<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
SMART MODULAR TECHNOLOGIES, INC.
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
831690102
(CUSIP Number)
SUSAN WANG
SOLECTRON CORPORATION
777 GIBRALTAR DRIVE
MILPITAS, CA 95035
(408) 957-8500
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
SEPTEMBER 13, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Sections 240.13-1(e), 240.13d-(f) or
240.13d-1(g), check the following box.
NOTE: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Section
240.13d-7(b) for other parties to whom copies are to be sent.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Solectron I.R.S. Identification No.: 942447045
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
(b)
N/A
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
N/A
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
STATE OF DELAWARE
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NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY 9,030,759 (1)
OWNED BY EACH
REPORTING PERSON
WITH
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8 SHARED VOTING POWER
17,238,400(2)
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9 SOLE DISPOSITIVE POWER
9,030,759(1)
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10 SHARED DISPOSITIVE POWER
N/A
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
26,269,159(1)(2)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
57.8%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
(1) In the event the Option (discussed in Items 3 and 4 below) becomes
exercisable and is exercised in full, Solectron Corporation ("Solectron ") will
have sole voting power with respect to that number of shares equal to 19.9% of
the then outstanding shares of Common Stock of Smart, which, based upon the
45,380,699 shares of Smart Common Stock outstanding as of September 9, 1999 (as
represented by Smart in the Merger Agreement discussed in Items 3 and 4)
currently equals 9,030,759 shares of Smart Common Stock. Prior to the exercise
of the Option, Solectron is not entitled to any rights as a stockholder of Smart
as to the shares of Smart Common Stock covered by the Option. The Option may
only be exercised upon the happening of certain events referred to in Item 4,
none of which has occurred as of the date hereof. Solectron expressly disclaims
beneficial ownership of any of the shares of Smart Common Stock which are
purchasable by Solectron upon exercise of the Option until such time as
Solectron purchases any such shares of Smart Common Stock upon any such
exercise.
(2) 17,238,400 shares of Smart Common Stock are subject to Voting
Agreements entered into by Solectron and certain stockholders of Smart
(discussed in Items 3 and 4 below). Solectron expressly disclaims beneficial
ownership of any of the shares of Smart Common Stock covered by the Voting
Agreements. Based on the number of shares of Smart Common Stock outstanding as
of September 9, 1999 (as represented by Smart in the Merger Agreement discussed
in Items 3 and 4), the number of shares of Smart Common Stock indicated
represents approximately 37.9% of the outstanding Smart Common Stock, excluding
the shares of outstanding shares of Smart Common Stock issuable upon exercise of
the Option.
CUSIP NO. 831690102 SCHEDULE 13D Page 2 of 11
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ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D (this "Statement") relates to the Common
Stock of Smart Modular Technologies, a California corporation ("Smart" or
"Issuer"). The principal executive offices of Smart are located at 4305 Cushing
Parkway, Fremont, California 94538.
ITEM 2. IDENTITY AND BACKGROUND.
The name of the corporation filing this statement is Solectron
Corporation, a Delaware corporation ("Solectron"). Solectron is a leading
worldwide provider of customized electronics manufacturing solutions to original
equipment manufacturers ("OEMs"). The address of Solectron's principal business
is 777 Gibraltar Drive, Milpitas, California 95035. The address of Solectron's
executive offices is the same as the address of its principal business.
Set forth on Schedule A is the name of each of the directors and
executive officers of Solectron, and their present principal occupation or
employment, including the name, principal business and address of any
corporation or other organization in which such employment is conducted, as of
the date hereof to Solectron's knowledge.
Neither Solectron, nor to Solectron's knowledge, any person named on
Schedule A hereto is required to disclose legal proceedings pursuant to Items
2(d) or 2(e). To Solectron's knowledge, except as set forth on Schedule A, each
of the individuals identified on Schedule A is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to an Agreement and Plan of Reorganization dated as of
September 13, 1999 (the "Merger Agreement"), among Solectron, SM Acquisition, a
California corporation and wholly-owned subsidiary of Solectron ("Merger Sub")
and Smart, and subject to the conditions set forth therein (including approval
by stockholders of Smart), Merger Sub will merge with and into Smart and Smart
will become a wholly-owned subsidiary of Solectron (such events constituting the
"Merger"). Once the Merger is consummated, Merger Sub will cease to exist as a
corporation and all of the business, assets, liabilities and obligations of
Merger Sub will be merged into Smart with Smart remaining as the surviving
corporation (the "Surviving Corporation").
