pursuant to
Section 2.1 (which shares shall be considered Escrow Shares for all purposes of
this Agreement).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule delivered by the Company to
Parent prior to the execution of this Agreement (the "Company Disclosure
Schedule"), which identifies exceptions only by specific Section references,
the Company hereby represents and warrants to Parent and Merger Sub as follows:
SECTION 3.1 Organization and Qualification; Subsidiaries. The Company has
been duly incorporated and is validly existing and in good standing under the
laws of the State of Delaware and has the requisite power and authority and all
necessary governmental approvals to own, lease and operate its properties and
to carry on its business as it is now being conducted, except where the failure
to be so incorporated, existing or in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
The Company is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing or good standing necessary. The Company does not have any
subsidiaries and does not hold any investment or interest of any kind in a
partnership or joint venture of any kind. For purposes of this Agreement,
"Company Material Adverse Effect" means any change affecting, or condition
having an effect on, the Company that is, or would reasonably be expected to
be, materially adverse to the assets, liabilities, business, condition
(financial or otherwise) or results of operations of the Company other than any
change or condition relating to the economy (including any change in the
semiconductor industry generally) or securities markets in general, and not
specifically relating to the Company.
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SECTION 3.2 Certificate of Incorporation and By-laws; Corporate Books and
Records. The copies of the Company's Certificate of Incorporation (the "Company
Certificate") and By-laws (the "Company By-laws"), both as amended to date,
have been delivered to Parent and are complete and correct copies thereof as in
effect on the date hereof. The Company is not in violation of any of the
provisions of the Company Certificate or the Company By-laws. True and complete
copies of all minute books of the Company have been made available by the
Company to Parent.
SECTION 3.3 Capitalization.
(a) The authorized capital stock of the Company consists solely of
30,000,000 shares of Company Common Stock and 19,716,667 shares of Preferred
Stock, of which 5,366,667 shares are designated Series A Preferred Stock,
5,900,000 shares are designated Series B Preferred Stock, 8,450,000 shares are
designated Series C Preferred Stock. As of the date hereof, 8,198,182 shares of
Company Common Stock are issued and outstanding, 5,266,266 shares of Series A
Preferred Stock are issued and outstanding, 5,409,736 shares of Series B
Preferred Stock are issued and outstanding and 8,449,944 shares of Series C
Preferred Stock are issued and outstanding and 226,031 shares of Series B
Preferred Stock are issuable upon exercise of rights under the Warrant
Agreements. As of February 16, 2000, the Series A Convertible Preferred
Liquidation Amount is $2,416,623 consisting of $1,974,850 representing the
aggregate Original Purchase Price for the Series A Preferred Stock and $441,773
for the Series A Accruing Dividends (as defined in the Company Certificate). As
of February 16, 2000, the Series B Convertible Preferred Liquidation Amount for
the Series B Preferred Stock is $7,138,650 consisting of $6,113,002
representing the aggregate Original Purchase Price for the Series B Preferred
Stock and $1,025,648 for the Series B Accruing Dividends (as defined in the
Company Certificate). As of February 16, 2000, the Series C Convertible
Preferred Stock Liquidation Amount is $24,494,796 consisting of $23,068,347
representing the aggregate Original Purchase Price for the Series C Preferred
Stock and $1,426,449 for the Series C Accruing Dividends (as defined in the
Company Certificate). Each share of Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock is convertible into shares of
Company Common Stock on a one-for-one basis as of the date hereof, and such
conversion rate shall be the conversion rate as at the Effective Time. Pursuant
to the Company Stock Option Plan, the Company has reserved for issuance
5,750,000 shares of Company Common Stock. As of the date hereof, the Company
has granted 8,075,130 shares of Company Common Stock in the form of Restricted
Stock and Founders Stock, of which 3,434,707 shares are vested (which vested
shares are included in the 8,198,182 number set forth above). The Company has
granted, pursuant to the Company Stock Option Plan, options to purchase an
aggregate of 879,000 shares of Company Common Stock, of which no shares are
vested. As of the date hereof, the Company has 191,170 shares of Company Common
Stock held in its treasury. The Fully-Diluted Company Common Stock as of the
date hereof is equal to 28,429,159 shares of Company Common Stock (which does
not include the 10,000 shares of Company Common Stock set forth in clause (iv)
of the definition of the Fully-Diluted Company Common Stock contained in this
Agreement). All of the issued and outstanding shares of Company Common Stock
are, and all shares reserved for issuance will be, upon issuance in accordance
with the terms specified in the instruments or agreements pursuant to which
they are issuable, duly authorized, validly issued, fully paid and
nonassessable. The Company has not issued any shares of its capital stock or
securities convertible into or exchangeable for its capital stock or other
equity securities or agreed to do anything of the foregoing that are not
included in the number of shares of the Fully-Diluted Company Common Stock set
forth above in this Section 3.3(a) as of the date hereof. Except as set forth
in Section 3.3 of the Company Disclosure Schedule, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character to which the Company is a party or by which the Company is bound
relating to the issued or unissued capital stock or other equity interests of
the Company, or securities convertible into or exchangeable for such capital
stock or equity interests, or obligating the Company to issue or sell any
shares of capital stock or equity interests, or securities convertible into or
exchangeable for such capital stock, of, or other equity interests in, the
Company. Schedule 3.3 of the Company Disclosure Schedule contains a true and
complete list, as of the date hereof, of (A) the name of each holder of Company
Common Stock, Company Preferred Stock, Restricted Stock, Founders Stock,
Options and Warrants, (B) the prices at which outstanding Company Options may
be exercised or Restricted Stock purchased under the applicable
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Company Stock Option Plan, the number of Company Options outstanding at each
such price and the vesting schedule of the Company Options, (C) the prices at
which unvested Restricted Stock and Founders Stock may be purchased, the number
of unvested Restricted Stock and Founders Stock shares at each such price, and
the vesting schedule of the Restricted Stock and Founders Stock, and (D) the
outstanding Warrants and the price at which outstanding Warrants may be
exercised. The Company shall update such Schedule 3.3 as of the Effective Time.
All shares of Company Common Stock subject to issuance under the Company Stock
Option Plan or the Warrant Agreements, upon issuance prior to the Effective
Time on the terms and conditions specified in the instruments pursuant to which
they are issuable, will be duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights.
(b) Except as set forth in Section 3.3 of the Company Disclosure Schedule,
there are no outstanding contractual obligations of the Company (A) restricting
the transfer of, (B) affecting the voting rights of, (C) requiring the
repurchase, redemption or disposition of, or containing any right of first
refusal with respect to, (D) requiring the registration for sale of, or (E)
granting any preemptive or antidilutive rights with respect to, any shares of
Company Common Stock or any capital stock of, or other equity interests in, the
Company. There are no outstanding contractual obligations of the Company to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any person.
SECTION 3.4 Authority Relative to This Agreement. The Company has all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
herein to be consummated by the Company. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary action and no other corporate proceedings on the part of the Company
and no stockholder votes are necessary to authorize this Agreement or to
consummate such transactions other than, with respect to the Merger, the
adoption of this Agreement by the affirmative vote of the holders of Company
Capital Stock specified in Section 3.17 hereof. The Board of Directors of the
Company has approved this Agreement and the transactions contemplated hereby
and has directed that this Agreement and the transactions contemplated hereby
be submitted to the Company's stockholders for approval at a meeting of such
stockholders. This Agreement has been duly authorized and validly executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
SECTION 3.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not, except as set forth
in Section 3.5(a) of the Company Disclosure Schedule, (1) (assuming, the
stockholder approval set forth in Section 3.4 is obtained) conflict with or
violate any provision of the Company Certificate or the Company By-laws, (2)
assuming that all consents, approvals, authorizations and permits described in
Section 3.5(b) have been obtained and all filings and notifications described
in Section 3.5(b) have been made, conflict with or violate any foreign or
domestic law, statute, code, ordinance, rule, regulation, order, judgment,
writ, stipulation, award, injunction, decree or arbitration award or finding
("Law") applicable to the Company or by which any property or asset of the
Company is bound or affected other than any conflict or violation which would
not result in a Company Material Adverse Effect or (3) require any consent or
approval under, result in any breach of, any loss of any benefit under or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
vesting, amendment, acceleration or cancellation of, or result in the creation
of a lien or other encumbrance on any property or asset of the Company pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
Company Permit (as defined in Section 3.6) or other instrument or obligation.
(b) Except as set forth in Section 3.5(a) or 3.5(b) of the Company
Disclosure Schedule and except for the filing of the Certificate of Merger
under the DGCL, the execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, require any
consent,
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approval, authorization or permit of, or filing with or notification to, any
domestic or foreign governmental, administrative, judicial or regulatory
authority ("Governmental Entity") or any other person.
SECTION 3.6 Permits; Compliance With Law. The Company is in possession of
all authorizations, licenses, permits, certificates, approvals and clearances
of any Governmental Entity necessary for the Company to own, lease and operate
its properties or to carry on its business substantially as it is being
conducted as of the date hereof (the "Company Permits"), and all such Company
Permits are valid and in full force and effect.
SECTION 3.7 Financial Statements.
(a) The Company has delivered to Parent (i) audited financial statements of
the Company at December 31, 1997 and December 31, 1998 and the related audited
statements of operations, changes in stockholders' equity, and cash flow for
the year then ended, including in each case the notes thereto (collectively,
the "Audited Financial Statements"), and (ii) the unaudited balance sheet of
the Company as at December 31, 1999 and the statements of operations, changes
in stockholders' equity and cash flows for the twelve-month period ended on
such date, prepared by the Company (collectively, "Unaudited Financial
Statements" and, together with the Audited Financial Statements, the "Financial
Statements").
(b) Each of the financial statements (including, in each case, any notes
thereto) was prepared in accordance with generally accepted accounting
principles consistently applied ("GAAP") (except as may be indicated in the
notes thereto on a consistent basis throughout the periods indicated) and, with
respect to the Unaudited Financial Statements, except for the lack of notes
thereto and normal period-end adjustments), and each presented fairly the
financial position, results of operations and cash flows of the Company as of
the dates thereof and for the periods indicated therein. The books and records
of the Company have been, and are being, maintained in accordance with
applicable legal and accounting requirements.
(c) Except as and to the extent set forth on the Financial Statements, the
Company has no liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on a
balance sheet or in notes thereto prepared, or as if prepared, in accordance
with GAAP, including normal year-end adjustments.
SECTION 3.8 Absence of Certain Changes or Events. Except as set forth in
Section 3.8 of the Company Disclosure Schedule, from December 31, 1998 (unless
otherwise noted in this Section 3.8) to the date of this Agreement, the Company
has not:
(a) suffered any Company Material Adverse Effect in its financial
condition or in the operations of its business, nor any Company Material
Adverse Effect with respect to any of the items on its Financial
Statements, including but not limited to cash distributions or material
decreases in the net assets of the Company;
(b) suffered any damage, destruction or loss, whether or not covered by
insurance, in an amount in excess of $50,000;
(c) granted or agreed to make any increase in the compensation payable
or to become payable by the Company to its directors, officers or employees
outside of the ordinary course of business consistent with past practice;
(d) declared, set aside or paid any dividend or made any other
distribution on or in respect of the shares of capital stock of the Company
or declared any direct or indirect redemption, retirement, purchase or
other acquisition by the Company of such shares other than repurchases of
capital stock of the Company at original issue prices from former employees
or consultants pursuant to written agreements providing for their
repurchase in the event of termination of employment or consultancy;
(e) since December 31, 1999, issued any shares of capital stock of the
Company or any warrants, rights or options or entered into any commitment
relating to the shares of capital stock of the Company
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except for the issuance of shares of Company Common Stock pursuant to the
exercise of the Company Stock Option Plan or upon conversion of outstanding
shares of Company Preferred Stock or Warrants;
(f) made any change in the accounting methods or practices it follows,
whether for general financial or tax purposes, or any change in
depreciation or amortization policies or rates adopted therein other than
changes required by changes in GAAP;
(g) sold, leased, abandoned or otherwise disposed of any real property
or any machinery, equipment or other operating property other than in the
ordinary course of business;
(h) sold, assigned, transferred, licensed or otherwise disposed of any
patent, trademark, trade name, brand name, copyright (or pending
application for any patent, trademark or copyright), invention, work of
authorship, process, know-how, formula or trade secret or interest
thereunder or other intangible asset other than in the ordinary course of
business;
(i) suffered any dispute involving any employee that may reasonably be
expected to result in a Company Material Adverse Effect;
(j) engaged in any activity or entered into any material commitment or
transaction (including without limitation any borrowing or capital
expenditure), in either case, other than in the ordinary course of
business;
(k) incurred any liabilities, contingent or otherwise, either matured or
unmatured (whether or not required to be reflected in the Financial
Statements in accordance with GAAP, and whether due or to become due)
except for (i) liabilities identified as such in the "liabilities" column
of any of the Financial Statements, and (ii) accounts payable or accrued
salaries that have been incurred by the Company since December 31, 1998 in
the ordinary course of business and consistent with the Company's past
practices;
(l) permitted or allowed any of its material property or assets to be
subjected to any mortgage, deed of trust, pledge, lien, security interest
or other encumbrance of any kind, except as set forth in Section 3.8 of the
Company Disclosure Schedule, other than any purchase money security
interests incurred in the ordinary course of business;
(m) paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets to, or entered into any agreement or
arrangement with any of its Affiliates, officers, directors or stockholders
or any Affiliate or associate of any of the foregoing; or
(n) made any amendment to or terminated any agreement which, if not so
amended or terminated, would be required to be disclosed on the Company
Disclosure Schedule.
SECTION 3.9 Employee Benefit Plans and Executive Compensation.
(a) Section 3.9(a) of the Company Disclosure Schedule sets forth a true and
complete list as of the date hereof of each "employee pension benefit plan" (as
such term is defined in Section 3(2) of ERISA), "employee welfare benefit plan"
(as such term is defined in Section 3(1) of ERISA), material personnel or
payroll policy (including vacation time, holiday pay, service awards, moving
expense reimbursement programs and sick leave) or material fringe benefit,
severance agreement or plan or any medical, hospital, dental, life or
disability plan, excess benefit plan, bonus, stock option, stock purchase, or
other incentive plan (including any equity or equity-based plan), top hat plan
or deferred compensation plan, salary reduction agreement, change-of-control
agreement, employment agreement, consulting agreement, collective bargaining
agreement, indemnification agreement, or retainer agreement, or any other
benefit plan, policy, program, arrangement, agreement or contract, whether or
not written, with respect to any employee, former employee, director,
independent contractor, or any beneficiary or dependent thereof (including,
without limitation, any "employee benefit plan", as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
maintained, or contributed to, by the Company or to which the Company is
required to contribute (the "Company Benefit Plans"). With respect to each of
the Company Benefit Plans, the Company has heretofore delivered or made
available to Parent a true, correct and complete copy of: (1) each writing
constituting a part of such Company Benefit Plans, including without limitation
all plan documents, trust
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agreements, and insurance contracts and other funding vehicles; (2) the most
recent Annual Report (Form 5500 Series) and accompanying schedule, if any; (3)
the current summary plan description and any material modifications thereto, if
any (in each case, whether or not required to be furnished under ERISA); (4)
the most recent annual financial report, if any; (5) the most recent actuarial
report, if any; and (6) the most recent determination letter from the Internal
Revenue Service ("IRS"), if any. Except as specifically provided in the
foregoing documents delivered to Parent, there are no amendments to any Company
Benefit Plans that have been adopted or approved nor has the Company undertaken
to make any such amendments or to adopt or approve any new Plan.
(b) No Company Benefit Plans are subject to Title IV of ERISA, Section 302
of ERISA or Section 412 or 4971 of the Code. No Company Benefit Plans are a
"multiemployer pension plan" (as such term is defined in Section 3(37) of
ERISA) (a "Multiemployer Plan") or a plan that has two or more contributing
sponsors at least two of whom are not under common control, within the meaning
of Section 4063 of ERISA (a "Multiple Employer Plan"). Neither the Company nor
any of its ERISA Affiliates (as defined below) has (1) at any time during the
last six years, contributed to or been obligated to contribute to any
Multiemployer Plan or Multiple Employer Plan, or (2) incurred any withdrawal
liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan that has not been satisfied in full.
Except as set forth in Section 3.9(b) of the Company Disclosure Schedule, there
does not now exist, nor do any circumstances exist that could result in, any
liability that would be a liability of the Company following the Effective Time
(1) under Title IV of ERISA, (2) under Section 302 of ERISA, (3) under Sections
412 and 4971 of the Code, or (4) as a result of a failure to comply with the
continuation coverage requirements of Section 601 et seq. of ERISA and Section
4980B of the Code.
(c) Except as set forth in Section 3.9(c) of the Company Disclosure
Schedule, each of the Company Benefit Plans has been operated and administered
in all material respects in accordance with applicable Laws and administrative
rules and regulations of any Governmental Entity, including, but not limited
to, ERISA and the Code. Each of the Company Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code has received a
favorable determination letter as to such qualification from the IRS, and no
event has occurred, either by reason of any action or failure to act, which
would cause the loss of any such qualification. Except as set forth in Section
3.9(c) of the Company Disclosure Schedule, no Company Benefit Plans provide
benefits, including, without limitation, death or medical benefits (whether or
not insured), with respect to current or former employees of the Company beyond
their retirement or other termination of service, other than (1) coverage
mandated by applicable Law, (2) death benefits or retirement benefits under any
"employee pension plan" (as such term is defined in Section 3(2) of ERISA), or
(3) deferred compensation benefits accrued as liabilities on the books of the
Company. All contributions or other amounts payable by the Company as of the
Effective Time with respect to each of the Company Benefit Plans in respect of
current or prior plan years will have been paid or accrued by such time in
accordance with GAAP.
(d) The Company has identified in Section 3.9(d) of the Company Disclosure
Schedule and has made available to Parent true and complete copies of (1) all
severance and employment agreements with directors, executive officers, key
employees or consultants of the Company; (2) all severance programs and
policies of the Company with or relating to its employees; and (3) all plans,
programs, agreements and other arrangements of the Company with or relating to
its employees, directors or consultants which contain change in control
provisions. Except as set forth in Section 3.9(d) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event, such as termination of employment) (A) result
in any payment or profit (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due or
increased to any director, employee or consultant of the Company or affiliate
from the Company or affiliate under any Company Benefit Plans or otherwise, (B)
increase any benefits otherwise payable under any Company Benefit Plans or (C)
result in any acceleration of the time of payment or vesting of any
compensation or benefits. No individual who is a party to an employment
agreement listed in Section 3.9(a) of the Company Disclosure Schedule or any
change of control employment agreement with the
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Company has terminated employment or been terminated, nor has any event
occurred that could give rise to a termination event, in either case under
circumstances that has given, or could give, rise to a payment or severance
obligation on the part of the Company under such agreement.
(e) Except as disclosed in Section 3.9(e) of the Company Disclosure
Schedule:
(1) With respect to each of the Company Benefit Plans, there are no claims
or other proceedings pending or threatened with respect to the assets thereof
(other than routine claims for benefits), and which could reasonably give rise
to any liability, claim or other proceeding against any Company Benefit Plans,
any fiduciary or plan administrator or other Person dealing with any Company
Benefit Plans or the assets of any such Company Benefit Plans.
(2) With respect to each of the Company Benefit Plans, no Person: (A) has
entered into any "prohibited transaction," as such term is defined in ERISA or
the Code and the regulations, administrative rulings and case law thereunder
that is not exempt under Code Section 4975 or ERISA Section 408 (or any
administrative class exemption issued thereunder); (B) has breached a fiduciary
obligation or violated Sections 402, 403, 405, 503, 510 or 511 of ERISA; (C)
has any liability for any failure to act or comply in connection with the
administration or investment of the assets of such plans; or (D) has engaged in
any transaction or otherwise acted with respect to such plans in such a manner
which could subject Parent, the Company or any employee of the Company to
liability under Section 409 or 502 of ERISA or Sections 4972 or 4976 through
4980B of the Code.
(3) Each of the Company Benefit Plans (other than any stock option plan) may
be amended, terminated, modified or otherwise revised by the Company, as
provided in the Company Benefit Plans as so amended, other than benefits
protected under Section 411(d) of the Code, on and after the Effective Time,
without further material liability to the Company (excluding ordinary
administrative expenses and routine claims for benefit plans), including, but
not limited to, any withdrawal liability under ERISA for any Multiemployer Plan
or any liability under any Company Benefit Plans subject to Title IV of ERISA.
(4) The requirements of the Consolidated Omnibus Budget Reconciliation Act
of 1985 and the Health Insurance Portability and Accountability Act, the
requirements of the Family Medical Leave Act of 1993, as amended, the
requirements of the Women's Health and Cancer Rights Act, the requirements of
the Newborns' and Mothers' Health Protection Act of 1996, or any amendment to
each such act, or any similar provisions of state law applicable to its
employees, have, in all material respects, been satisfied with respect to each
of the Company Benefit Plans.
(5) All contributions, payments, premiums, expenses, reimbursements or
accruals for all periods ending prior to or as of the Effective Time for each
of the Company Benefit Plans (including periods from the first day of the then
current plan year to the Effective Time), including without limitation such
Company Benefits Plans providing for vacation time, shall have been made or
accrued on the Financial Statements (in accordance with GAAP, including FAS 87,
88, 106 and 112) and each such plan otherwise does not have nor could have any
unfunded liability (including benefit liabilities as defined in Section
4001(a)(16) of ERISA) which is not reflected on the Financial Statements. The
same shall be true for all periods ending as of the Effective Time for each of
the Company Benefit Plans.
(6) The Company has determined that each contractor, consultant, or leased
employee who has performed services for the Company prior to the date hereof or
who will perform services prior to the Effective Time is not an employee for
all purposes under ERISA, the Code, the Company Benefit Plans, and other
applicable Laws, there are no claims or proceedings pending or threatened
relating to a claim for benefits by such contractor, consultant or leased
employee under ERISA, the Code, the Company Benefit Plans, or other applicable
Laws with respect to such services performed prior to the date hereof or which
will be performed prior to the Effective Time and there is no violation of Law
or otherwise which could serve as the basis of any such claim or proceeding.
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(f) Except as set forth in Section 3.9(f) of the Company Disclosure
Schedule, as of the date hereof, the Company is not a party to or is bound by:
(1) any employment or consulting agreement, contract or commitment with
any officer or director level employee or member of the Company's Board of
Directors or any other employee who is one of the ten (10) most highly
compensated employees, including base salary and bonuses;
(2) any agreement of indemnification or guaranty by the Company not
entered into in the ordinary course of business other than indemnification
agreements between the Company and any of its officers or directors in
standard forms; or
(3) any agreement, contract or commitment containing any covenant
limiting the freedom of the Company or any of its employees to engage in
any line of business or conduct business in any geographical area, compete
with any person or granting any exclusive distribution rights.
SECTION 3.10 Contracts. (a) Section 3.10 of the Company Disclosure Schedule
contains a complete and accurate list of each of the following Contracts:
(i) Contracts relating to indebtedness, liability for borrowed money or
the deferred purchase price of property (excluding trade payables in the
ordinary course of business) or any guarantee or other contingent liability
in respect of any indebtedness or obligation of any Person (other than the
endorsement of negotiable instruments for collection in the ordinary course
of business);
(ii) Contracts that contain restrictions with respect to payment of
dividends or any other distribution in respect of the equity of the
Company;
(iii) any letters of credit or similar arrangements relating to the
Company;
(iv) any employment agreements with any employee of the Company or other
Person on a consulting basis;
(v) any management, consulting or advisory agreements, or severance
plans or arrangements for any present or former employee of the Company;
(vi) any non-disclosure agreements and non-compete agreements binding
present and former employees of the Company;
(vii) any agreement under which the Company is lessee of or holds or
operates any property, real or personal;
(viii) any agreement under which the Company is lessor of or permits any
third party to hold or operate any property, real or personal;
(ix) any agreement relating to the acquisition or divestiture of the
capital stock or other equity securities, assets or business of any person
involving the Company or pursuant to which or the Company has any
liability, contingent or otherwise;
(x) any powers of attorney granted by or on behalf of the Company;
(xi) any agreement, other than agreements entered into in the ordinary
course of the Company's business consistent with past practice, which
prevents the Company from disclosing confidential information or which
prohibits the Company from freely engaging in business anywhere in the
world;
(xii) any sales distribution agreements, franchise agreements and
advertising agreements relating to the Company;
(xiii) any warranty, guaranty or other similar undertaking with respect
to a contractual performance extended by the Company;
(xiv) any agreement pursuant to which the Company has agreed to defend,
indemnify or hold harmless any other Person;
(xv) any agreement pursuant to which the Company has agreed to settle
any liability for Taxes;
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(xvi) any agreement pursuant to which the Company has agreed to shift or
allocate the liability of the Company or any other person for Taxes; and
(xvii) any other agreement of the Company or by which the Company is
bound.
(b) The Company has delivered to Parent a true and complete copy of each
written arrangement listed on Section 3.10 of the Company Disclosure Schedule.
With respect to each: (i) the Contract is in full force and effect and is valid
and enforceable in accordance with its terms against the Company and, to the
Company's knowledge, by the Company against the other party thereto; (ii) the
Company is not in breach or default thereof; (iii) no event has occurred which,
with notice, or lapse of time or both, would constitute a breach or default
thereof by the Company or, to the Company's knowledge, constitute a breach or
default thereof by any other party thereto; (iv) no event has occurred that
would permit termination, modification, or acceleration thereof by any other
party thereto; and (v) the Company has not repudiated and no other party
thereto has repudiated or acted in a manner inconsistent with any provision
thereof; provided, however, that for purposes of this sentence only, the
Company's knowledge shall not contain the requirement of due investigation. The
Contracts constitute all of the contracts necessary to conduct all operations
of the Company as they are currently conducted or as they are currently
contemplated to be conducted. The Company is not a party to any verbal
contract, agreement, or other arrangement which, if reduced to written form,
would be required to be listed on Section 3.10 of the Company Disclosure
Schedule under the terms of this Section 3.10.
(c) Each contract, arrangement, commitment or understanding of any type or
form described in this Section 3.10, whether or not set forth in Section 3.10
of the Company Disclosure Schedule, is referred to herein as a "Contract."
SECTION 3.11 Litigation. There is no suit, claim, action, proceeding or
investigation pending or, to the Company's knowledge, threatened against the
Company or for which the Company is obligated to indemnify a third party. The
Company is not subject to any outstanding order, writ, injunction, decree or
arbitration ruling, award or other finding that has had or would, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect.
SECTION 3.12 Environmental Matters.
(a) Except to the extent that it would not have a Company Material Adverse
Effect, the Company (1) is in compliance with all, and is not subject to any
liability with respect to any, applicable Environmental Laws, (2) holds or has
applied for all Environmental Permits necessary to conduct its current
operations and (3) is in compliance with its Environmental Permits.
(b) Except to the extent that it would not have a Company Material Adverse
Effect, the Company has not received any written notice, demand, letter, claim
or request for information alleging that the Company may be in violation of, or
liable under, any Environmental Law.
(c) Except to the extent that it would not have a Company Material Adverse
Effect, the Company (1) has not entered into or agreed to any consent decree or
order or is subject to any judgment, decree or judicial order relating to
compliance with Environmental Laws, Environmental Permits or the investigation,
sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous
Materials and no investigation, litigation or other proceeding is pending or
threatened in writing against the Company or asserted in writing against the
Company with respect thereto, or (2) is not an indemnitor in connection with
any claim threatened in writing against the Company or asserted in writing
against the Company by any third-party indemnitee for any liability under any
Environmental Law or relating to any Hazardous Materials.
(d) None of the real property owned or leased by the Company is listed or
proposed for listing on the "National Priorities List" under CERCLA, as updated
through the date hereof, or any similar state list of sites requiring
investigation or cleanup.
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For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended as of the date hereof.
"Environmental Laws" means any federal, state or local statute, law,
ordinance, regulation, rule, code, treaty, writ or order and any
enforceable judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree, judgment,
stipulation, injunction, permit, authorization, policy, opinion, or agency
requirement, in each case having the force and effect of law, relating to
the pollution, protection, investigation or restoration of the environment,
health and safety as affected by the environment or natural resources,
including, without limitation, those relating to the use, handling,
presence, transportation, treatment, storage, disposal, release, threatened
release or discharge of Hazardous Materials.
"Environmental Permits" means any permit, approval, identification
number, license and other authorization required under any applicable
Environmental Law.
"Hazardous Materials" means (a) any petroleum, petroleum products,
byproducts or breakdown products, radioactive materials, asbestos-
containing materials or polychlorinated biphenyls or (b) any chemical,
material or other substance defined or regulated as toxic or hazardous or
as a pollutant or contaminant or waste under any applicable Environmental
Law.
SECTION 3.13 Intellectual Property.
(a) Section 3.13(a) of the Company Disclosure Schedule contains a list and
description (showing in each case the registered or other owner, registration,
application or issue date and number, if any) of all pending copyright
registrations, registered copyrights, pending patent applications, issued
patents, pending trademark or servicemark applications, trademark or
servicemark registrations and tradenames (including all assumed or fictitious
names under which the Company is conducting its business or has within the
previous five years conducted its business) owned by the Company.
(b) Section 3.13(b) of the Company Disclosure Schedule contains a list and
description (showing in each case the registered or other owner, registration,
application or issue date and number, if any) of all pending copyright
registrations, registered copyrights, pending patent applications, issued
patents, pending trademark or servicemark applications, trademark or
servicemark registrations and tradenames (including all assumed or fictitious
names under which the Company is conducting its business or has within the
previous five years conducted the business) licensed to or by the Company.
(c) Section 3.13(c) of the Company Disclosure Schedule contains a list and
description (showing in each case any licensee) of all software owned by the
Company.
(d) Section 3.13(d) of the Company Disclosure Schedule contains a list and
description (showing in each case any owner or licensor) of all software
licensed to or by the Company, excluding software licensed to the Company
having a fee less than five hundred dollars ($500).
(e) Section 3.13(e) of the Company Disclosure Schedule contains a list and
description (showing in each case the parties thereto and the material terms
thereof) of all material agreements, contracts, licenses, sublicenses,
assignments and indemnities which relate to (i) any copyright, patent right,
servicemark or trademark listed in Section 3.13(a) of the Company Disclosure
Schedule, (ii) any trade secrets owned by, licensed to or used by the Company
or (iii) any software listed in Section 3.13(c) or (d) of the Company
Disclosure Schedule.
(f) The Company: (i) owns the entire right, title and interest in and to the
Intellectual Property and software owned by the Company as of the date hereof,
free and clear of any encumbrance; and (ii) has no restrictions on the right to
use the same.
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(g) (i) All registrations for copyrights, patent rights, servicemarks and
trademarks identified in Section 3.13(a) of the Company Disclosure Schedule as
being owned by the Company are valid and in force, and all applications to
register any unregistered copyrights, patent rights, servicemarks and
trademarks so identified are pending and in good standing; and (ii) the Company
has the sole and exclusive right to bring actions for infringement or
unauthorized use of the Intellectual Property and software owned by the
Company, and the Company has no knowledge of any basis for any such action. The
Company has no obligation under this Section to affirmatively seek out
infringers of its Intellectual Property. Correct and complete copies of: (x)
registrations for all registered copyrights, issued patents, and registered
trademarks identified in Section 3.13(a) as being owned by the Company; and (y)
all pending applications to register unregistered copyrights, patent rights and
trademarks identified in Section 3.13(a) of the Company Disclosure Schedule as
being owned by the Company (together with any subsequent correspondence or
filings relating to the foregoing) have heretofore been delivered by the
Company to Parent.
(h) No infringement of any copyright or trade secret right of any other
Person has occurred or results in any way from the operations of the business,
no claim of any infringement of any intellectual property right of any other
Person has been made or asserted in respect of the operations of the business
of the Company and the Company has not had notice of any basis for, a claim
against the Company or that the operations, activities, products, software,
equipment, machinery or processes of its business infringe any intellectual
property right of any other Person.
(i) Excluding the software identified in Section 3.13(i) of the Company
Disclosure Schedule, (i) the software owned or exclusively licensed by the
Company is not subject by agreement to any transfer, assignment, site,
equipment, or other operational limitations; (ii) the Company has maintained
and protected the software that each of it owns (the "Owned Software")
(including, without limitation, all source code and system specifications) with
appropriate proprietary notices (including, without limitation, the notice of
copyright in accordance with the requirements of 17 U.S.C. (S) 401),
confidentiality and non-disclosure agreements and such other measures as are
reasonably necessary to protect the proprietary, trade secret or confidential
information contained therein; (iii) the Owned Software has been registered or
is eligible for protection and registration under applicable U.S. copyright law
and has not been forfeited to the public domain; (iv) the Company has copies of
all releases or separate versions of the Owned Software so that the same may be
subject to registration in the United States Copyright Office; (v) the Company
has complete and exclusive right, title and interest in and to the Owned
Software; (vi) the Company has developed the Owned Software through its own
efforts and for its own account; (vii) the Owned Software does not infringe any
copyright of any other Person; (viii) any Owned Software includes the source
code, system documentation, statements of principles of operation and
schematics, as well as any pertinent commentary, explanation, program
(including compilers), workbenches, tools, and higher level (or "proprietary")
language used for the development, maintenance, implementation and use thereof,
so that a trained computer programmer could develop, maintain, support, compile
and use all releases or separate versions of the same that are currently
subject to maintenance obligations by the Company; and (ix) there are no
agreements or arrangements in effect with respect to the marketing,
distribution, licensing or promotion of the Owned Software by any other Person.
(j) All employees, agents, consultants or contractors who have contributed
to or participated in the creation or development of any copyrightable,
patentable or trade secret material on behalf of the Company or any predecessor
in interest thereof either: (i) with respect to copyrightable materials, is a
party to a "work-for-hire" agreement under which the Company or any predecessor
in interest thereof is deemed to be the original owner/author of all property
rights therein; or (ii) with respect to copyrightable or patentable materials
or materials subject to trade secret protection, has executed an assignment or
an agreement to assign in favor of the Company or any predecessor in interest
thereof, of all right, title and interest in such material.
For purposes of this Agreement:
"Intellectual Property" means any or all of the following and all rights
in, arising out of, or associated therewith, whether registered or
unregistered, as applicable: (i) United States and foreign patents and
applications therefor and all reissues, divisions, renewals, extensions,
provisionals,
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continuations and continuations-in-part thereof; (ii) inventions and
discoveries (whether or not patentable), disclosures, trade secrets,
proprietary information, know-how, technical data and customer lists, and all
documentation relating to any of the foregoing; (iii) copyrights, copyright
registrations and applications therefor and all other corresponding rights
thereto throughout the world; (iv) industrial designs and any registrations and
applications therefor throughout the world; (v) trade names, logos, common law
trademarks and service marks; trademark and servicemark registrations and
applications therefor and all goodwill associated therewith throughout the
world; (vi) data bases and data collections and all rights therein throughout
the world; (vii) computer software including source code, object code,
firmware, development tools, files, records and data, all media on which any of
the foregoing is recorded, all Web addresses, sites and domain names; (viii)
any similar corresponding or equivalent rights to any one of the foregoing; and
(ix) all documentation directly related to any of the foregoing.
SECTION 3.14 Taxes.
(a) The term "Tax" means any net income, capital gains, gross income, gross
receipts, sales, use, transfer, ad valorem, franchise, profits, license,
capital, withholding, payroll, employment, excise, goods and services,
severance, stamp, occupation, premium, property, windfall profits or other tax
or customs duties, or any interest, any penalties, additions to tax or
additional amounts incurred or accrued under applicable tax law or properly
assessed or charged by any Taxing authority (domestic or foreign). For purposes
of the definition of Tax, any interest, penalties, additions to tax or
additional amounts that relate to taxes for any period, or a portion of any
period, ended on or before the Effective Time shall include any interest,
penalties, additions to tax, or additional amounts relating to taxes for such
periods, regardless of whether such items are incurred, accrued, assessed or
similarly charged on, before or after the Effective Time.
(b) For purposes of this Section 3.14, the term "Company" shall be deemed to
include any predecessor of the Company or any person or entity from which the
Company incurs a liability for Taxes as a result of transferee liability, joint
and several liability, or a contract.
(c) The Company has timely filed true, correct and complete tax returns,
reports or estimates, all prepared in accordance with applicable laws, for all
years and periods (and portions thereof) and for all jurisdictions (whether
federal, state, local or foreign) in which any such returns, reports or
estimates were due. All Taxes, as due and payable in respect of such returns,
reports and estimates have been paid, and there is no current liability for any
Taxes due in connection with any such returns. All Taxes not yet due and
payable have been fully accrued on the books of the Company and adequate
reserves have been established therefor. There are no unpaid assessments for
additional Taxes for any period. All charges, accruals, and reserves for Taxes
provided for on the financial statements delivered pursuant to Section 3.7 are
adequate. All federal, state and foreign tax returns filed by the Company since
its inception have been provided to Parent on or before the Effective Time.
(d) The Company has never been a member of any consolidated, combined or
unitary group for federal, state, local or foreign Tax purposes.
(e) The Company is not a party of any joint venture, partnership or other
arrangement that could be treated as a partnership for federal income Tax
purposes.
(f) The Company has (i) withheld all required amounts from its employees,
agents, contractors and nonresidents and remitted such amounts to the proper
agencies; (ii) paid all employer contributions and premiums; and (iii) filed
all federal, state, local and foreign returns and reports with respect to
employee income Tax withholding, social security unemployment Taxes and
premiums, all in compliance with the withholding Tax provisions of the Code as
in effect for the applicable year and other applicable federal, state, local or
foreign laws.
(g) No deficiencies or reassessments for any Taxes have been proposed,
asserted or assessed against the Company by any federal, state, local or
foreign taxing authority.
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(h) The Company has not executed or filed with any taxing authority (whether
federal, state, local or foreign) any agreement or other document extending or
have the effect of extending the period for assessment, reassessment or
collection of any Taxes, and no power of attorney granted by the Company with
respect to any Taxes is currently in force that will survive after the
Effective Time.
(i) No federal, state, local or foreign Tax audits or other administrative
proceedings, discussions or court proceedings are presently pending with regard
to any Taxes or tax returns of the Company and no additional issues are being
asserted against the Company in connection with any existing audits of the
Company.
(j) The Company has not entered into any agreement relating to Taxes which
affects any taxable year ending after the Effective Time.
(k) The Company has not agreed to and it is not required to make any
adjustment by reason of a change in accounting methods that affects any taxable
year ending after the Effective Time. Neither the IRS nor any other agency has
proposed any such adjustment or change in accounting methods that affects any
taxable year ending after the Effective Time. The Company has no application
pending with any taxing authority requesting permission for any changes in
accounting methods that relate to its business or operations and that affects
any taxable year ending after the Effective Time.
(l) The Company is not and never has been a party to any tax sharing
agreement or similar arrangement for the sharing of Tax liabilities or
benefits.
(m) The Company is not a "U.S. Real Property Holding Company" within the
meaning of Code section 897 or section 1445.
(n) The Company has not consented to the application of Code section 341(f).
(o) There is no contract, agreement, plan or arrangement covering any
employee or former employee of the Company that, individually or collectively,
could give rise to the payment by the Company of any amount that would not be
deductible by reason of Code section 280G.
(p) No asset of the Company is tax-exempt use property under Code section
168(h).
(q) No portion of the cost of any asset of the Company has been financed
directly or indirectly from the proceeds of any tax-exempt state or local
government obligation described in Code section 103(a).
(r) None of the assets of the Company is property that the Company is
required to treat as being owned by any other person pursuant to the safe
harbor lease provision of former Code section 168(f)(8).
(s) The Company does not have and has not had a permanent establishment in
any foreign country and does not and has not engaged in a trade or business in
any foreign country.
(t) The Company has never been a party to a transaction that has been
reported as a reorganization within the meaning of Code section 368 or
distributed a corporation (or been distributed) in a transaction that is
reported to qualify under Code section 355.
(u) None of the interest payable by the Company is nondeductible under Code
section 163 or is treated as interest on corporate acquisition indebtedness
under Code section 279.
(v) There are no liens for Taxes on any assets of the Company, except for
liens for current Taxes not yet due.
SECTION 3.15 Labor Matters.
(a) The Company is not a party to any collective bargaining agreement or
other labor union contract applicable to persons employed by them.
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(b) (i) The Company is in compliance in all material respects with all
federal, state and other applicable laws, domestic or foreign, respecting
employment and employment practices, terms and conditions of employment, wages
and hours, immigration, the payment of social security and similar taxes,
occupational safety and health and plant closing, and has not and is not
engaged in any unfair labor practice; (ii) no unfair labor practice complaint
against the Company is pending before the National Labor Relations Board; (iii)
there is no labor strike, dispute, slowdown or stoppage actually pending or
threatened against or involving the Company; (iv) no grievance that might have
an adverse effect upon the Company or the conduct of their respective
businesses exists, no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and no claim therefor has been
asserted; and (v) no collective bargaining agreement is currently being
negotiated by the Company.
SECTION 3.16 Insurance. The Company maintains insurance coverage with
reputable insurers, or maintains self-insurance practices, in such amounts and
covering such risks as are in accordance with normal semiconductor industry
practice.
SECTION 3.17 Vote Required. The affirmative vote of (a) the holders of a
majority of the outstanding shares of Company Capital Stock, voting as a single
class in which each share of Company Capital Stock is entitled to one vote, and
(b) the holders of greater than 55% of the outstanding shares of Company
Preferred Stock, voting as a single class in which each share of Company
Preferred Stock is entitled to one vote, is the only vote of the holders of any
class or series of capital stock or other equity interests of the Company
necessary to approve the Merger and the transactions contemplated hereunder
other than any vote required under Section 5.4 for purposes of section 280G of
the Code.
SECTION 3.18 Brokers. Except as set forth in Section 3.18 of the Company
Disclosure Schedule, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger
based upon arrangements made by or on behalf of the Company.
SECTION 3.19 Year 2000 Compliance. None of the firmware or software that the
Company provides to its customers has limitations concerning calculation and
manipulation of dates, including century, millennium and leap year
calculations, which make the firmware or software unfit for its intended
purpose.
SECTION 3.20 Related Party Transactions.
(a) Except as set forth in Section 3.20 of the Company Disclosure Schedule,
none of the Company or any of the Company's Affiliates owns, directly or
indirectly, on an individual or joint basis, any material interest in, or
serves as an officer or director of, any customer, competitor or supplier of
the Company or any organization which has a Contract with the Company. None of
the Company's Affiliates has any Contract with the Company which is not on
arms-length terms. There is no indebtedness between the Company, on the one
hand, and the Company senior management or any of the Company's Affiliates, on
the other hand.
(b) Except as set forth in Section 3.20 of the Company Disclosure Schedule,
the Company is not a party to any oral or written (i) agreement with any
executive officer or other key employee of the Company the benefits of which
are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company of the nature contemplated by
this Agreement, or agreement with respect to any executive officer of the
Company providing any term of employment or compensation guarantee (x)
extending for a period longer than one year after the Effective Time or (y) for
the payment of in excess of $60,000 per annum or (ii) plan, including any stock
option plan, stock appreciation right plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting
of the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
SECTION 3.21 Investment Company Act. The Company (i) is not an "investment
company," or a company "controlled" by, or an "affiliated company" with respect
to, an "investment company" within the
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meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act"), or (ii) satisfies all conditions for an exemption from the
Investment Company Act, and, accordingly, the Company is not required to be
registered under the Investment Company Act.
SECTION 3.22 Capital Expenditures. The Company's outstanding capital
expenditure commitments as of the date hereof are as set forth on Section 3.22
of the Company Disclosure Schedule. The Company's capital expenditure projects
through the Effective Time (exclusive of the Company's outstanding capital
expenditure commitments as of the date hereof) will not exceed $1,000,000.
SECTION 3.23 Assets Register. Section 3.23 of the Company Disclosure
Schedule sets forth a true and correct tangible assets register as of December
31, 1999 showing an aggregate book value of such assets.
SECTION 3.24 Disclosure. No representation or warranty made by the Company
in this Agreement contains or, as of the Effective Time, will contain any
untrue statement of a material fact or omits or, as of the Effective Time, will
omit to state a material fact necessary to make the statements contained herein
or therein not misleading.
SECTION 3.25 No Undisclosed Liabilities. The Company has no claims,
liabilities or indebtedness (including, without limitation, unasserted claims,
whether known or unknown), whether absolute, contingent, accrued or otherwise,
which is not shown or which is in excess of amounts shown except as set forth
or reflected on the Financial Statements or referred to in the footnotes
thereto (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law or arising out of any action, suit or legal,
administrative or arbitration proceeding or investigation before or by any
Governmental Entity). The Company is not in default in respect of the terms and
conditions of any indebtedness or obligation binding upon it.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and warrant to
the Company as follows:
SECTION 4.1 Organization and Qualification; Subsidiaries. Each of Parent and
Merger Sub has been duly organized, and is validly existing and in good
standing, under the laws of the jurisdiction of its incorporation or
organization, as the case may be, and has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect.
Each of Parent and Merger Sub is duly qualified or licensed to do business, and
is in good standing, in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification or licensing or good standing necessary, except for such failures
to be so qualified or licensed and in good standing that would not,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect. For purposes of this Agreement, "Parent Material
Adverse Effect" means any change affecting, or condition having an effect on,
Parent and Merger Sub that is, or would reasonably be expected to be,
materially adverse to the assets, liabilities, business, condition (financial
or otherwise) or results of operations of Parent and Merger Sub other than any
change or condition relating to the economy (including any change in the
semiconductor industry generally) or securities markets in general, and not
specifically relating to Parent and Merger Sub.
SECTION 4.2 Certificate of Incorporation and By-laws; Corporate Books and
Records. The copies of Parent's Restated Certificate of Incorporation and By-
laws that are set forth as exhibits to Parent's Form 10-K for the year ended
December 31, 1998 are complete and correct copies thereof as in effect on the
date hereof. Parent is not in violation of any of the provisions of its
Restated Certificate of Incorporation or By-laws.
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SECTION 4.3 Capitalization. The authorized capital stock of Parent consists
of (a) 1,400,000,000 shares of Parent Common Stock and (b) 500,000 shares of
preferred stock, par value $100 per share (the "Parent Preferred Stock"). As of
January 29, 2000, (1) 714,636,270 shares of Parent Common Stock were issued and
outstanding, all of which were validly issued and fully paid, nonassessable and
free of preemptive rights and (2) 40,633 shares of Parent Common Stock were
held in the treasury of Parent. As of February 17, 2000, 53,543,283 shares of
Parent Common Stock were reserved for issuance upon exercise of stock options,
rights and warrants outstanding as of such date. As of the date hereof, 250,000
shares of the Parent Preferred Stock are designated as Junior Participating
Preferred Stock, Series B and no shares of Parent Preferred Stock are issued
and outstanding. As of the date hereof, except for stock options and agreements
or arrangements referred to in this Section 4.3, for the 6.68% Trust Originated
Preferred Securities of Motorola Capital Trust I, for the Parent's Liquid Yield
Option Notes due 2009, for Parent's Liquid Yield Option Notes due 2013 and for
Parent's preferred share purchase rights, there were no options, warrants or
other rights to purchase capital stock of Parent, or securities convertible
into or exchangeable for such capital stock or obligating Parent to issue or
sell any shares of capital stock, or securities convertible into or
exchangeable for such capital stock of Parent. The shares of Parent Common
Stock to be issued in connection with the Merger, when issued as contemplated
herein, will be duly authorized, validly issued, fully paid and nonassessable
and will not be issued in violation of any preemptive rights.
SECTION 4.4 Authority Relative to This Agreement. Each of Parent and Merger
Sub has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated herein to be consummated by Parent and Merger Sub.
Each of (a) the execution and delivery of this Agreement by each of Parent and
Merger Sub and the consummation by Parent and Merger Sub of such transactions
and (b) the issuance (the "Share Issuance") of shares of Parent Common Stock in
accordance with the Merger has been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Parent and Merger Sub and no stockholder votes are necessary to authorize this
Agreement or to consummate such transactions. This Agreement has been duly
authorized and validly executed and delivered by Parent and Merger Sub and
constitutes a legal, valid and binding obligation of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with its terms.
SECTION 4.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and Merger Sub do
not, and the performance of this Agreement by Parent and Merger Sub will not,
(1) conflict with or violate any provision of the Certificate of Incorporation
or By-laws of Parent or Merger Sub, (2) assuming that all consents, approvals,
authorizations and permits described in Section 4.5(b) have been obtained, that
all filings and notifications described in Section 4.5(b) have been made,
conflict with or violate any foreign or domestic Law applicable to Parent or
Merger Sub or any Parent subsidiary or by which any property or asset of
Parent, Merger Sub or any Parent subsidiary is bound or affected or (3) result
in any breach of, any loss of any benefit under or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on
any property or asset of Parent, Merger Sub or any Parent subsidiary pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, other instrument or obligation, except, with respect to clauses (2) and
(3), for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, reasonably be
expected to either (A) have a Parent Material Adverse Effect nor (B) prevent or
materially delay the performance of this Agreement by Parent and Merger Sub.
(b) The execution and delivery of this Agreement by Parent and Merger Sub do
not, and the performance of this Agreement by Parent and Merger Sub will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except (1) under the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "Exchange Act"), the Securities
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Act of 1933, as amended, and the rules and regulations promulgated thereunder
(the "Securities Act"), state securities or "blue sky" laws ("Blue Sky Laws"),
the rules and regulations of the NYSE, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), foreign antitrust and competition laws and the filing and
recordation of the Certificate of Merger as required by the DGCL and (2) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not, individually or in the
aggregate, reasonably be expected to (A) prevent or materially delay
consummation of the Merger, (B) otherwise prevent Parent or Merger Sub from
performing its material obligations under this Agreement or (C) have a Parent
Material Adverse Effect.
SECTION 4.6 SEC Filings; Financial Statements.
(a) Parent has timely filed all registration statements, prospectuses,
forms, reports and documents required to be filed by it under the Securities
Act or the Exchange Act, as the case may be, since September 30, 1999
(collectively, the "Parent SEC Filings"). The Parent SEC Filings (1) as of
their respective dates were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (2) did not at the
time they were filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the Parent SEC Filings was prepared in
accordance with GAAP applied (except as may be indicated in the notes thereto
and, in the case of unaudited quarterly financial statements, as permitted by
Form 10-Q under the Exchange Act) on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto), and each presented
fairly the financial position of Parent as at the respective dates thereof and
for the respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which did not and
would not, individually or in the aggregate, reasonably be expected to have a
Parent Material Adverse Effect). The books and records of Parent have been, and
are being, maintained in accordance with GAAP and any other applicable legal
and accounting requirements.
SECTION 4.7 Absence of Certain Changes or Events. From September 30, 1999 to
the date of this Agreement, except as specifically contemplated by, or as
disclosed in, this Agreement, there has not been (a) any Parent Material
Adverse Effect or an event or development that would, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect, (b)
any event or development that would, individually or in the aggregate,
reasonably be expected to prevent or materially delay the performance of this
Agreement by Parent, or (c) any action taken by Parent during the period from
September 30, 1999 through the date of this Agreement that, if taken during the
period from the date of this Agreement through the Effective Time, would
constitute a breach of Section 5.2.
SECTION 4.8 Ownership of Merger Sub; No Prior Activities.
(a) Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and has engaged in no business
activity other than as contemplated by this Agreement.
(b) All of the outstanding capital stock of Merger Sub is owned directly by
Parent. There are no options, warrants or other rights (including registration
rights), agreements, arrangements or commitments to which Merger Sub is a party
of any character relating to the issued or unissued capital stock of, or other
equity interests in, Merger Sub or obligating Merger Sub to grant, issue or
sell any shares of the capital stock of, or other equity interests in, Merger
Sub, by sale, lease, license or otherwise. There are no obligations, contingent
or otherwise, of Merger Sub to repurchase, redeem or otherwise acquire any
shares of the capital stock of Merger Sub.
(c) Except for obligations or liabilities incurred in connection with its
incorporation and the transactions contemplated by this Agreement, Merger Sub
has not and will not have incurred, directly or indirectly, through
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any subsidiary or affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
SECTION 4.9 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
Merger based upon arrangements made by or on behalf of Parent or any Parent
Subsidiary.
SECTION 4.10 Disclosure. No representation or warranty made by Parent or
Merger Sub in this Agreement contains or, as of the Effective Time, will
contain any untrue statement of a material fact or omits or, as of the
Effective Time, will omit to state a material fact necessary to make the
statements contained herein or therein not misleading. There is no material
fact peculiar to Parent or Merger Sub which has not been disclosed to the
Company.
SECTION 4.11 NYSE Requirements. Parent is not required to obtain stockholder
approval of this Agreement or the transactions contemplated hereby pursuant to
the rules of the NYSE applicable to listed companies.
ARTICLE V
COVENANTS
SECTION 5.1 Conduct of Business by the Company Pending the Effective Time.
(a) The Company agrees that, between the date of this Agreement and the
Effective Time, except as specifically permitted by Sections 2.5, 2.6, 2.7,
2.8, 5.1(b), 5.4, 6.1, 6.2, 6.5, 6.8 or 6.12(b) of this Agreement, unless
Parent shall otherwise agree in writing: (a) the business of the Company shall
be conducted in the ordinary course of business consistent with past practice
and (b) the Company shall use its reasonable best efforts to keep available the
services of such of the current officers, key employees and consultants of the
Company and to preserve the current relationships of the Company with such of
the customers, suppliers and other persons with which the Company has
significant business relations as is reasonably necessary in order to preserve
substantially intact its business organization. By way of amplification and not
limitation, except as set forth in Section 5.1 of the Company Disclosure
Schedule or as specifically permitted by Sections 2.5, 2.6, 2.7, 2.8, 5.1(b),
5.4, 6.1, 6.2, 6.5, 6.8 or 6.12(b) of this Agreement, the Company shall not
(unless required by applicable Laws) between the date of this Agreement and the
Effective Time, directly or indirectly, do, or agree to do, any of the
following without the prior written consent of Parent:
(i) amend or otherwise change its Certificate of Incorporation or By-
laws;
(ii) (1) issue, sell, pledge, dispose of, grant, transfer, encumber, or
authorize the issuance, sale, pledge, disposition, grant, transfer, or
encumbrance of any shares of capital stock of, or other equity interests
in, the Company of any class, or securities convertible or exchangeable or
exercisable for any shares of such capital stock or other equity interests,
or any options, warrants or other rights of any kind to acquire any shares
of such capital stock or other equity interests or such convertible or
exchangeable securities, or any other ownership interest (including,
without limitation, any phantom interest), of the Company, other than the
issuance of Company Common Stock upon the exercise of Company Options or
Warrants in accordance with their terms or in accordance with the terms of
Section 5.1(b) below or (2) sell, pledge, dispose of, transfer, lease,
license, guarantee or encumber, or authorize the sale, pledge, disposition,
transfer, lease, license, guarantee or encumbrance of, any material
property or assets of the Company;
(iii) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock or enter into any agreement with respect to the
voting of its capital stock;
(iv) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
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(v) (1) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization, person or any
division thereof or any assets, other than acquisitions of assets in the
ordinary course of business consistent with past practice; (2) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible
for, the obligations of any person for borrowed money, except pursuant to
the agreements on the date hereof that are set forth in Section 5.1 of the
Company Disclosure Schedule and Parent's consent shall not be unreasonably
withheld in order to allow the Company to borrow up to $3,000,000 to fund
the Company's ongoing operations; (3) terminate, cancel or request any
material change in, or agree to any material change in, any Contract other
than in the ordinary course of business; (4) make or authorize any capital
expenditures in excess of $1,000,000 (excluding any outstanding capital
expenditure commitments set forth in Section 3.22); or (5) enter into or
amend any contract, agreement, commitment or arrangement that, if fully
performed, would not be permitted under this Section 5.1;
(vi) except as may be required by contractual commitments with respect
to severance or termination pay in existence on the date hereof as
disclosed in Section 3.9 of the Company Disclosure Schedule: (1) increase
the compensation payable or to become payable to its officers or employees
(except for increases in accordance with past practices in salaries or
wages of employees of the Company which are not across-the-board
increases), (2) grant any rights to severance or termination pay to, or
enter into any employment or severance agreement with, any director,
officer or other employee of the Company, or establish, adopt, enter into
or amend 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 director, officer
or employee, except to the extent required by applicable Law or the terms
of a collective bargaining agreement or (3) take any affirmative action to
accelerate the vesting of any stock-based compensation;
(vii) make any change in accounting policies or procedures except as
required by GAAP or by a Governmental Entity;
(viii) waive, release, assign, settle or compromise any material claims,
or any material litigation or arbitration;
(ix) make any material Tax election, change any existing procedure or
practice with respect to filing and preparing its Tax return or settle or
compromise any material federal, state or local Tax liability;
(x) modify, amend or terminate, or waive, release or assign any material
rights or claims with respect to any confidentiality or standstill
agreement to which the Company is a party;
(xi) write up, write down or write off the book value of any assets,
individually or in the aggregate, in excess of $75,000 except for
depreciation and amortization in accordance with GAAP consistently applied
or any adjustment that GAAP may require;
(xii) take any action to exempt or make not subject to (1) the
provisions of Section 203 of the DGCL, or (2) any other state takeover law
or state law that purports to limit or restrict business combinations or
the ability to acquire or vote shares or any person or entity (other than
Parent or its subsidiaries) or any action taken thereby, which person,
entity or action would have otherwise been subject to the restrictive
provisions thereof and not exempt therefrom;
(xiii) take any action that is intended or would reasonably be expected
to result in any of the conditions to the Merger set forth in Article VII
not being satisfied, except, in every case, as may be required by
applicable Law;
(xiv) enter into any commitment to a customer to provide more than 2500
processor pieces without providing Parent with three Business Days prior
written notice; or
(xv) authorize or enter into any agreement or otherwise make any
commitment to do any of the foregoing.
(b) The Company shall be permitted to grant Company Options under the
Company Stock Option Plan to employees first employed by the Company between
the date of the Agreement and the Effective Time in such
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amounts and containing such economic terms as reasonably determined by the
Company and as reasonably approved by Parent (which approval shall not be
unreasonably withheld), and shall be in accordance with the following
specifications (it being understood that such Company Options shall not be
included in the calculation of Company Fully-Diluted Common Stock for the
purpose of Section 2.01(a) hereof):
(i) The Company Options shall be nonqualified stock options;
(ii) The stock option agreement applicable to each Company Option shall
be in substantially the same agreement form the Company used for Company
Option grants constituting nonqualified options made in February 2000; and
(iii) The number of shares of Company Common Stock into which such
Company Options shall be exercised shall not in any event exceed 250,000.
SECTION 5.2 Conduct of Business by Parent Pending the Effective Time. Except
as specifically permitted by any other provision of this Agreement, Parent
shall not (unless required by applicable Laws or NYSE regulations), and shall
not permit Merger Sub (unless required by applicable Laws or NYSE regulations)
to, between the date of this Agreement and the Effective Time, directly or
indirectly, take, or agree to take, without the prior written consent of the
Company any action that is intended or could reasonably be expected to result
in any of the conditions to the Merger set forth in Article VII not being
satisfied, except, in every case, as may be required by applicable Law.
SECTION 5.3 Cooperation. The Company and Parent shall coordinate and
cooperate in connection with (a) the preparation of the Registration Statement
(as defined in Section 6.1(a)) and the Proxy Statement (as defined in Section
6.1(a)), (b) determining whether any action by or in respect of, or filing
with, any Governmental Entity is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any Contracts, in
connection with the consummation of the Merger and (c) seeking any such
actions, consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith or with the Registration Statement
and the Proxy Statement and timely seeking to obtain any such actions,
consents, approvals or waivers.
SECTION 5.4 Employee Benefit Covenant. Prior to the Effective Time, the
Company shall submit to a stockholder vote the right of any "disqualified
individual" to receive any and all payments that could be deemed "parachute
payments" (as defined in Code section 280(c)) under Code section 280G(b), in a
manner that satisfies the shareholder approval requirements for the small
business exemption of Code section 280G(b)(5). In addition, prior to the
Effective Time, the Company shall provide adequate disclosure to the
stockholders of the Company of all material facts concerning all payments that,
but for such vote, could be deemed "parachute payments" to a "disqualified
individual" under Code section 280G in a manner that satisfies Code section
280G(b)(5)(B).
SECTION 5.5 Audited Financial Statements. No later than the later of March
17, 2000 or the filing by Parent of its Annual Report on Form 10-K, the Company
shall deliver to Parent audited financial statements of the Company at December
31, 1999 and the related audited statements of operations, changes in
stockholders' equity and cash flow for the year then ended, including the notes
thereto (the "1999 Audited Financial Statements") which may contain a "going
concern" qualification. In addition, the Company shall deliver to Parent not
later than April 30, 2000 unaudited financial statements of the Company at
March 31, 2000 to the extent requested by Parent in connection with its efforts
to cause the Registration Statement (as defined in Section 6.1(a)) to become
effective in accordance with the terms of Section 6.1(a).
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Registration Statement; Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement,
delivery by the Company to Parent of 1999 Audited Financial Statements and the
filing by Parent of its Annual Report on Form 10-K for the year ended on
December 31, 1999 with the Securities and Exchange Commission (the "SEC"),
Parent and the Company shall prepare and file with the SEC a proxy statement
relating to the meeting of the Company's stockholders to be held in connection
with the Merger (together with any amendments thereof or supplements thereto,
the "Proxy Statement") and Parent shall prepare and file with the SEC a
registration statement on Form S-4 (together with all amendments thereto, the
"Registration Statement") in which the Proxy Statement shall be included as a
prospectus, in connection with the registration under the Securities Act of the
shares of Parent Common Stock to be issued to the stockholders of the Company
pursuant to the Merger. Each of Parent and the Company will use all reasonable
efforts to cause the Registration Statement to become effective as promptly as
practicable, and, prior to the effective date of the Registration Statement,
Parent shall take all or any action required under any applicable federal or
state securities laws in connection with the issuance of shares of Parent
Common Stock in the Merger. Each of Parent and the Company shall furnish all
information concerning it and the holders of its capital stock as the other may
reasonably request in connection with such actions and the preparation of the
Registration Statement and Proxy Statement. As promptly as practicable after
the Registration Statement shall have become effective, the Company shall mail
the Proxy Statement to its stockholders. The Proxy Statement shall include the
recommendation of the Board of Directors of the Company in favor of the Merger.
No amendment or supplement to the Proxy Statement or the Registration
Statement will be made by Parent or the Company without the approval of the
other party (which approval shall not be unreasonably withheld or delayed).
Parent will advise the Company, promptly after it receives notice thereof, of
the time when the Registration Statement has become effective or any supplement
or amendment has been filed, of the issuance of any stop order, the suspension
of the qualification of the Parent Common Stock issuable in connection with the
Merger for offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Proxy Statement or the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional
information.
(b) The information supplied by Parent for inclusion in the Registration
Statement and the Proxy Statement shall not, at (1) the time the Registration
Statement is declared effective, (2) the time the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to the stockholders of
the Company, (3) if applicable, the time the Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to stockholders of Parent, (4)
the time of the Company Stockholders' Meeting (as defined in Section 6.2(a)),
and (5) the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading. If at any time prior to
the Effective Time any event or circumstance relating to Parent or any Parent
subsidiary, or their respective officers or directors, should be discovered by
Parent which should be set forth in an amendment or a supplement to the
Registration Statement or Proxy Statement, Parent shall promptly inform the
Company. All documents that Parent is responsible for filing with the SEC in
connection with the transactions contemplated herein will comply as to form and
substance in all material respects with the applicable requirements of the
Securities Act and the rules and regulations thereunder and the Exchange Act
and the rules and regulations thereunder.
(c) The information supplied by the Company for inclusion in the
Registration Statement and the Proxy Statement shall not, at (1) the time the
Registration Statement is declared effective, (2) the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to the
stockholders of the Company, (3) if applicable, the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed
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to stockholders of Parent, (4) the time of the Company Stockholders' Meeting,
and (5) the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading. If at any time prior to
the Effective Time any event or circumstance relating to the Company, or its
officers or directors, should be discovered by the Company which should be set
forth in an amendment or a supplement to the Registration Statement or Proxy
Statement, the Company shall promptly inform Parent. All documents that the
Company is responsible for filing with the SEC in connection with the
transactions contemplated herein will comply as to form and substance in all
material respects with the applicable requirements of the Securities Act and
the rules and regulations thereunder and the Exchange Act and the rules and
regulations thereunder.
SECTION 6.2 Company Stockholders' Meetings. The Company shall call and hold
a meeting of its stockholders or if applicable and upon the approval of Parent
(which approval shall not be unreasonably withheld), a written action of
stockholders of the Company in lieu of a meeting (the "Company Stockholders'
Meeting") as promptly as practicable for the purpose of voting upon the
approval of the Merger, and the Company shall use its best efforts to hold the
Company Stockholders' Meeting as soon as practicable after the date on which
the Registration Statement becomes effective.
SECTION 6.3 Access to Information; Confidentiality.
(a) Except as required pursuant to any confidentiality agreement or similar
agreement or arrangement to which the Company or Parent or Parent subsidiaries
is a party (which such person shall use reasonable best efforts to cause the
counterparty thereto to waive, which reasonable efforts shall not require the
advance of funds) or pursuant to applicable Law or the regulations or
requirements of any stock exchange or other regulatory organization with whose
rules the parties are required to comply, from the date of this Agreement to
the Effective Time, each party shall (and shall cause its subsidiaries to): (1)
provide to the other party (and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other representatives,
collectively, "Representatives") access at reasonable times upon prior notice
to the officers, employees, agents, properties, offices and other facilities of
such party and its subsidiaries and to the books and records thereof and (2)
furnish promptly such information concerning the business, properties,
contracts, assets, liabilities, personnel and other aspects of such party and
its subsidiaries as the other party or its Representatives may reasonably
request. No investigation conducted pursuant to this Section 6.3 shall affect
or be deemed to modify any representation or warranty made in this Agreement.
(b) The parties shall comply with, and shall cause their respective
Representatives to comply with, all of their respective obligations under the
Non-Disclosure Agreement dated October 5, 1999 by the Company and Parent (the
"Confidentiality Agreement") with respect to the information disclosed pursuant
to this Section 6.3, which agreement will remain in full force and effect.
SECTION 6.4 No Solicitation of Transactions.
(a) The Company shall not, directly or indirectly, take (nor shall the
Company authorize or permit its Representatives or other affiliates to take)
any action to (1) encourage (including by way of furnishing nonpublic
information), solicit, initiate or facilitate any Acquisition Proposal (as
defined in Section 6.4(c)), (2) enter into any agreement with respect to any
Acquisition Proposal or (3) participate in any way in discussions or
negotiations with, or furnish any information to, any person in connection
with, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or could reasonably be expected to lead to, any
Acquisition Proposal.
(b) The Company will as promptly as practicable communicate to Parent any
inquiry received by it relating to any potential Acquisition Proposal and the
material terms of any proposal or inquiry, including the identity of the person
and its affiliates making the same, that it may receive in respect of any such
transaction, or of any such information requested from it or of any such
negotiations or discussions being sought to be initiated with it; and shall
keep Parent fully informed on a prompt basis with respect to any developments
with respect to the foregoing.
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(c) "Acquisition Proposal" means any offer or proposal concerning any (1)
merger, consolidation, business combination, or similar transaction involving
the Company, (2) sale, lease or other disposition directly or indirectly by
merger, consolidation, business combination, share exchange, joint venture, or
otherwise of assets of the Company representing 10% or more of the assets of
the Company, (3) issuance, sale, or other disposition of (including by way of
merger, consolidation, business combination, share exchange, joint venture, or
any similar transaction) securities (or options, rights or warrants to
purchase, or securities convertible into or exchangeable for, such securities)
representing 10% or more of the voting power of the Company or (4) transaction
in which any person shall acquire beneficial ownership (as such term is defined
in Rule 13d-3 under the Exchange Act), or the right to acquire beneficial
ownership or any "group" (as such term is defined under the Exchange Act) shall
have been formed which beneficially owns or has the right to acquire beneficial
ownership of, 10% or more of the outstanding voting capital stock of the
Company.
(d) Neither the Board of Directors of the Company nor any committee thereof
shall (1) withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to Parent, the approval or recommendation by the Board of
Directors or such committee of the adoption and approval of the Merger and the
matters to be considered at the Company Stockholders' Meeting, (2) other than
the Merger, approve or recommend, or propose publicly to approve or recommend,
any Acquisition Proposal, or (3) other than the Merger, cause the Company to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement (each, an "Acquisition Agreement") related to any
Acquisition Proposal.
SECTION 6.5 Appropriate Action; Consents; Filings.
(a) The Company and Parent shall use their reasonable best efforts to (1)
take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary, proper or advisable under applicable Law or
otherwise to consummate and make effective the transactions contemplated by
this Agreement as promptly as practicable, (2) obtain from any Governmental
Entities any consents, licenses, permits, waivers, approvals, authorizations or
orders required to be obtained or made by Parent or the Company or Parent
subsidiaries, or to avoid any action or proceeding by any Governmental Entity
(including, without limitation, those in connection with the HSR Act), in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the transactions contemplated herein, including, without
limitation, the Merger, and (3) make all necessary filings, and thereafter make
any other required submissions, with respect to this Agreement and the Merger
required under (A) the Securities Act and the Exchange Act, and any other
applicable federal or state securities Laws, (B) the HSR Act and (C) any other
applicable Law; provided, however, that Parent and the Company shall cooperate
with each other in connection with the making of all such filings, including
providing copies of all such documents to the non-filing party and its advisors
prior to filing and, if requested, to accept all reasonable additions,
deletions or changes suggested in connection therewith and, provided, further,
that nothing in this Section 6.5(a) shall require Parent to agree to (1) the
imposition of conditions, (2) the requirement of divestiture or (3) the
requirement of expenditure of money by Parent or the Company to a third party
in exchange for any such consent that, in any such case, would be materially
adverse to Parent, the Company and their subsidiaries, taken as a whole). The
Company and Parent shall furnish to each other all information required for any
application or other filing to be made pursuant to the rules and regulations of
any applicable Law (including all information required to be included in the
Proxy Statement and the Registration Statement) in connection with the
transactions contemplated by this Agreement. The Company and Parent shall not
take any action, or refrain from taking any action, the effect of which would
be to delay or impede the ability of the Company and Parent to consummate the
transactions contemplated by this Agreement.
(b) (1) The Company and Parent shall give (or Parent shall cause Parent
subsidiaries to give) any notices to third parties, and use, and Parent shall
cause Parent subsidiaries to use, all reasonable efforts to obtain any third
party consents, (A) necessary, proper or advisable to consummate the
transactions contemplated in this Agreement, (B) required to be disclosed in
the Company Disclosure Schedule, or (C) required to prevent a Company Material
Adverse Effect from occurring prior to or after the Effective Time or a Parent
Material Adverse Effect from occurring prior to or after the Effective Time.
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(2) In the event that either party shall fail to obtain any third party
consent described in subsection (b)(1) above, such party shall use all
reasonable efforts, and shall take any such actions reasonably requested by the
other party hereto, to minimize any adverse effect upon the Company and Parent,
Parent subsidiaries, and their respective businesses resulting, or which could
reasonably be expected to result after the Effective Time, from the failure to
obtain such consent.
(c) From the date of this Agreement until the Effective Time, the Company
shall promptly notify Parent in writing, or Parent shall notify the Company in
writing, as the case may be, of any pending or threatened action or suit,
arbitration or other proceeding or investigation by any Governmental Entity or
any other person (1) challenging or seeking material damages in connection with
the Merger or the conversion of Company Common Stock into Parent Common Stock
pursuant to the Merger or (2) seeking to restrain or prohibit the consummation
of the Merger or otherwise limit the right of Parent or its subsidiaries to own
or operate all or any portion of the businesses or assets of the Company, which
in either case would reasonably be expected to have a Company Material Adverse
Effect prior to or after the Effective Time or a Parent Material Adverse Effect
after the Effective Time.
SECTION 6.6 Letters of Accountants. Each of Parent and the Company shall use
their reasonable best efforts to cause to be delivered to the other two letters
from their respective independent public accountants, one dated the date on
which the Registration Statement shall become effective and one dated a date
within two business days before the Effective Time, in form and substance
reasonably satisfactory to the recipient and customary in scope and substance
for comfort letters delivered by independent public accountants.
SECTION 6.7 Certain Notices. From and after the date of this Agreement until
the Effective Time, each party hereto shall promptly notify the other party
hereto of (a) the occurrence, or non- occurrence, of any event that would be
likely to cause any condition to the obligations of any party to effect the
Merger and the other transactions contemplated by this Agreement not to be
satisfied or (b) the failure of the Company or Parent, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it pursuant to this Agreement which would reasonably be
expected to result in any condition to the obligations of any party to effect
the Merger and the other transactions contemplated by this Agreement not to be
satisfied; provided, however, that the delivery of any notice pursuant to this
Section 6.7 shall not cure any breach of any representation or warranty
requiring disclosure of such matter prior to the date of this Agreement or
otherwise limit or affect the remedies available hereunder to the party
receiving such notice.
SECTION 6.8 Warrants. Each of the Company and Parent shall use its best
efforts so that each outstanding warrant (as set forth on Section 6.8 of the
Company Disclosure Schedule) to purchase shares of Company Capital Stock (the
"Warrants") as provided in the warrant agreements governing such Warrants (the
"Warrant Agreements") shall have been exercised prior to the Effective Time,
subject to the terms and provisions thereof, into the number of shares of
Company Capital Stock that the holder thereof is entitled to thereunder.
SECTION 6.9 Stock Exchange Listing. Parent shall promptly prepare and submit
to the NYSE a listing application covering the shares of Parent Common Stock to
be issued in the Merger and shall use reasonable best efforts to cause such
shares to be approved for listing on such exchange, subject to official notice
of issuance, prior to the Effective Time.
SECTION 6.10 Plan of Reorganization. The Agreement is intended to constitute
a "plan of reorganization" within the meaning of section 1.368-2(g) of the
income tax regulations promulgated under the Code. From and after the date
hereof and until the Effective Time, each party hereto shall use its reasonable
best efforts to cause the Merger to qualify, and will not knowingly take any
actions or cause any actions to be taken which could reasonably be expected to
prevent the Merger from qualifying, as a reorganization under the provisions of
section 368(a) of the Code.
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SECTION 6.11 Indemnification. From and after the Effective Time for a period
of two years, Parent shall fulfill and honor in all respects the obligations of
the Company to indemnify each person who is or was a director or officer of the
Company pursuant to any indemnification provision contained in the Company
Certificate of Incorporation or Company By-laws, each as amended and as in
effect on the date hereof.
SECTION 6.12 Stock Options. (a) Not later than fifteen calendar days after
the Effective Time Parent shall provide for registration of shares of Parent
Common Stock subject to the Company Options, Restricted Stock and Founders
Stock by filing with the SEC a registration statement on Form S-8 (or any
successor form) with respect to such shares of Parent Common Stock. Such
registration shall be kept effective (and the current status of the prospectus
required thereby shall be maintained in accordance with the relevant
requirements of the Securities Act and the Exchange Act) at least for so long
as such Company Options, Restricted Stock and Founders Stock remain
outstanding.
(b) Prior to the Effective Time, the Board of Directors of the Company shall
adopt by resolution an amendment to the Company Stock Option Plan, which
amendment shall be approved by Parent (such approval to not be unreasonably
withheld), to provide that one-half of the Company Options that are unvested
prior to the Effective Time and held by any person employed by or providing
services to the Company at the Effective Time shall become fully vested and
exercisable as of the Effective Time, and the other one-half of such Company
Options shall become vested over the 12-month period immediately following the
Effective Time in equal amounts on a monthly basis.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.1 Conditions to Obligations of Each Party Under This Agreement.
The respective obligations of each party to effect the Merger and the other
transactions contemplated herein shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions, any or all of which
may be waived, in whole or in part, to the extent permitted by applicable Law:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceedings
for that purpose shall have been initiated or, to the knowledge of Parent
or the Company, threatened by the SEC.
(b) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of the
Company and, if applicable, by the requisite vote of the stockholders of
Parent.
(c) No Order. No Governmental Entity, nor any federal or state court of
competent jurisdiction or arbitrator shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, judgment, injunction or arbitration award or finding or
other order (whether temporary, preliminary or permanent), in any case
which is in effect and which prevents or prohibits consummation of the
Merger or any other transactions contemplated in this Agreement.
(d) Consents and Approvals. All consents, approvals and authorizations
of any Governmental Entity or other person required to be set forth in
Section 3.5 or 4.5 or the related sections of the Company Disclosure
Schedule as necessary to consummate the Merger shall have been obtained (in
each case, without (1) the imposition of conditions, (2) the requirement of
divestiture or (3) the requirement of expenditure of money by Parent or the
Company to a third party in exchange for any such consent that, in any such
case, would be materially adverse to Parent, Parent subsidiaries, taken as
a whole, and the Company), except for such consents, approvals and
authorizations the failure of which to obtain would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse
Effect or a Parent Material Adverse Effect after the Effective Time.
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(e) HSR Act. The applicable waiting period, together with any extensions
thereof, under the HSR Act shall have expired or been terminated.
(f) NYSE. The shares of Parent Common Stock issuable to the Company's
stockholders in the Merger shall have been approved for listing on the
NYSE, subject to official notice of issuance.
(g) Employment Agreements. Each of Laurence G. Walker, David Husak,
Peter Morris, Richard Hollingsworth, Kurt Hoff, Clint Ramsay and John
Burnham has executed and delivered an employment agreement, in
substantially the form attached hereto as Exhibit C.
(h) Certificate of Merger. Prior to the Effective Time, the Certificate
of Merger shall be accepted for filing with the Secretary of State of the
State of Delaware.
SECTION 7.2 Additional Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger and the other
transactions contemplated herein are also subject to the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement shall be true and
correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of materiality,
such statement shall be true and correct in all respects giving effect to
such standard) as of the date hereof and as of the Effective Time as though
made on and as of the Effective Time, except that those representations and
warranties which address matters only as of a particular date shall remain
true and correct in all material respects (except that where any statement
in a representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all respects
giving effect to such standard) as of such date. Parent shall have received
a certificate of the Chief Executive Officer or Chief Financial Officer of
the Company to that effect.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time. Parent shall have received a certificate of
the Chief Executive Officer or Chief Financial Officer of the Company to
that effect.
(c) Tax Opinion. Parent shall have received the opinion of Winston &
Strawn, special tax advisors to Parent, in form and substance reasonably
satisfactory to Parent, based upon facts, representations and assumptions
set forth in such opinion which are consistent with the state of facts
existing at the Effective Time, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of section 368(a) of the Code. The issuance of such opinion shall
be conditioned upon the receipt by such tax counsel of customary
representation letters from Parent, Merger Sub and the Company.
(d) Accountant Letters. Parent shall have received from the Company
"cold comfort" letters of PricewaterhouseCoopers LLP, dated the date on
which the Registration Statement shall become effective and a date within
two Business Days before the Effective Time and addressed to Parent, in
form and substance reasonably satisfactory to Parent and reasonably
customary in scope and substance for comfort letters delivered by
independent public accountants.
SECTION 7.3 Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger and the other transactions
contemplated in this Agreement is also subject to the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Parent contained in this Agreement shall be true and correct
in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of materiality,
such statement shall be true and correct in all respects giving effect to
such standard) as of the date hereof and as of the Effective Time as though
made on and as of the Effective Time, except that those representations and
warranties which address matters only as of a particular date shall remain
true and correct in all material respects (except
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that where any statement in a representation or warranty expressly includes
a standard of materiality, such statement shall be true and correct in all
respects giving effect to such standard) as of such date. The Company shall
have received a certificate of a responsible officer of Parent to that
effect.
(b) Agreements and Covenants. Parent shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the
Effective Time. The Company shall have received a certificate of a
responsible officer of Parent to that effect.
(c) Tax Opinion. The Company shall have received the opinion of Hale and
Dorr LLP, special tax advisor to the Company, in a form and substance
reasonably satisfactory to the Company, based upon facts, representations,
and assumptions in such opinion, which are consistent with the state of
facts existing at the Effective Time, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of section 368(a) of the Code. The issuance of such opinion shall
be conditioned upon the receipt by such tax counsel of customary
representation letters from Parent, Merger Sub and the Company.
(d) Registered Shares. All shares of Parent Common Stock issuable to the
Stockholders in the Merger shall have been registered under the Securities
Act.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Survival of Representations and Warranties. The representations
and warranties set forth in Articles III and IV shall survive for a period of
12 months after the Effective Time; provided, however, that if a notice is
given as provided herein before expiration of the representation or warranty,
then notwithstanding the expiration thereof any claim based on such
representation or warranty shall survive until the resolution of such claim.
SECTION 8.2 Indemnification by Parent. (a) Parent agrees, subject to the
other terms and conditions of this Agreement, to indemnify the Stockholders
against, and hold them harmless from, all losses, claims, fines, penalties,
amounts paid in settlement, liabilities, costs and expenses (including, without
limitation, reasonable attorney and expert fees) of and damages to the
Stockholders related to or arising out of the breach of the representation and
warranty of Parent contained in Section 4.3 hereof.
(b) No claim may be made after the Effective Time against Parent for
indemnification pursuant to Section 8.2(a) unless the aggregate of all
liabilities and damages of the Stockholders (exclusive of legal fees incurred
in connection with pursuing such claim) with respect to Section 8.2(a) along
with all liability of Parent to the Stockholders shall in the aggregate exceed
$100,000; provided, however, that under no circumstances shall Parent liability
under Section 8.2(a) exceed $43,000,000. This Section 8.2(b) is not intended to
address the liability of Parent for any breach of any representation, warranty
or covenant if the Merger is not consummated.
(c) The Stockholders agree to give Parent through the Stockholder
Representative prompt written notice of any claim, assertion, event or
proceeding by or in respect of a third party of which they have knowledge
concerning any liability or damage as to which it may request indemnification
hereunder (a "Claim Notice" which contains (a) a description and the amount
(the "Claim Amount") of such indemnification request, and (ii) a statement that
the Stockholders are entitled to indemnification hereunder and a reasonable
explanation of the basis therefore (a copy of such Claim Notice shall also be
delivered to the Escrow Agent); provided, however, that no delay on the part of
the Stockholder Representative in notifying Parent shall relieve Parent from
any liability or obligation hereunder unless Parent can demonstrate that it was
damaged by such delay. Parent will not consent to the entry of any judgment
with respect to the matter, or enter into any settlement which does not include
a provision whereby the plaintiff or claimant in the matter releases the
Stockholders from all liability with respect thereto without the written
consent of the Stockholder Representative. Parent shall have the right
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to direct, at its own expense and through counsel of its own choosing
(reasonably satisfactory to Parent), the defense or settlement of any such
claim or proceeding; the Stockholders Representative may participate in such
defense, but in such case the expenses of the Stockholder Representative shall
be paid by the Stockholder Representative; provided, however, that if the
Stockholder Representative delivers to Parent a written opinion of counsel to
the effect that there exists an actual conflict of interest between Parent and
the Stockholder Representative with respect to such claim, or such claim or
liability involves the possibility of criminal sanctions or criminal liability
to the Stockholder Representative, the Stockholder Representative shall be
entitled to participate in the defense of such claim or liability at the
expense of Parent. The Stockholder Representative shall provide Parent with
access to all records and personnel of the Stockholders and the Company
relating to any such claim, assertion, event or proceeding during normal
business hours and shall otherwise cooperate with and assist, at Parent's
request, Parent in the defense or settlement thereof, and Parent shall
reimburse the Stockholder Representative for all reasonable out-of-pocket
expenses in connection therewith. If Parent elects to direct the defense of any
such claim or proceeding, the Stockholder Representative shall not pay, or
permit to be paid, any part of any claim or demand arising from such asserted
liability unless Parent consents in writing to such payment (such consent not
to be unreasonably withheld or delayed) or unless Parent, subject to the last
sentence of this Section 8.2(c), withdraws from the defense of such asserted
liability or unless a final judgment from which no appeal may be taken by or on
behalf of Parent is entered against the Stockholder Representative for such
liability. If Parent shall fail to assume the defense of such claim in the
manner provided above, or if, after commencing or undertaking any such defense,
fails to prosecute or withdraws from such defense, the Stockholder
Representative shall have the right to undertake the defense or settlement
thereof, and the Stockholder Representative may defend against, or enter into
any settlement with respect to, the matter in any manner the Stockholder
Representative reasonably may deem appropriate.
SECTION 8.3 Indemnification by the Stockholders. (a) The Stockholders agree,
subject to the other terms and conditions of this Agreement and the Escrow
Agreement, to indemnify Parent (and Parent's directors, officers, employees,
controlling persons, affiliates, successors, assigns, representatives, advisors
and legal counsel (collectively, the "Parent Indemnitees")) against, and hold
then harmless from, all losses, claims, fines, penalties, amounts paid in
settlement, liabilities, costs and expenses (including, without limitation,
reasonable attorney and expert fees) of and damages to Parent related to or
arising out of (i) the untruth, inaccuracy or incompleteness as of the date
hereof or on the Effective Time of any representation or warranty of the
Company contained in this Agreement or the Company Disclosure Schedule (without
regard to any "materiality", "Company Material Adverse Effect", "substantial
compliance" or similar exception or qualifier) (or in any document, writing,
certificate, or data delivered by the Company under this Agreement) or the
failure by the Company or any Stockholder to perform any of its covenants or
obligations hereunder or contained in this Agreement or the Company Disclosure
Schedule (or in any document, writing, certificate, data or financial
statements delivered by the Company or the Stockholders under this Agreement),
(ii) the fees, expenses and disbursements in excess of $2,500,000 in accordance
with the provisions of Section 9.5 hereof, (iii) (A) any governmental action,
order, directive, administrative proceeding or ruling; (B) personal or bodily
injuries (including death) or damage (including loss of use) to any premises
(public or private); (C) cleanup, remediation, investigation or monitoring of
any pollution or contamination of or adverse effects on human health or the
environment; or (D) any violation or alleged violation of Environmental Laws
existing prior to the Effective Time, and (iv) those matters set forth on
Section 8.3 of the Company Disclosure Schedule. The Stockholders agree to
establish the Escrow Fund pursuant to Section 8.3(c) for the sole purpose of
satisfying the Stockholders' indemnification obligations hereunder.
(b) No claim may be made after the Effective Time against the Escrow Fund
for indemnification pursuant to Section 8.3(a) unless the aggregate of all
liabilities and damages (exclusive of (i) legal fees incurred in connection
with pursuing such claim, (ii) any breach of Section 3.23 (except for the
$75,000 adjustment referred to in Section 5.1(a)(xi)), and (iii) any breach of
Section 9.5) of Parent with respect to Section 8.3(a) and all liability of the
Stockholders to Parent shall in the aggregate exceed $100,000; provided,
however, that the aggregate amount available to indemnify the Parent Indemnitee
shall not exceed the value of the Escrow Fund. No Stockholder shall be required
to indemnify the Parent Indemnitee for an amount that would exceed
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such Stockholder's pro rata share of the Escrow Shares deposited in the Escrow
Fund. The Stockholders shall not have any right of contribution from the
Company with respect to any loss claimed by the Parent Indemnitee after the
Effective Time. This Section 8.3(b) is not intended to address the liability of
the Company for any breach of any representation, warranty or covenant if the
Merger is not consummated.
(c) As security for the indemnity provided for in this Section 8.3 and to
provide security to satisfy any contingencies arising from the representations
and warranties of the Company hereunder, each of the Stockholders receiving the
Parent Common Stock in the Merger will be deemed to have received and deposited
with the Escrow Agent the Escrow Shares (plus any additional shares as may be
issued upon any stock split, stock dividend or recapitalization effected by
Parent after the Effective Time with respect to the Escrow Shares). The Escrow
Shares will be deposited with and will be held by the Escrow Agent, such
deposit to constitute an escrow fund (the "Escrow Fund") to be governed by the
terms set forth in the Escrow Agreement. The portion of the Escrow Fund
contributed on behalf of each Stockholder shall be in proportion to the
aggregate Merger Shares which such Stockholder would otherwise be entitled
under Section 2.1.
(d) The Parent Indemnitees agree to give the Stockholder Representative,
with a copy to the Escrow Agent, prompt Claim Notice which shall contain
information similar to those described in Section 8.2(c); provided, however,
that no delay on the part of any Parent Indemnitee in notifying the Stockholder
Representative shall relieve the Stockholders from any liability or obligation
hereunder unless (and then solely to the extent that) the Stockholders can
demonstrate that they were damaged by such delay. The Stockholder
Representative will not consent to the entry of any judgment with respect to
the matter, or enter into any settlement which does not include a provision
whereby the plaintiff or claimant in the matter releases the Parent Indemnitee
from all liability with respect thereto, without the written consent of the
Parent Indemnitee. The Stockholder Representative shall have the right to
direct, at its own expense and through counsel of its own choosing (reasonably
satisfactory to the Parent Indemnitee), the defense or settlement of any such
claim or proceeding; the Parent Indemnitee may participate in such defense, but
in such case the expenses of the Parent Indemnitee shall be paid by the Parent
Indemnitee; provided, however, that if the Parent Indemnitee delivers to the
Stockholder Representative a written opinion of counsel to the effect that
there exists an actual conflict of interest among the Stockholders and the
Parent Indemnitee with respect to such claim, or such claim or liability
involves the possibility of criminal sanctions or criminal liability to the
Parent Indemnitee, the Parent Indemnitee shall be entitled to participate in
the defense of such claim or liability at the expense of the Parent Indemnitee.
Parent shall provide the Stockholder Representative with access to its records
and personnel relating to any such claim, assertion, event or proceeding during
normal business hours and shall otherwise cooperate with and assist, at the
Stockholder Representative's request, the Stockholder Representative in the
defense or settlement thereof, and the Stockholder Representative shall
reimburse Parent for all its reasonable out-of-pocket expenses in connection
therewith. If the Stockholder Representative elects to direct the defense of
any such claim or proceeding, Parent shall not pay, or permit to be paid, any
part of any claim or demand arising from such asserted liability unless the
Stockholder Representative consents in writing to such payment (such consent
not to be unreasonably withheld or delayed) or unless the Stockholder
Representative, subject to the last sentence of this Section 8.3(d), withdraws
from the defense of such asserted liability or unless a final judgment from
which no appeal may be taken by or on behalf of the Stockholder Representative
is entered against Parent for such liability. If the Stockholder Representative
shall fail to assume the defense of such claim in the manner provided above, or
if, after commencing or undertaking any such defense, fail to prosecute or
withdraws from such defense, Parent shall have the right to undertake the
defense or settlement thereof, and the Parent Indemnitee may defend against, or
enter into any settlement with respect to, the matter in any manner the Parent
Indemnitee reasonably may deem appropriate.
SECTION 8.4 Stockholder Representative; Approval of Stockholders.
(a) Laurence G. Walker shall be constituted and appointed as agent
("Stockholder Representative") for and on behalf of the Stockholders to give
and receive notices and communications, to agree to, negotiate, enter into
settlements and compromises of, and demand arbitration and comply with orders
of courts and awards of
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arbitrators with respect to such claims, and to take all actions necessary or
appropriate in the judgment of the Stockholder Representative for the
accomplishment of the foregoing. Such agency may be changed by a majority vote
or by the written consent of the majority of the Stockholders from time to time
upon not less than ten Business Days' prior written notice to Parent. In the
event of the death or disability (for more than 15 Business Days) of the
Stockholder Representative or his resignation as Stockholder Representative and
until a successor Stockholder Representative shall be appointed as provided
above or in Section 7(b) of the Escrow Agreement, the then President of the
Company shall act as the Stockholder Representative pending the appointment of
the successor Stockholder Representative. No bond shall be required of the
Stockholder Representative, and the Stockholder Representative shall receive no
compensation for his/her services. Notices or communications to or from the
Stockholder Representative shall constitute notice to or from each of the
Stockholders.
(b) The approval by the Stockholders of the Merger shall be deemed to be
approval of the terms of the provisions of this Article VIII, including the
appointment of the Stockholder Representative.
(c) A decision, act, consent or instruction of the Stockholder
Representative shall constitute a decision of all Stockholders and shall be
final, binding and conclusive upon each such Stockholder, and Parent may rely
upon any such decision, act, consent or instruction of the Shareholder
Representative as being the decision, act, consent or instruction of each
Stockholder. Parent is hereby relieved from any liability to any person for any
acts done by it in accordance with such decision, act, consent or instruction
of the Stockholder Representative.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of this Agreement and
the Merger by the Stockholders:
(a) by mutual consent of Parent and the Company;
(b) (1) by Parent (provided that Parent is not then in material breach of
any representation, warranty, covenant or other agreement contained herein), if
there has been a breach by the Company of any of its representations,
warranties, covenants or agreements contained in this Agreement, or any such
representation and warranty shall have become untrue, in any such case such
that Section 7.2(a) or Section 7.2(b) will not be satisfied and, in either such
case, such breach or condition has not been promptly cured within 30 days
following receipt by the Company of written notice of such breach;
(2) by the Company (provided that the Company is not then in material
breach of any representation, warranty, covenant or other agreement
contained herein), if there has been a breach by Parent of any of its
representations, warranties, covenants or agreements contained in this
Agreement, or any such representation and warranty shall have become
untrue, in any such case such that Section 7.3(a) or Section 7.3(b) will
not be satisfied and such breach or condition has not been promptly cured
within 30 days following receipt by Parent of written notice of such
breach;
(c) by either Parent or the Company if any decree, permanent injunction,
judgment, order or other action by any court of competent jurisdiction, any
arbitrator or any Governmental Entity preventing or prohibiting consummation of
the Merger shall have become final and nonappealable (so long as the party
seeking termination is not in breach of Section 6.5(a) hereof); or
(d) by either Parent or the Company if the Merger shall not have been
consummated before May 31, 2000; provided that the Company or Parent shall have
the right to automatically extend such date to June 30, 2000 by providing
written notice thereof to the other party so long as the party requesting such
extension is not then in material breach of any representation, warranty,
covenant or other agreement contained herein; and provided, further that any
extension requested by either Parent or the Company beyond June 30, 2000 shall
be considered and negotiated by the Company and Parent in good faith.
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SECTION 9.2 Effect of Termination. Notwithstanding any other provision, no
termination of this Agreement shall release any party of any liabilities
arising hereunder for any pre-termination breaches hereof or intentional
misrepresentations made herein.
SECTION 9.3 Amendment. This Agreement may be amended upon the agreement of
all parties hereto; provided, however, that, after approval of the Merger by
the Stockholders, no amendment may be made without further Stockholder approval
which, by law or in accordance with the rules of any relevant stock exchange,
requires further approval by the Stockholders. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto.
SECTION 9.4 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance by the other party
with any of the agreements or conditions contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed
by the party or parties to be bound thereby, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
SECTION 9.5 Fees and Expenses. Whether or not the transactions herein
contemplated shall be consummated, Parent shall pay the fees, expenses and
disbursements of Parent and Merger Sub and their respective agents,
representatives, accountants and counsel incurred in connection with the
subject matter of this Agreement and any amendments thereto and all other costs
and expenses incurred in the performance and compliance with all conditions to
be performed by Parent and Merger Sub under this Agreement. If the transactions
herein contemplated shall be consummated, the Stockholders shall pay (or
promptly reimburse Parent or the Company) from the Escrow Fund the fees,
expenses and disbursements of the Company and the Stockholders and their
respective agents, representatives, accountants and counsel, in excess of
$2,500,000 in the aggregate for all such fees, expenses and disbursements,
incurred in connection with the subject matter of this Agreement and any
amendments thereto and all other costs and expenses incurred in the performance
and compliance with all conditions to be performed by the Company and the
Stockholders under this Agreement. If the transactions herein contemplated
shall not be consummated, the Company shall pay all fees, expenses and
disbursements of the Company and the Stockholders and their respective agents,
representatives, accountants and counsel incurred in connection with the
subject matter of this Agreement and any amendments thereto and all other costs
and expenses incurred in the performance and compliance with all conditions to
be performed by the Company and the Stockholders under this Agreement.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) or delivered by a nationally
recognized courier service to the parties at the following addresses (or at
such other address for a party as shall be specified by like changes of
address) or sent by electronic transmission to the telecopier number specified
below:
(a) If to Parent or Merger Sub, addressed to it at:
Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
Telecopier No.: (847) 576-3628
Attention: General Counsel
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With a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Telecopier No.: (312) 558-5600
Attention: Oscar A. David, Esq.
(b) If to the Company, addressed to it at:
C-Port Corporation
One High Street
North Andover, Massachusetts 01845
Telecopier No.: (978) 773-2301
Attention: Chief Executive Officer
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Telecopier No.: (617) 526-5000
Attention: Peter B. Tarr, Esq.
(c) If to the Stockholder Representative:
C-Port Corporation
One High Street
North Andover, Massachusetts 01845
Telecopier No.: (978) 773-2301
Attention: Laurence G. Walker
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Telecopier No.: (617) 526-5000
Attention: Peter B. Tarr, Esq.
SECTION 10.2 Certain Definitions. For purposes of this Agreement, the term:
(a) "Affiliate" means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common
control with, the first-mentioned person;
(b) "Business Day" means any day other than a day on which banks in the
State of New York are authorized or obligated to be closed;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock
or as trustee or executor, by contract or credit arrangement or otherwise;
(d) "knowledge" means actual knowledge after due investigation and
knowledge and information that are or should be available to a person by
virtue of such person's position;
(e) "person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in Section 13(d) of the Exchange Act);
and
(f) "subsidiary" or "subsidiaries" of Parent, the Surviving Corporation
or any other person means any corporation, partnership, joint venture or
other legal entity of which Parent, the Surviving Corporation
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or such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, a
majority of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the Board of Directors or
other governing body of such corporation or other legal entity.
SECTION 10.3 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.4 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
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
SECTION 10.5 Entire Agreement. This Agreement (together with the Exhibits,
the Company Disclosure Schedule and the other documents delivered pursuant
hereto), the Voting Agreement, the Escrow Agreement and the Confidentiality
Agreement constitute the entire agreement of the parties and supersede all
prior agreements and undertakings, both written and oral, between the parties,
or any of them, with respect to the subject matter hereof and, except as
otherwise expressly provided herein, are not intended to confer upon any other
person any rights or remedies hereunder.
SECTION 10.6 Assignment. This Agreement shall not be assigned by operation
of law or otherwise.
SECTION 10.7 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and the Stockholders of the
Company and their respective successors and assigns, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
SECTION 10.8 Mutual Drafting. Each party hereto has participated in the
drafting of this Agreement, which each party acknowledges is the result of
extensive negotiations among the parties.
SECTION 10.9 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Delaware, without
reference to principles of conflicts of laws.
SECTION 10.10 Publicity. The Company shall not issue any press release or
otherwise make public any information with respect to this Agreement or the
transactions contemplated hereby, prior to the Effective Time, without the
prior written consent of Parent. Neither Parent nor the Merger Sub shall issue
any press release or otherwise make public any information with respect to this
Agreement or the transactions contemplated hereby, prior to the Effective Time,
without the prior written consent of the Company, unless otherwise required by
law or the rules of the NYSE.
SECTION 10.11 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 10.12 Time of the Essence. Time is of the essence with respect to
the obligations of the parties hereunder.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
MOTOROLA, INC.
/s/ Theodore W. Schaffner
By: _________________________________
Name: Theodore W. Schaffner
Title: Senior Vice President
CP ACQUISITION CORP.
/s/ Theodore W. Schaffner
By: _________________________________
Name: Theodore W. Schaffner
Title: Vice President
C-PORT CORPORATION
/s/ Laurence G. Walker
By: _________________________________
Name: Laurence G. Walker
Title: President and Chief Executive
Officer
[Signature page to Merger Agreement]
A-41
<PAGE>
APPENDIX B
[LETTERHEAD OF DEUTSCHE BANK SECURITIES INC.]
February 17, 2000
Board of Directors
C-Port Corporation
One High Street
North Andover, MA 01845
Gentlemen:
Deutsche Bank Securities Inc. ("Deutsche Bank") has acted as financial
advisor to C-Port Corporation ("C-Port") in connection with the proposed merger
of C-Port and Motorola, Inc. ("Motorola") pursuant to the Agreement and Plan of
Merger, dated February 17, 2000, among C-Port, Motorola and CP Acquisition
Corp., a wholly owned subsidiary of Motorola ("Merger Sub") (the "Merger
Agreement"), which provides, among other things, for the merger of Merger Sub
with and into C-Port (the "Transaction"), as a result of which C-Port will
become a wholly owned subsidiary of Motorola.
As set forth more fully in the Merger Agreement, as a result of the
Transaction and the Voting Agreements, each share of the Common Stock, par
value $.001 per share, of C-Port ("C-Port Common Stock") not owned directly or
indirectly by Motorola or C-Port will be converted into the right to receive
.1022485 shares (the "Exchange Ratio") of Common Stock, par value $3.00 per
share, of Motorola ("Motorola Common Stock"). In addition, shareholders holding
approximately 56% of the equity securities of C-Port with voting rights have
entered into Voting Agreements pursuant to which they have agreed to vote their
shares in favor of the Transaction. Ten percent of the number of shares of
Motorola Common Stock that the shareholders of C-Port Common Stock shall be
entitled to receive shall be deposited in escrow for a period of one year
pursuant to the terms of the Escrow Agreement to be entered into at closing,
which escrow constitutes the sole recourse of Motorola in respect of the
Indemnity obligations of the Merger Agreement. The terms and conditions of the
Transaction are more fully set forth in the Merger Agreement.
You have requested Deutsche Bank's opinion, as investment bankers, as to the
fairness, from a financial point of view, to the shareholders of C-Port of the
Exchange Ratio.
In connection with Deutsche Bank's role as financial advisor to C-Port, and
in arriving at its opinion, Deutsche Bank has reviewed certain publicly
available financial and other information concerning Motorola and C-Port and
certain internal analyses and other information furnished to it by Motorola and
C-Port. Deutsche Bank has also held discussions with members of the managements
of Motorola and C-Port regarding the businesses and prospects of their
respective companies and the joint prospects of a combined company. In
addition, Deutsche Bank has (i) reviewed the reported prices and trading
activity for Motorola Common Stock (ii) compared certain financial and stock
market information for Motorola with similar information for certain other
companies whose securities are publicly traded, (iii) reviewed the financial
terms of certain recent business combinations which it deemed comparable in
whole or in part, (iv) reviewed the terms of the Merger Agreement and certain
related documents, and (v) performed such other studies and analyses and
considered such other factors as it deemed appropriate.
Deutsche Bank has not assumed responsibility for independent verification
of, and has not independently verified, any information, whether publicly
available or furnished to it, concerning Motorola or C-Port, including, without
limitation, any financial information, forecasts or projections considered in
connection with the rendering of its opinion. Accordingly, for purposes of its
opinion, Deutsche Bank has assumed and relied upon the accuracy and
completeness of all such information and Deutsche Bank has not conducted a
physical inspection of any of the properties or assets, and has not prepared or
obtained any independent evaluation or appraisal of any of the assets or
liabilities, of Motorola or C-Port. With respect to the financial forecasts and
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projections of C-Port made available to Deutsche Bank and used in its analyses,
Deutsche Bank has assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
management of C-Port as to the matters covered thereby. In rendering its
opinion, Deutsche Bank expresses no view as to the reasonableness of such
forecasts and projections or the assumptions on which they are based. Deutsche
Bank's opinion is necessarily based upon economic, market and other conditions
as in effect on, and the information made available to it as of, the date
hereof.
For purposes of rendering its opinion, Deutsche Bank has assumed that, in
all respects material to its analysis, the representations and warranties of C-
Port, Merger Sub and Motorola contained in the Merger Agreement are true and
correct, C-Port, Merger Sub and Motorola will each perform all of the covenants
and agreements to be performed by it under the Merger Agreement and all
conditions to the obligations of each of C-Port, Merger Sub and Motorola to
consummate the Transaction will be satisfied without any waiver thereof.
Deutsche Bank has also assumed that all material governmental, regulatory or
other approvals and consents required in connection with the consummation of
the Transaction will be obtained and that in connection with obtaining any
necessary governmental, regulatory or other approvals and consents, or any
amendments, modifications or waivers to any agreements, instruments or orders
to which either C-Port or Motorola is a party or is subject or by which it is
bound, no limitations, restrictions or conditions will be imposed or
amendments, modifications or waivers made that would have a material adverse
effect on C-Port or Motorola or materially reduce the contemplated benefits of
the Transaction to C-Port. In addition, you have informed Deutsche Bank, and
accordingly for purposes of rendering its opinion Deutsche Bank has assumed,
that the Transaction will be tax-free to each of C-Port and Motorola and their
respective stockholders and that the Transaction will be accounted for as a
purchase.
This opinion is addressed to, and for the use and benefit of, the Board of
Directors of C-Port and is not a recommendation to the stockholders of C-Port
to approve the Transaction. This opinion is limited to the fairness, from a
financial point of view, to the shareholders of C-Port of the Exchange Ratio,
and Deutsche Bank expresses no opinion as to the merits of the underlying
decision by C-Port to engage in the Transaction.
Deutsche Bank will be paid a fee for its services as financial advisor to C-
Port in connection with the Transaction, a substantial portion of which is
contingent upon consummation of the Transaction. We are an affiliate of
Deutsche Bank AG (together with its affiliates, the "DB Group"). One or more
members of the DB Group have, from time to time, provided investment banking
and other financial services to Motorola, and to the respective affiliates and
shareholders of C-Port and Motorola, for which it has received compensation. In
the ordinary course of business, members of the DB Group may actively trade in
the securities and other instruments and obligations of Motorola for their own
accounts and for the accounts of their customers. Accordingly, the DB Group may
at any time hold a long or short position in such securities, instruments and
obligations.
Based upon and subject to the foregoing, it is Deutsche Bank's opinion as
investment bankers that the Exchange Ratio is fair, from a financial point of
view, to the shareholders of C-Port.
Very truly yours,
/s/ Deutsche Bank Securities Inc.
DEUTSCHE BANK SECURITIES INC.
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APPENDIX C
Voting Agreement
February 17, 2000
Motorola, Inc.
1303 Algonquin Road
Schaumburg, Illinois 61096
Attention:
Ladies and Gentlemen:
Each of the undersigned understands that Motorola, Inc. ("Parent"), CP
Acquisition Corp. ("Merger Sub") and C-Port Corporation (the "Company") are
entering into an Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"), providing for, among other things, a merger of Merger Sub
with and into the Company (the "Merger"), in which all of the outstanding
shares of common stock, par value $.001 per share, of the Company (the "Company
Common Stock") will be exchanged for shares of common stock, par value $3.00
per share, of Parent. Terms that are defined in the Merger Agreement but that
are not defined in this letter agreement will have the meaning ascribed to them
in the Merger Agreement.
Each of the undersigned is a Stockholder of the Company and is entering into
this letter agreement to induce you to enter into the Merger Agreement and to
consummate the transactions contemplated thereby.
Each of the undersigned confirms its agreement with you as follows:
1. The undersigned represents, warrants and agrees that Schedule I
annexed hereto sets forth (a) the number of shares of Company Common Stock (the
"Shares") of which the undersigned is the record or beneficial owner and (b)
the number of shares of Company Preferred Stock (set forth on Schedule I
according to the number of shares owned in each class of Company Preferred
Stock) and options and warrants (such Preferred Stock and options and warrants
being collectively referred to herein as the "Convertible Securities") which
are exercisable for the number of shares of Company Common Stock set forth
therein, of which the undersigned is the record or beneficial owner. The
undersigned represents, warrants and agrees that, as of the date hereof, the
undersigned owns such Shares and Convertible Securities, free and clear of all
liens, charges, encumbrances, voting agreements and commitments of every kind
except those contained in the restricted stock agreements with the Company.
2. The undersigned represents and warrants that the undersigned has all
necessary power and authority to enter into this letter agreement, and that
this agreement is the legal, valid and binding agreement of the undersigned,
and is enforceable against the undersigned in accordance with its terms.
3. Except, if necessary, for the filing of a Pre-merger Notification and
Report Form pursuant to HSR Act, (A) no filing with, and no permit,
authorization, consent or approval of, any-state or federal public body or
authority is necessary for the execution of this letter agreement by the
undersigned and the consummation by the undersigned of the transactions
contemplated hereby and by the Merger Agreement and (B) none of the execution
and delivery of this letter agreement and the Merger Agreement by the
undersigned, the consummation by the undersigned of the transactions
contemplated hereby or thereby or compliance by the undersigned with any of the
provisions hereof or thereof shall (i) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration of any obligation or to a loss of a material
benefit) under any of the terms, conditions or provisions of any Contract to
which the undersigned is a party or by which the undersigned may be bound, or
(ii) violate any Law, order, injunction, judgment, decree or award of any
court, Governmental Entity or arbitrator.
4. The undersigned agrees that it will not, and will not agree to,
contract to or sell or otherwise transfer or dispose of any of the Shares, or
any interest therein, or Convertible Securities, or any Shares obtained upon
the exercise of Convertible Securities, or any other securities convertible
into or exchangeable
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for Company Common Stock or any voting rights with respect thereto, other than
(i) pursuant to the Merger or (ii) with your prior written consent.
5. The undersigned agrees that all of the Shares (including any Shares
issued upon exercise of any Convertible Securities exercised prior to the
record date referred to below) and the shares of Company Preferred Stock that
are beneficially owned by the undersigned at the record date for any meeting of
Stockholders called to consider and vote to approve the Merger Agreement, the
Merger and other transactions contemplated by the Merger Agreement will be
voted by the undersigned in favor thereof and the undersigned shall refrain
from voting the Shares and the shares of Company Preferred Stock in favor of
any proposal involving the sale of substantially all of the assets or capital
stock, merger or business combination involving the Company and any other
person other than Parent.
6. The undersigned hereby grants to, and appoints, Parent, the Secretary
of Parent, any Assistant Secretary of Parent and the Chief Financial Officer of
Parent, in their respective capacities as officers of Parent, and any
individual who shall hereafter succeed to any such office of Parent, and any
other designee of Parent, each of them individually, the undersigned's
irrevocable proxy and attorney-in-fact (with full power of substitution) to
vote the undersigned's Shares and the shares of Company Preferred Stock, and to
sign the undersigned's name to any written consent of the holders of the Shares
and the shares of Company Preferred Stock with respect thereto, in order to
give effect to the covenants of the undersigned contained in this letter
agreement. The undersigned agrees that this proxy is irrevocable until this
letter agreement is terminated in accordance with paragraph 12 hereof and
coupled with an interest and will take such further action or execute such
other instruments as may be necessary to effectuate the intent of this proxy
and hereby revokes any proxy previously granted by the undersigned with respect
to the Shares and the shares of Company Preferred Stock.
7. The undersigned agrees to cooperate fully with you in connection with
the Merger Agreement and the transactions contemplated thereby. The undersigned
agrees that it will not initiate, solicit or facilitate any discussions,
inquiries or proposals with any third party that constitute or may reasonably
be expected to lead to an Acquisition Proposal or an Acquisition Agreement or
provide any third party with any information or assistance or negotiate with
respect to a possible Acquisition Proposal.
8. The undersigned will provide all information reasonably requested by
Parent for inclusion in any registration statement to be filed pursuant to the
Merger Agreement.
9. The undersigned hereby waives, to the full extent of the law, and
agrees not to assert any appraisal rights pursuant to Section 262 of the DGCL
or otherwise in connection with the Merger with respect to any and all shares
of Company Capital Stock held by the undersigned of record or beneficially
owned.
10. Each of the undersigned does hereby appoint Laurence G. Walker as
the representative of each of these and other Stockholders in accordance with
Article VIII of the Merger Agreement.
11. In the event any of the undersigned is a director of the Company,
notwithstanding anything to the contrary in this letter agreement, nothing in
this letter agreement is intended or shall be construed to require any of the
undersigned to take or in any way limit any action that any of the undersigned
may take to discharge his fiduciary duties as a director of the Company;
provided, however, that no such duty shall excuse the undersigned as a
Stockholder from its obligations as a Stockholder to vote the Shares, to the
extent that they may be so voted, or otherwise perform any obligation as herein
provided and to otherwise comply with the terms and conditions of this letter
agreement.
12. This letter agreement may be terminated at the option of any party
hereto at any time after the earliest of (a) termination of the Merger
Agreement in accordance with its terms, and (b) the day following the Effective
Time provided that any termination pursuant to this clause (b) shall not
terminate paragraph 8 hereof. Notwithstanding any other provision hereof, this
letter shall terminate automatically on the date of the termination of the
Merger Agreement.
13. This agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without reference to principles of
conflicts of law. This letter agreement may be executed in any
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number of counterparts and by the parties hereto on separate counterparts but
all such counterparts shall together constitute one and the same letter
agreement.
Please confirm that the foregoing correctly states the understanding between
us and you by signing and returning to us a counterpart hereof.
Very truly yours,
/s/ Laurence G. Walker
_____________________________________
Laurence G. Walker
/s/ Bruce Sachs
_____________________________________
Bruce Sachs
_____________________________________
David J. Husak
/s/ Thomas Brightman
_____________________________________
Thomas Brightman
/s/ Robi Soni
_____________________________________
Robi Soni
CHARLES RIVER PARTNERSHIP VIII, A
LIMITED PARTNERSHIP
/s/ Michael Zak
By: _________________________________
General Partner
CHARLES RIVER VIII-A LLC
/s/ Michael Zak
By: _________________________________
Manager
BESSEMER VENTURE INVESTORS IV LP
By: Deer IV & Co, LLC, General
Partner
/s/ Robert H. Buescher
By: _________________________________
Manager
BESSEMER VENTURE INVESTORS L.P.
By: Deer IV & Co, LLC, General
Partner
/s/ Robert H. Buescher
By: _________________________________
Manager
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<PAGE>
BVP IV SPECIAL SITUATIONS L.P.
By: Deer IV & Co, LLC, General
Partner
/s/ Robert H. Buescher
By: _________________________________
Manager
BESSEC VENTURES IV L.P.
By: Deer IV & Co, LLC, General
Partner
/s/ Robert H. Buescher
By: _________________________________
Manager
BENCHMARK CAPITAL PARTNERS II, L.P.
as nominee for:
Benchmark Capital Partners II, L.P.
Benchmark Founders Fund II, L.P.
Benchmark Founders Fund II-A, L.P.
Benchmark Members' Fund, L.P.
By: Benchmark Capital Management Co.
II,
LLC, General Partner
/s/ Andrew Rachleff
By: _________________________________
Managing Member
William Burgin
Brimstone Island Co. L.P.
Neill H. Brownstein
Hardymon Family Limited Partnership
Christopher Gabrieli
Gabrieli Family Foundation
David J. Cowan
Robert P. Goodman
Gerald N. Christopher
Ravi B. Mhatre
Gautam A. Prakash
Robi L. Soni
Joanne A. Strober
William R. Wasik
Craighall Corporation
Richard R. Davis
Conaly Partners
Lindsay 1994 Family Partnership,
L.P.
John G. MacDonald
Howard S. Markowitz
Edward Park
Robert J.S. Roriston
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Steven L. Williamson
Woods 1994 Family Partnership. L.P.
Lawrence W. Cheng
Andrew S. Fine
Travis M. Drouin
/s/ Robert. H. Buescher
By: _________________________________
Robert H. Buescher
Attorney-in-Fact for each of
the
above-named parties
/s/ Robert H. Buescher
_________________________________
Robert H. Buescher,
individually
Confirmed as of the date first above written:
MOTOROLA, INC.
/s/ Theodore W. Schaffner
By: ___________________________
Name:Theodore W. Schaffner
Title:Senior Vice President
C-PORT CORPORATION
/s/ Laurence G. Walker
By: ___________________________
Name:Laurence G. Walker
Title:President and Chief Executive Officer
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SCHEDULE I
<TABLE>
<CAPTION>
Number of Shares Including Options and
Warrants
---------------------------------------
Stockholder Common Series A Series B Series C
- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Walker, Laurence G..................... 1,128,000 38,667 17,965 9,157
Sachs, Bruce........................... 50,000 0 100,000 0
Brightman, Thomas...................... 700,000 58,666 27,257 9,157
Soni, Robi L........................... 22,166 15,392 22,459
Charles River VIII-A LLC............... 45,867 19,129 21,870
Charles River Partnership VIII, a
Limited Partnership................... 2,487,466 1,037,428 1,186,083
Burgin, William........................ 34,053 15,393 14,972
Brimstone Island Co., LP............... 34,053 15,392 14,972
Brownstein, Neil H..................... 22,267 10,000 5,000
Buescher, Robert H..................... 11,689 8,000 10,000
Hardymon, G. Felda..................... 55,533 30,785 18,315
Gabrieli, Christopher.................. 61,273 27,986 18,315
Gabrieli Family Foundation............. 6,833 2,799 3,663
Cowan, David J......................... 44,450 17,699 29,944
Mhatre, Ravi B......................... 5,554 2,655 1,832
Prakash, Gautam A...................... 7,771 15,392 7,326
Strober, Joanna A...................... 3,312 7,696 5,495
Wasik, William R....................... 560 443 257
Craighall Corporation.................. 2,333 4,000 1,000
Davis, Richard R....................... 17,500 11,000 6,000
Conaly Partners........................ 3,500 3,000 1,800
Lindsay 1994 Family Partnership, LP.... 11,666 5,000 5,197
MacDonald, John G...................... 4,433 3,000 1,500
Markowitz, Howard S.................... 2,216 885 200
Park, Edward........................... 2,216 2,200 1,000
Roriston, Robert J. S.................. 3,383 2,100 1,500
Williamson, Steven L................... 5,833 4,400 1,000
Christopher, Gerald N.................. 0 0 2,000
Goodman, Robert P...................... 0 0 22,459
Drouin, Travis M....................... 0 0 1,100
Woods 1994 Family Partnership, LP...... 25,666 13,628 12,088
BVP IV Special Situations LP........... 95,139 61,187 53,854
Bessemer Venture Investors LP.......... 222,667 136,322 0
Bessemer Venture Partners IV LP........ 748,059 456,019 470,812
Bessec Ventures IV, LP................. 748,059 456,019 470,812
Benchmark Capital Partners II, L.P..... 0 2,654,867 893,330
Cheng, Lawrence W...................... 0 3,500 1,250
Fine, Andrew........................... 0 4,424 1,832
--------- --------- --------- ---------
TOTAL.............................. 1,878,000 4,832,850 5,192,962 3,327,551
========= ========= ========= =========
</TABLE>
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APPENDIX D
Delaware General Corporation Law
Delaware Code Annotated
Title 8. Corporations
Chapter 1. General Corporation Law
Subchapter IX. Merger or Consolidation
Section 262. Appraisal rights
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to Section
228 of this title shall be entitled to an appraisal by the Court of Chancery of
the fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and
the words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions
thereof, solely of stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), Section 252, Section 254, Section 257, Section
258, Section 263 or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
Sections 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
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(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are
available pursuant to subsection (b) or (c) hereof that appraisal rights
are available for any or all of the shares of the constituent corporations,
and shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholder's shares shall deliver
to the corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such stockholder's shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of such stockholder's shares. A proxy or vote against
the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the effective date of such
merger or consolidation, the surviving or resulting corporation shall
notify each stockholder of each constituent corporation who has complied
with this subsection and has not voted in favor of or consented to the
merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to Section 228
or Section 253 of this title, each constituent corporation, either before
the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
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constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10
days after such stockholder's written request for such a statement is received
by the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or
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resulting corporation pursuant to subsection (f) of this section and who has
submitted such stockholder's certificates of stock to the Register in Chancery,
if such is required, may participate fully in all proceedings until it is
finally determined that such stockholder is not entitled to appraisal rights
under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the merger or consolidation
as provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the
Court of Chancery shall be dismissed as to any stockholder without the approval
of the Court, and such approval may be conditioned upon such terms as the Court
deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
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APPENDIX E
Form of Escrow Agreement
This Escrow Agreement is entered into as of [ ], 2000 (this
"Agreement") by and among Motorola, Inc., a Delaware corporation ("Parent"),
[Laurence G. Walker] (the "Stockholder Representative"), and Harris Trust and
Savings Bank (the "Escrow Agent").
WHEREAS, Parent, C-Port Corporation (the "Company") and a subsidiary of
Parent ("Merger Sub") have entered into an Agreement and Plan of Merger dated
as of February [ ], 2000 (the "Merger Agreement"), pursuant to which Merger
Sub will be merged (the "Merger") with and into the Company which, as the
surviving corporation (the "Surviving Corporation"), will become a wholly-owned
subsidiary of Parent (the defined terms used but not defined herein shall have
the meaning ascribed to such terms in the Merger Agreement);
WHEREAS, the Merger Agreement provides that an escrow fund (the "Escrow
Fund") will be established to secure certain indemnification and expense
obligations of the Stockholders to Parent;
WHEREAS, the Escrow Agent is willing to act in the capacity of Escrow Agent
hereunder subject to, and upon the terms and conditions of, this Agreement; and
WHEREAS, the parties hereto desire to establish the terms and conditions
pursuant to which the Escrow Fund will be established and maintained;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Consent of Company Stockholders; Designation of Escrow Agent. The
Stockholders have by virtue of their approval of the Merger Agreement
consented to: (a) the establishment of the escrow to secure the
Stockholders' indemnification obligations under Article VIII of the Merger
Agreement in the manner set forth herein, (b) the appointment of the
Stockholder Representative as their representative for purposes of this
Agreement and as attorney-in-fact and agent for and on behalf of each
Stockholder, and the taking by the Stockholder Representative of any and
all actions and the making of any decisions required or permitted to be
taken or made by them under this Agreement and (c) all of the other terms,
conditions and limitations contained in the Merger Agreement and in this
Agreement. Parent and the Stockholder Representative, on behalf of the
Stockholders, hereby mutually designate and appoint Harris Trust and
Savings Bank to serve as Escrow Agent for the purposes set forth herein.
The Escrow Agent hereby accepts such appointment and agrees to act in
furtherance of the terms and conditions herein.
2. Escrow and Indemnification.
(a) Escrow of Shares. As of the Effective Time, Parent shall deposit
with the Escrow Agent a certificate for [ ] Escrow Shares issued
in the name of the Escrow Agent or its nominee. Parent may from time to
time deposit with the Escrow Agent additional shares of Parent Common
Stock pursuant to the terms of the Merger Agreement. The Escrow Shares
shall be held as a trust fund and shall not be subject to any lien,
attachment, trustee process or any other judicial process of any
creditor of any party hereto. The Escrow Agent agrees to hold the
Escrow Shares in the Escrow Fund, subject to the terms and conditions
of this Agreement.
(b) Indemnification. The Stockholders have agreed in Article VIII of
the Merger Agreement to indemnify and hold harmless Parent to the
extent set forth therein. The Escrow Shares shall secure such indemnity
and payment obligations of the Stockholders, subject to the
limitations, and in the manner provided, in the Merger Agreement and
this Agreement. It is further acknowledged and agreed that the Escrow
Fund established hereunder to secure the indemnity and payment
obligations of the Stockholders under Article VIII of the Merger
Agreement shall be Parent's sole and exclusive remedy in satisfaction
of such indemnity and payment obligations.
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(c) Dividends, Etc. Any cash dividends or property or any securities
distributed in respect of or in exchange for any of the Escrow Shares,
whether by way of stock dividends, stock splits or otherwise
(collectively, the "Dividends"), shall be delivered to or issued in the
name of the Escrow Agent or its nominee, and the Escrow Agent shall
hold the Dividends in the Escrow Fund. Such securities shall be
considered Escrow Shares for purposes hereof and such cash or other
property shall be considered part of the Escrow Fund.
(d) Voting of Shares. The Stockholder Representative shall have the
right, in its sole discretion, on behalf of the Stockholders, to direct
the Escrow Agent in writing as to the exercise of any voting rights
pertaining to the Escrow Shares, and the Escrow Agent shall comply with
any such written instructions. In the absence of such instructions, the
Escrow Agent shall not vote any of the Escrow Shares. The Stockholder
Representative shall have no obligation to solicit consents or proxies
from the Stockholders for purposes of any such vote.
(e) Transferability. The respective interests of the Stockholders in
the Escrow Shares and the Dividends shall not be assignable or
transferable, other than by operation of law. Notice of any such
assignment or transfer by operation of law shall be given to the Escrow
Agent and Parent, and no such assignment or transfer shall be valid
until such notice is given.
3. Distribution of Escrow Shares.
(a) The Escrow Agent shall distribute the Escrow Shares and the
Dividends only in accordance with (i) a written instrument delivered to
the Escrow Agent that is executed by both Parent and the Stockholder
Representative and that instructs the Escrow Agent as to the
distribution of some or all of the Escrow Shares and the Dividends,
(ii) an order of a court of competent jurisdiction, a copy of which is
delivered to the Escrow Agent by either Parent or the Stockholder
Representative, that instructs the Escrow Agent as to the distribution
of some or all of the Escrow Shares and the Dividends, (iii) the
provisions of Section 3(b) hereof, or (iv) the provisions of Section
3(c) hereof.
(b) Within five Business Days after the first anniversary hereof
(the "Termination Date"), the Escrow Agent shall distribute to the
Stockholders all of the Escrow Shares and the Dividends from the Escrow
Fund, registered, in the case of the Escrow Shares, in the name of the
Stockholders. Notwithstanding the foregoing, if Parent has previously
delivered to the Escrow Agent a copy of a Claim Notice and the Escrow
Agent has not received written notice of the resolution of the claim
covered thereby, the Escrow Agent shall retain in escrow after the
Termination Date such number of Escrow Shares and the Dividends as have
a Value (as defined in Section 4 below) equal to 125% of the Claimed
Amount covered by such Claim Notice. Any Escrow Shares so retained in
escrow shall be distributed only in accordance with the terms of
clauses (i) or (ii) of Section 3(a) hereof.
(c) (i) If at any time Parent determines the existence of a cause of
action with respect to matters set forth in Section 8.3 of the Merger
Agreement, Parent shall notify the Stockholder Representative and the
Escrow Agent by delivery to the Stockholder Representative and the
Escrow Agent of the Claim Notice.
(ii) The determination of Parent as set forth in the Claim Notice
shall be deemed final and binding upon the Stockholder
Representative and the Escrow Agent, and the Escrow Agent shall
deliver the number of Escrow Shares and the Dividends specified in
the Claim Notice pursuant to the instructions set forth in the Claim
Notice on the twentieth (20th) Business Day after its receipt of the
Claim Notice unless within fifteen (15) Business Days after delivery
of the Claim Notice to the Escrow Agent a written notice ("Notice of
Objection") is given by the Stockholder Representative to Parent and
the Escrow Agent of the Stockholder Representative's objection to
the Claim Notice setting forth the basis of its objection to the
Claim Notice.
(iii) If the Notice of Objection is given as provided above, the
Escrow Agent shall keep the number of Escrow Shares and the
Dividends indicated in the Claim Notice until the Escrow Agent
receives written joint instructions from the Stockholder
Representative and Parent as Stockholder Representative and Parent
shall promptly consult with each other with respect to their
disagreement for purposes of prompt and amicable resolution of the
dispute.
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(iv) If the Stockholder Representative and Parent are able to
resolve the dispute, Parent and the Stockholder Representative shall
promptly provide the Escrow Agent with joint written instructions
executed by the Stockholder Representative and Parent with respect
to the distribution of the Escrow Shares and the Dividends subject
to the dispute. If the instructions are not precise, the Escrow
Agent, in its sole and absolute discretion, shall (i) request
additional instructions and (ii) keep the Escrow Shares and the
Dividends until receipt of such additional instructions.
(v) If the Stockholder Representative and Parent are unable to
reach agreement within the thirty (30) days after the Notice of
Objection has been given to Parent and the Escrow Agent, the dispute
shall be referred for resolution to a court of competent
jurisdiction, whose decision shall be final, binding and non-
appealable. Once such decision is rendered, the Stockholder
Representative and Parent shall deliver to the Escrow Agent joint
written instructions executed by the Stockholder Representative and
Parent pursuant to the terms of the decision. Upon receipt of such
instructions, the Escrow Agent shall promptly release the Escrow
Shares and the Dividends subject to the dispute pursuant to such
instructions.
(d) Any distribution of all or a portion of the Escrow Shares and
the Dividends to the Stockholders shall be made by delivery of (i)
stock certificates issued in the name of the Stockholders covering such
percentage of the Escrow Shares, including for purposes hereof the
Dividends in the form of shares of Parent Common Stock, being
distributed as is calculated in accordance with the percentages set
forth opposite such holders' respective names on Attachment A attached
hereto and (ii) cash and other property, if any; provided, however,
that such Attachment A shall be appropriately revised by Parent in the
event Parent deposits additional Escrow Shares and the Dividends with
the Escrow Agent following the date of this Agreement. With respect to
the Escrow Shares, distributions to the Stockholders shall be made by
mailing stock certificates to such holders at their respective
addresses shown on Attachment A (or such other address as may be
provided in writing to the Escrow Agent by the Stockholder
Representative). No fractional Escrow Shares shall be distributed to
Stockholders pursuant to this Agreement. Instead, the number of shares
that each Stockholder shall receive shall be rounded up or down to the
nearest whole number (provided that the Stockholder Representative
shall have the authority to effect such rounding in such a manner that
the total number of whole Escrow Shares to be distributed equals the
number of Escrow Shares then held in the Escrow Account).
4. Valuation of Escrow Shares. For purposes of this Agreement, the
"Value" per share shall be the average of the last reported sale price per
share of the common stock of Parent Common Stock on the NYSE over the five
consecutive trading days ending on the last Business Day immediately
preceding the date of the distribution of the Escrow Shares by the Escrow
Agent.
5. Fees and Expenses of Escrow Agent. Parent shall pay all of the fees
and expenses of the Escrow Agent for the services to be rendered by the
Escrow Agent hereunder.
6. Limitation of Escrow Agent's Liability.
(a) The Escrow Agent shall incur no liability with respect to any
action taken or suffered by it in reliance upon any notice, direction,
instruction, consent, statement or other documents believed by it to be
genuine and duly authorized, nor for other action or inaction except
its own willful misconduct or gross negligence. The Escrow Agent shall
not be responsible for the validity or sufficiency of this Agreement.
In all questions arising under the Escrow Agreement, the Escrow Agent
may rely on the advice of counsel, and the Escrow Agent shall not be
liable to anyone for anything done, omitted or suffered in good faith
by the Escrow Agent based on such advice. The Escrow Agent shall not be
required to take any action hereunder involving any expense unless the
payment of such expense is made or provided for in a manner reasonably
satisfactory to it. In no event shall the Escrow Agent be liable for
indirect, punitive, special or consequential damages.
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(b) Parent and the Stockholders hereby, jointly and severally, agree
to indemnify the Escrow Agent for, and hold it harmless against, any
loss, liability or expense incurred without gross negligence or willful
misconduct on the part of Escrow Agent, arising out of or in connection
with its carrying out of its duties hereunder. Parent, on the one hand,
and the Stockholders, on the other hand, shall each be liable for one-
half of such amounts.
7. Liability and Authority of Stockholder Representative; Successors and
Assignees.
(a) The Stockholder Representative shall incur no liability to the
Stockholders with respect to any action taken or suffered by them in
reliance upon any note, direction, instruction, consent, statement or
other documents believed by them to be genuinely and duly authorized,
nor for other action or inaction except their own willful misconduct or
gross negligence. The Stockholder Representative may, in all questions
arising under the Escrow Agreement, rely on the advice of counsel and
the Stockholder Representative shall not be liable to the Stockholders
of anything done, omitted or suffered in good faith by the Stockholder
Representative based on such advice.
(b) In the event of the death or disability (for more than 15
Business Days) of the Stockholder Representative, his resignation as
the Stockholder Representative or otherwise, a successor Stockholder
Representative shall be elected by a majority vote or written consent
of the Stockholders upon not less than ten Business Days prior written
notice to Parent, with each such Stockholder (or his, her or its
successors or assigns) to be given a vote equal to the number of votes
represented by the shares of stock of the Company held by such
Stockholder immediately prior to the Effective Time; provided, however,
that the then President of the Company shall act as the Stockholder
Representative pending the appointment of a successor Stockholder
Representative. Each successor Stockholder Representative shall have
all of the power, authority, rights and privileges conferred by this
Agreement upon the original Stockholder Representative, and the term
"Stockholder Representative" as used herein shall be deemed to include
successor Stockholder Representative.
(c) The Stockholder Representative, acting jointly but not singly,
shall have full power and authority to represent the Stockholders, and
their successors, with respect to all matters arising under this
Agreement and all actions taken by any Stockholder Representative
hereunder shall be binding upon the Stockholders, and their successors,
as if expressly confirmed and ratified in writing by each of them.
Without limiting the generality of the foregoing, the Stockholder
Representative, acting by a majority thereof, shall have full power and
authority to interpret all of the terms and provisions of this
Agreement, to compromise any claims asserted hereunder and to authorize
any release of the Escrow Shares and the Dividends to be made with
respect thereto, on behalf of the Stockholders and their successors.
All actions to be taken by the Stockholder Representative hereunder
shall be evidenced by, and taken upon, the written direction of a
majority thereof.
(d) The Escrow Agent may rely on the Stockholder Representative as
the exclusive agent of the Stockholders under this Agreement and shall
incur no liability to any party with respect to any action taken or
suffered by it in reliance thereon.
8. Termination. This Agreement shall terminate upon the distribution by
the Escrow Agent of all of the Escrow Shares and the Dividends in
accordance with this Agreement; provided that the provisions of Sections 6
and 7 shall survive such termination.
9. Notices. All notices, instructions and other communications given
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or
certified mail, return receipt requested, postage prepaid, or (ii) via a
reputable nationwide overnight courier service, in each case to the address
set forth below. Any such notice, instruction or communication shall be
deemed to have been delivered two business days after it is sent by
registered or certified mail, return receipt requested, postage prepaid, or
one business day after it is sent via a reputable nationwide overnight
courier service.
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If to Parent:
Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
Telecopier No.: (847) 576-3628
Attention: General Counsel
With a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Telecopier No. (312) 558-5600
Attention: Oscar A. David, Esq.
If to the Stockholder
Representative:
Laurence G. Walker
c/o C-Port Corporation
One High Street
North Andover, Massachusetts 01845
Telecopier No. (978) 773-2301
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Telecopier No. (617) 526-5000
Attention: Peter B. Tarr, Esq.
Telecopier No. (617) 526-6000
If to the Escrow Agent:
[ ]
[ ]
[ ]
With a copy to:
Any party may give any notice, instruction or communication in connection
with this Agreement using any other means (including personal delivery,
telecopy or ordinary mail), but no such notice, instruction or
communication shall be deemed to have been delivered unless and until it is
actually received by the party to whom it was sent. Any party may change
the address to which notices, instructions or communications are to be
delivered by giving the other parties to this Agreement notice thereof in
the manner set forth in this Section 9.
10. Successor Escrow Agent. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow
Agent may resign and be discharged from its duties or obligations hereunder
by delivering a resignation to the parties to this Escrow Agreement, not
less than 60 days prior to the date when such resignation shall take
effect. Parent may appoint a successor Escrow Agent without the consent of
the Stockholder Representative so long as such successor is a bank with
assets of at least $500 million, and may appoint any other successor Escrow
Agent with the consent of the Stockholder Representative, which shall not
be unreasonably withheld. If, within such notice period,
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Parent provides to the Escrow Agent written instructions with respect to
the appointment of a successor Escrow Agent and directions for the transfer
of any Escrow Shares then held by the Escrow Agent to such successor, the
Escrow Agent shall act in accordance with such instructions and promptly
transfer such
Escrow Shares to such designated successor. If no successor Escrow Agent is
named as provided in this Section 10 prior to the date on which the
resignation of the Escrow Agent is to properly take effect, the Escrow
Agent may apply to a court of competent jurisdiction for appointment of a
successor Escrow Agent.
11. General.
(a) Governing Law; Assigns. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware
without regard to conflict-of-law principles and shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors
and assigns.
(b) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(c) Entire Agreement. Except for those provisions of the Merger
Agreement referenced herein, this Agreement constitutes the entire
understanding and agreement of the parties with respect to the subject
matter of this Agreement and supersedes all prior agreements or
understandings, written or oral, between the parties with respect to the
subject matter hereof.
(d) Waivers. No waiver by any party hereto of any condition or of any
breach of any provision of this Escrow Agreement shall be effective unless
in writing. No waiver by any party of any such condition or breach, in any
one instance, shall be deemed to be a further or continuing waiver of any
such condition or breach or a waiver of any other condition or breach of
any other provision contained herein.
(e) Amendment. This Agreement may be amended only with the written
consent of Parent, the Escrow Agent and the Stockholder Representative.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
MOTOROLA, INC.
By: _________________________________
Name:
Title:
-------------------------------------
Laurence G. Walker, not in his
individual capacity but solely as
the Stockholder Representative
hereunder
HARRIS TRUST AND SAVINGS BANK
By: _________________________________
Name:
Title:
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ATTACHMENT A
<TABLE>
<CAPTION>
Stockholder Percentage
----------- ----------
<S> <C>
</TABLE>
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law ("DGCL") provides that a
corporation has the power to indemnify its officers, directors, employees and
agents (or persons serving in such positions in another entity at the request
of the corporation) against the expenses, including attorneys' fees, judgments,
fines or settlement amounts actually and reasonably incurred by them in
connection with the defense of any action by reason of being or having been
directors or officers, if such person shall have acted in good faith and in a
manner reasonably believed to be in or not opposed to the best interests of the
corporation (and, with respect to any criminal action, had no reasonable cause
to believe the person's conduct was unlawful), except that, if such action
shall be by or in the right of the corporation, no such indemnification shall
be provided as to any claim, issue or matter as to which such person shall have
been judged to have been liable to the corporation unless and to the extent
that the Court of Chancery of the State of Delaware, or another court in which
the suit was brought, shall determine upon application that, in view of all of
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity.
As permitted by Section 102 of the DGCL, the registrant's Restated
Certificate of Incorporation provides that no director shall be personally
liable to the registrant or its stockholders for monetary damages for any
breach of fiduciary duty as a director, except for liability (i) for breaches
of the director's duty of loyalty to the registrant or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) for the unlawful payment of dividends or
unlawful stock purchases or redemptions under Section 174 of the DGCL, or (iv)
for any transaction from which the director derived an improper personal
benefit.
The registrant's Restated Certificate of Incorporation further provides that
the registrant must indemnify and hold harmless, to the fullest extent
authorized by the DGCL, as the same exists or may be hereafter amended (but, in
the case of any such amendment, only to the extent that the amendment permits
the registrant to provide broader indemnification rights than the DGCL
permitted the registrant to provide prior to such amendment), each person who
was or is made a party or is threatened to be made a party to or is involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director or officer of the
registrant or is or was serving (at such time as such person is or was a
director or officer of the registrant) at the request of the registrant as a
director, officer, employee or agent of another entity, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director, officer, employee
or agent, against all expense, liability and loss reasonably incurred or
suffered by such indemnitee in connection therewith. This right to
indemnification will continue as to an indemnitee who has ceased to be a
director, officer, employee or agent and will inure to the benefit of the
indemnitee's heirs, executors and administrators. However, except as provided
below with respect to proceedings to enforce rights to indemnification, the
registrant will indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by that indemnitee only if the proceeding was
authorized by the registrant's Board of Directors.
The Restated Certificate of Incorporation provides that the right to
indemnification is a contract right and includes the right to be paid by the
registrant the expenses incurred in defending any such proceeding in advance of
its final disposition. However, if and to the extent that the DGCL requires, an
advancement of expenses incurred by an indemnitee in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to an
employee benefit plan) will be made only upon delivery to the registrant of an
undertaking, by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision that
such indemnitee is not entitled to be indemnified for such expenses. The
registrant's Restated Certificate of
II-1
<PAGE>
Incorporation also provides that the registrant may, by action of the
registrant's Board of Directors or by action of any person to whom the
registrant's Board of Directors has delegated such authority, provide
indemnification to employees and agents of the registrant with the same scope
and effect as the indemnification of the registrant's officers and directors.
The rights to indemnification and to the advancement of expenses conferred in
the Restated Certificate of Incorporation will not be exclusive of any other
right which any person may have or hereafter acquire under the Restated
Certificate of Incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 145 of the DGCL also provides that a corporation has the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation (or who was serving at
the request of the corporation in such position at another entity) against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
corporation would have the power to indemnify such person against such
liability under the DGCL. The Restated Certificate of Incorporation provides
that the registrant may maintain insurance, at its own expense, to protect
itself and any director, officer, employee or agent of the registrant or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the registrant would
have the power to indemnify such person against such expense, liability or loss
under the DGCL. All of the directors and officers of the registrant are covered
by insurance policies maintained and held in effect by the registrant against
liabilities for actions taken in such capacities, including liabilities under
the Securities Act of 1933, as amended, subject to certain exclusions.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of February 17, 2000, by and
among the registrant, CP Acquisition Corp. and C-Port Corporation
(included as Appendix A to the prospectus incorporated as part of
this registration statement).
4.1 Restated Certificate of Incorporation, as amended (incorporated by
reference to Exhibit 3(i)(b) to the registrant's Quarterly Report on
Form 10-Q for the quarter ended April 2, 1994 (File No. 1-07221)).
4.2 Certificate of Designations, Preferences and Rights of Junior
Participating Preferred Stock, Series B (incorporated by reference
to Exhibit 3.3 to the registrant's Registration Statement on Form S-
3 dated January 20, 1999 (Registration No. 333-70827)).
4.3 By-laws, as amended through February 17, 1999 (incorporated by
reference to Exhibit 3.3 to the registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1999 (File No. 1-
07221)).
4.4 Rights Agreement, dated as of November 5, 1998 between the
registrant and Harris Trust and Savings Bank, as Rights Agent
(incorporated by reference to Exhibit 1.1 to the registrant's
Amendment No. 1 to Registration Statement on Form 8-A/A dated March
16, 1999 (File No. 1-07221)).
5.1 Opinion of Donald F. McLellan, Esq., Vice President, Transactions,
Motorola Corporate Law Department, as to the legality of the shares
being issued.
8.1 Form of Opinion of Hale and Dorr LLP regarding the federal income
tax consequences of the Merger.
8.2 Form of Opinion of Winston & Strawn regarding the federal income tax
consequences of the Merger.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
21.1 Subsidiaries of registrant (incorporated by reference to Exhibit 21
to the registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999 (File No. 1-07221)).
23.1 Consent of KPMG LLP (Registrant).
23.2 Consent of Donald F. McLellan, Esq., Vice President, Transactions,
Motorola Corporate Law Department (included in Exhibit No. 5.1).
23.3 Consent of Hale and Dorr LLP (included in Exhibit No. 8.1).
23.4 Consent of Winston & Strawn (included in Exhibit No. 8.2).
23.5 Consent of Deutsche Bank Securities Inc.
24.1 Power of Attorney (included on page II-5 of this registration
statement).
99.1 Form of Proxy Card of C-Port.
99.2 Voting Agreement, dated as of February 17, 2000, from Laurence G.
Walker; Bruce Sachs; Thomas Brightman; Robi Soni (directors and
officers of C-Port); Charles River Partnership VII; Charles River
VIII-A LLC; Bessemer Venture Investors IV LP; Bessemer Venture
Investors L.P.; BVP IV Special Situations L.P.; Bessec Ventures IV
L.P.; Benchmark Capital Partners II, L.P.; and certain other
stockholders of C-Port (included as Appendix C to the prospectus
incorporated as part of this registration statement).
99.3 Form of Escrow Agreement by and among Motorola, Inc., Laurence G.
Walker, as Stockholder Representative, and Harris Trust and Savings
Bank (included as Appendix E to the prospectus incorporated as part
of this registration statement).
</TABLE>
Item 22. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
(c) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(d) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (c) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that, in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this registration statement through
the date of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, duly authorized, in Schaumburg, Illinois, on March
24, 2000.
Motorola, Inc.
/s/ Christopher B. Galvin
By: _________________________________
Christopher B. Galvin
Chairman of the Board and Chief
Executive Officer
Each of the undersigned hereby constitutes and appoints Christopher B.
Galvin, Robert L. Growney, Carl F. Koenemann and Anthony M. Knapp, and each of
them, as attorneys for him or her and in his or her name, place and stead, and
in any and all capacities, to execute and file any amendments, supplements or
statements with respect thereto, hereby giving and granting to said attorneys,
and each of them, full power and authority to do and perform each and every act
and thing whatsoever requisite and necessary to be done in and about the
premises, as fully, to all intents and purposes, as he or she might or could do
if personally present at the doing thereof, hereby ratifying and confirming all
that said attorneys, or any of them, or their or his or her substitute or
substitutes, may or shall lawfully do, or cause to be done, by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Christopher B. Galvin Chairman of the Board and March 24, 2000
____________________________________ Chief Executive Officer
Christopher B. Galvin (Principal Executive
Officer)
/s/ Carl F. Koenemann Executive Vice President and March 24, 2000
____________________________________ Chief Financial Officer
Carl F. Koenemann (Principal Financial
Officer)
/s/ Anthony M. Knapp Senior Vice President and March 24, 2000
____________________________________ Controller
Anthony M. Knapp (Principal Accounting
Officer)
/s/ Ronnie C. Chan Director March 24, 2000
____________________________________
Ronnie C. Chan
/s/ H. Laurance Fuller Director March 24, 2000
____________________________________
H. Laurance Fuller
/s/ Robert W. Galvin Director March 14, 2000
____________________________________
Robert W. Galvin
/s/ Robert L. Growney Director March 17, 2000
____________________________________
Robert L. Growney
/s/ Anne P. Jones Director March 24, 2000
____________________________________
Anne P. Jones
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Donald R. Jones Director March 24, 2000
____________________________________
Donald R. Jones
/s/ Judy C. Lewent Director March 24, 2000
____________________________________
Judy C. Lewent
/s/ Dr. Walter E. Massey Director March 24, 2000
____________________________________
Dr. Walter E. Massey
/s/ Nicholas Negroponte Director March 24, 2000
____________________________________
Nicholas Negroponte
/s/ John E. Pepper, Jr. Director March 24, 2000
____________________________________
John E. Pepper, Jr.
/s/ Samuel C. Scott III Director March 24, 2000
____________________________________
Samuel C. Scott III
/s/ Gary L. Tooker Director March 24, 2000
____________________________________
Gary L. Tooker
/s/ B. Kenneth West Director March 24, 2000
____________________________________
B. Kenneth West
/s/ Dr. John A. White Director March 24, 2000
____________________________________
Dr. John A. White
</TABLE>
II-6
<PAGE>
Exhibit 5.1
[Letterhead of Donald F. McLellan, Esq.]
March 24, 2000
Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
Ladies and Gentlemen:
I refer to the Registration Statement on Form S-4 (the "Registration
Statement") of Motorola, Inc., a Delaware corporation (the "Company"), filed on
March 24, 2000 with the Securities and Exchange Commission under the Securities
Act of 1993, as amended (the "Securities Act"). The Registration Statement
relates to up to 2,907,862 shares of the Company's Common Stock, $3 par value
per share (including the associated preferred stock purchase rights, the
"Shares"), which are to be issued in connection with the merger (the "Merger")
of CP Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
the Company ("Merger Sub"), with and into C-Port Corporation, a Delaware
corporation ("C-Port"), pursuant to the Agreement and Plan of Merger dated as of
February 17, 2000 by and among C-Port, the Company and Merger Sub (the "Merger
Agreement").
On February 29, 2000, the Company declared, subject to approval by its
stockholders, a 3-for-1 stock split in the form of a stock dividend payable on
June 1, 2000 to holders of the Company's Common Stock of record on May 15, 2000.
To the extent that the Merger is completed after May 15, 2000, the Registration
Statement will be deemed to cover, pursuant to Rule 416 under the Securities
Act, 8,723,586 shares of the Company's Common Stock (including the associated
stock purchase rights) to give effect to the stock split, and for purposes of
this opinion letter the term "Shares" shall refer to such higher number covered
by the Registration Statement.
I have examined and am familiar with (i) the Company's Restated Certificate
of Incorporation, as amended, (ii) the Company's By-Laws, as amended, and (iii)
the corporate proceedings relating to the Registration Statement. Upon the
basis of the foregoing, and having satisfied myself as to such other matters of
law and fact as I consider relevant for the purposes of this opinion, I advise
you that, in my opinion, upon issuance and delivery of the Shares in accordance
with the Merger Agreement, the Shares will have been validly issued, fully paid
and non-assessable.
The foregoing opinion is limited to the General Corporation Law of the
State of Delaware. I express no opinion herein as to any other laws, statutes,
regulations or ordinances.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of my name in the Registration Statement
under the caption "Legal and Tax Matters." In giving this consent, I do not
admit that I am within the category of persons whose consent is required by
Section 7 of the Securities Act.
Very truly yours,
/s/ Donald F. McLellan
Donald F. McLellan, Esq.
Vice President, Transactions
Motorola, Inc.
<PAGE>
Exhibit 8.1
Hale and Dorr LLP
Counsellors at Law
www.haledorr.com
60 State Street . Boston, MA 02109
617-526-6000 . fax 617-526-5000
DRAFT
-----
____________, 2000
C-Port Corporation
One High Street
North Andover, MA 01845
Re: Agreement and Plan of Merger among Motorola, Inc.,
CP Acquisition Corp., and C-Port Corporation
--------------------------------------------
Ladies and Gentlemen:
This opinion is being delivered to you in connection with the filing of a
registration statement (the "Registration Statement") on Form S-4, which
includes the Proxy Statement and Prospectus relating to the Agreement and Plan
of Merger dated as of February 17, 2000 (the "Merger Agreement"), by and among
Motorola, Inc., a Delaware corporation ("Parent"), CP Acquisition Corp., a
Delaware corporation and wholly owned subsidiary of Parent ("Sub"), and C-Port
Corporation, a Delaware corporation ("Target"). Pursuant to the Merger
Agreement, Sub will merge with and into Target (the "Merger"). Except as
otherwise provided, capitalized terms not defined herein have the meanings set
forth in the Merger Agreement and the exhibits thereto or in the letters
delivered to Hale and Dorr LLP by Parent and Target containing certain
representations of Parent and Target relevant to this opinion (the
"Representation Letters"). All section references, unless otherwise indicated,
are to the United States Internal Revenue Code of 1986, as amended (the "Code").
In our capacity as counsel to Target in the Merger, and for purposes of
rendering this opinion, we have examined and relied upon the Registration
Statement, the Merger Agreement and the exhibits thereto, including the Escrow
Agreement, the Representation Letters, and such other documents as we considered
relevant to our analysis. In our examination of documents, we have assumed the
authenticity of original documents, the accuracy of copies, the genuineness of
signatures, and the legal capacity of signatories.
We have assumed that all parties to the Merger Agreement and to any other
documents examined by us have acted, and will act, in accordance with the terms
of such Merger Agreement and documents and that the Merger will be consummated
at the Effective Time pursuant to the terms and conditions set forth in the
Merger Agreement without the waiver or modification of any such terms and
conditions. Furthermore, we have assumed that all representations contained in
the Merger Agreement, as well as those representations contained in the
Representation Letters, are, and at the Effective
Boston Washington, DC New York Boston London*
- --------------------------------------------------------------------------------
Hale and Dorr LLP Includes Professional Corporations
* an indepedent joint venture law firm
<PAGE>
C-Port Corporation
________, 2000
Page 2
Time will be, true and complete in all material respects, and that any
representation made in any of the documents referred to herein "to the best of
the knowledge and belief" (or similar qualification) of any person or party is,
and at the Effective Time will be, correct without such qualification. We have
also assumed that as to all matters for which a person or entity has represented
that such person or entity is not a party to, does not have, or is not aware of,
any plan, intention, understanding, or agreement, there is no such plan,
intention, understanding, or agreement. We have not attempted to verify
independently such representations, but in the course of our representation,
nothing has come to our attention that would cause us to question the accuracy
thereof.
The conclusions expressed herein represent our judgment as to the proper
treatment of certain aspects of the Merger under the income tax laws of the
United States based upon the Code, Treasury Regulations, case law, and rulings
and other pronouncemens of the Internal Revenue Service (the "IRS") as in effect
on the date of this opinion. No assurances can be given that such laws will not
be amended or otherwise changed prior to the Effective Time, or at any other
time, or that such changes will not affect the conclusions expressed herein.
Nevertheless, we undertake no responsibility to advise you of any developments
after the Effective Time in the application or interpretation of the income tax
laws of the United States.
Our opinion represents our best judgment of how a court would decide if
presented with the issues addressed herein and is not binding upon either the
IRS or any court. Thus, no assurances can be given that a position taken in
reliance on our opinion will not be challenged by the IRS or rejected by a
court.
This opinion addresses only the specific United States federal income tax
consequences of the Merger set forth below, and does not address any other
federal, state, local, or foreign income, estate, gift, transfer, sales, use, or
other tax consequences that may result from the Merger or any other transaction
(including any transaction undertaken in connection with the Merger). We
express no opinion regarding the tax consequences of the Merger to stockholders
of Target that are subject to special tax rules, and we express no opinion
regarding the tax consequences of the Merger arising in connection with the
ownership of options or warrants for Target stock.
On the basis of, and subject to, the foregoing, and in reliance upon the
representations and assumptions described above, we are of the opinion that the
discussion under the section "Material Federal Income Tax Consequences of the C-
Port Merger" in the Registration Statement, subject to the limitations and
qualifications described therein, accurately describes the material federal
income tax considerations relevant to Target stockholders receiving Parent
Common Stock in the Merger.
In rendering this opinion, we have assumed that Winston & Strawn has
delivered, and has not withdrawn, an opinion that is substantially similar to
this one. No opinion is expressed as to any federal income tax consequence of
the Merger except as specifically set forth herein, and this opinion may not be
relied upon except with respect to the consequences specifically discussed
herein.
<PAGE>
C-Port Corporation
________, 2000
Page 3
This opinion is intended solely for the purpose of inclusion as an exhibit
to the Registration Statement. It may not be relied upon for any other purpose
or by any other person or entity, and may not be made available to any other
person or entity without our prior written consent. We hereby consent to the
filing of this opinion as an exhibit to the Registration Statement and further
consent to the use of our name in the Registration Statement in connection with
references to this opinion and the tax consequences of the Merger. In giving
this consent, however, we do not hereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Very truly yours,
HALE AND DORR LLP
<PAGE>
Exhibit 8.2
Form of Legal Opinion of Winston & Strawn
DRAFT
[Winston & Strawn Letterhead]
___________, 2000
Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
CP Acquisition Corp.
1303 East Algonquin Road
Schaumburg, Illinois 60196
Ladies and Gentlemen:
We have acted as special counsel to Motorola, Inc., a Delaware
corporation ("Parent"), and CP Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), in connection with (i) the
Merger (as defined and described in the Agreement and Plan of Merger, dated as
of February 17, 2000 (the "Merger Agreement"), by and among Parent, Merger Sub,
and C-Port Corporation, a Delaware corporation ("Company")), and (ii) the
preparation and filing of the Registration Statement with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), on _______ , which includes the Proxy Statement
of Company and the Prospectus of Parent (the "Proxy Statement/Prospectus").
Unless otherwise indicated, each capitalized term used herein has the meaning
ascribed to it in the Merger Agreement.
In connection with this opinion letter, we have examined the Merger
Agreement, the Proxy Statement/Prospectus, and such other documents and
corporate records as we have deemed necessary or appropriate in order to enable
us to render the opinion set forth below. For purposes of this opinion letter,
we have assumed (i) the validity and accuracy of the documents and corporate
records that we have examined and the facts and representations concerning the
Merger that have come to our attention during our engagement and (ii) that the
Merger has been or will be consummated in the manner described in the Merger
Agreement and the Proxy Statement/Prospectus.
Subject to the foregoing and the fact that the discussion in the Proxy
Statement/Prospectus under the heading "MERGER - Material Federal Income Tax
Consequences of the C-Port Merger" (the "Discussion") is a summary and does
not purport to discuss all possible United States federal income tax
consequences of the Merger, we are of the opinion that the Discussion states the
material United States federal income tax consequences of the Merger to holders
of Company Capital Stock who surrender such stock in exchange for Parent Common
Stock pursuant to the Merger Agreement. In addition, we express no opinion as to
the United States federal, state, local, foreign or other tax consequences,
other than as set forth in the Discussion. Further,
<PAGE>
there can be no assurances that the opinion expressed herein will be accepted by
the Internal Revenue Service (the "IRS") or, if challenged, by a court. This
opinion letter is delivered in accordance with the requirements of Item
601(b)(8) of Regulation S-K under the Securities Act.
In rendering our opinion, we have considered the applicable provisions
of the Internal Revenue Code of 1986, as amended, Treasury Department
regulations promulgated thereunder, pertinent judicial authorities, interpretive
rulings of the IRS, and such other authorities as we have considered relevant.
It should be noted that statutes, regulations, judicial decisions, and
administrative interpretations are subject to change at any time, possibly with
retroactive effect. A change in the authorities or the accuracy or completeness
of any of the information, documents, corporate records, covenants, statements,
representations or assumptions on which our opinion is based could affect our
conclusions. The opinion set forth herein is expressed as of the date hereof,
and we are under no obligation to supplement or revise our opinion to reflect
any changes (including changes that have retroactive effect) (i) in applicable
law or (ii) in any information, document, corporate record, covenant, statement,
representation, or assumption stated herein that becomes untrue or incorrect.
This opinion letter is furnished to you solely for use in connection
with the Merger, as described in the Merger Agreement and the Proxy
Statement/Prospectus, and is not to be used, circulated, quoted, or otherwise
referred to for any other purpose without our express written permission. In
accordance with the requirements of Item 601(b)(23) of Regulation S-K under the
Securities Act, we hereby consent to the filing of this opinion as an exhibit to
the Proxy Statement/Prospectus and to the reference to our firm name under the
headings "MERGER -Material Federal Income Tax Consequences of the C-Port
Merger", "THE MERGER AGREEMENT - Conditions", and "LEGAL AND TAX MATTERS." In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act or the
rules and regulations of the Commission thereunder.
Very truly yours,
Winston & Strawn
-2-
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Motorola, Inc.
We consent to the incorporation by reference in the registration
statement on Form S-4 of Motorola, Inc. of our reports dated January 17, 2000,
except as to Note 15, which is as of March 17, 2000, and our reports dated March
17, 2000, with respect to the consolidated and supplemental consolidated balance
sheets of Motorola, Inc. and subsidiaries as of December 31, 1999 and 1998, and
the related consolidated and supplemental consolidated statements of operations,
stockholders' equity, and cash flows and the related consolidated and
supplemental consolidated financial statement schedule for each of the years in
the three-year period ended December 31, 1999, which reports appear in or are
incorporated by reference in the annual report on Form 10-K of Motorola, Inc.
for the year ended December 31, 1999 or in the Form 8-K/A of Motorola, Inc.
dated March 24, 2000 and to the references to our firm under the headings
"Summary Selected Financial Information" and "Experts" in the prospectus.
/s/ KPMG LLP
Chicago, Illinois
March 24, 2000
<PAGE>
Exhibit 23.5
Consent of Deutsche Bank Securities Inc.
To: The Board of Directors of Motorola, Inc.
The Board of Directors of C-Port Corporation
We hereby consent to (i) the inclusion of our opinion dated February 17,
2000 to the Board of Directors of C-Port Corporation as Appendix B to the proxy
statement/prospectus of C-Port Corporation and Motorola, Inc. forming a part of
this Registration Statement on Form S-4, and (ii) the references made to our
firm and such opinion in such proxy statement/prospectus under the headings
"Summary--Opinion of Financial Advisor to C-Port," "The Merger--Background" and
"The Merger--Opinion of Financial Advisor to C-Port." In giving the foregoing
consent, we do not admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended
(the "Securities Act"), or the rules and regulations promulgated thereunder, and
we do not admit that we are experts with respect to any part of such
Registration Statement within the meaning of the term "expert" as used in the
Securities Act or the rules and regulations promulgated thereunder.
/s/ Deutsche Bank Securities Inc.
Boston, Massachusetts Deutsche Bank Securities Inc.
March 23, 2000
<PAGE>
Exhibit 99.1
Form of Proxy Card of C-Port Corporation
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
C-PORT CORPORATION
One High Street
North Andover, Massachusetts 01845
PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD [ ], 2000
The undersigned stockholder of C-PORT CORPORATION, a Delaware corporation (the
"Company"), revoking all prior proxies, hereby appoints Laurence G. Walker and
John Gavin, and each or either of them his attorneys and agents with full power
of substitution to vote as Proxy for the undersigned stockholder as herein
stated at the special meeting of stockholders of the Company to be held at the
offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109 on
[ ], 2000 at [ ] .m., local time, and at any adjournment or
adjournments thereof, with all the power which the undersigned would possess if
personally present at said meeting, upon on the proposals set forth below and
in accordance with their discretion on any other matters that may properly come
before the special meeting.
**IMPORTANT**
PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND MAIL THIS PROXY
IMMEDIATELY IN THE ENCLOSED ENVELOPE
See Reverse Side
[X] Please mark your votes as in this example.
1. To consider and vote upon a proposal to approve and adopt the Agreement and
Plan of Merger, dated as of February 17, 2000, among Motorola Inc., a
Delaware corporation, CP Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of Motorola, and C-Port Corporation, a Delaware
corporation, the Merger, and the appointment of Laurence G. Walker as the
stockholder representative under the Agreement and Plan of Merger, as
described in the accompanying Proxy Statement/Prospectus.
[_] FOR[_] AGAINST[_] ABSTAIN
2. To transact any other business as may properly come before the special
meeting or any adjournment of postponement of the special meeting, including
potential adjournments or postponements of the special meeting to solicit
additional proxies to approve and adopt the Agreement and Plan of Merger and
the Merger.
[_] FOR[_] AGAINST[_] ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED OR, WHERE NO
DIRECTION IS GIVEN, WILL BE VOTED FOR PROPOSAL 1 SET FORTH ABOVE.
Mark here for address change and note below. [_]
Dated: ___________________, 2000
Address: ______________________
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--------------------------- Signature(s)
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Signature(s)
Please sign your name exactly as it appears on this proxy. When signing as
attorney, executor, administrator, trustee or guardian, etc., please give your
full title as it appears herein. When signing as joint tenants, all parties in
the joint tenancy must sign. When a proxy is given by a corporation, it should
be signed by an authorized officer.