As an inducement to Solectron to enter into the Merger Agreement,
Solectron and Smart entered into a Stock Option Agreement dated as of September
13, 1999 (the "Stock Option Agreement") pursuant to which Smart granted
Solectron the right (the "Option"), under certain conditions, to acquire up to
the number of shares of Smart Common Stock sufficient to give Solectron
ownership of 19.9% of Smart's outstanding Common Stock. Smart's obligation to
issue shares pursuant to the exercise of the Option is subject to the occurrence
of certain events (discussed in Item 4 below), which may not occur. The granting
of the Option was negotiated as a material term of the entire Merger
transaction. Solectron did not pay additional consideration to Smart in
connection with Smart entering into the Stock Option Agreement and granting the
Option. In the event the Option becomes exercisable, Solectron anticipates it
will use working capital for any exercise of the Option.
As a further inducement for Solectron to enter into the Merger
Agreement and in consideration thereof, certain stockholders of Smart (the
"Stockholders") entered into individual voting agreements with Solectron
(collectively the "Voting Agreements") whereby each Stockholder agreed,
severally and not jointly, to vote all of the shares of Smart Common Stock
beneficially owned by him in favor of approval and adoption of the Merger
Agreement and approval of the Merger and certain related matters. Solectron did
not pay
CUSIP NO. 831690102 SCHEDULE 13D Page 3 of 11
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additional consideration to any Stockholder in connection with the execution
and delivery of the Voting Agreements.
References to, and descriptions of, the Merger, the Merger Agreement,
the Stock Option Agreement and the Voting Agreements as set forth herein are
qualified in their entirety by reference to the copies of the Merger Agreement,
the Stock Option Agreement and the Voting Agreement, respectively, included as
Exhibits 1, 2 and 3, respectively, to this Schedule 13D.
ITEM 4. PURPOSE OF TRANSACTION.
(a) - (b) As described in Item 3 above, this statement relates to the
Merger of Merger Sub, a wholly-owned subsidiary of Solectron, with and into
Smart in a statutory merger pursuant to the California Corporations Code. At the
effective time of the Merger, the separate existence of Merger Sub will cease
and Smart will continue as the Surviving Corporation and as a wholly-owned
subsidiary of Solectron. Each holder of outstanding Smart Common Stock will
receive, in exchange for each share of Smart Common Stock held by such holder,
0.51 shares of Solectron Common Stock. Solectron will assume each outstanding
option to purchase Smart Common Stock Option under Smart's stock option plans.
Pursuant to the Stock Option Agreement, Smart granted Solectron the
Option, under certain conditions, to acquire up to the number of shares of Smart
Common Stock sufficient to give Solectron ownership of 19.9% of Smart's
outstanding Common Stock. Smart's obligation to issue shares pursuant to the
exercise of the Stock Option is subject to the occurrence of certain events
(each, an "Exercise Event"), which may not occur. In general, an Exercise Event
may be deemed to occur: (a) if (i) the Board of Directors of Smart or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Solectron its unanimous recommendation in favor
of, the adoption and approval of the Merger Agreement or the approval of the
Merger; (ii) Smart shall have failed to include in the Prospectus/Proxy
Statement the unanimous recommendation of the Board of Directors of Smart in
favor of the adoption and approval of the Merger Agreement and the approval of
the Merger; (iii) the Board of Directors of Smart fails to reaffirm its
unanimous recommendation in favor of the adoption and approval of the Merger
Agreement and the approval of the Merger within ten (10) days after Solectron
requests in writing that such recommendation be reaffirmed at any time following
the announcement of an Acquisition Proposal (as defined in Section 5.4(a) of the
Merger Agreement); (iv) the Board of Directors of Smart or any committee thereof
shall have approved or recommended any Acquisition Proposal; (v) Smart shall
have entered into any letter of intent or similar document or any agreement,
contract or commitment accepting any Acquisition Proposal; or (vi) a tender or
exchange offer relating to securities of Smart shall have been commenced by a
Person (as defined in the Merger Agreement) unaffiliated with Solectron and
Smart shall not have sent to its securityholders pursuant to Rule 14e-2
promulgated under the Securities Act of 1933, as amended, within ten (10)
business days after such tender or exchange offer is first published, sent or
given, a statement disclosing that Smart recommends rejection of such tender or
exchange offer; or (b) if the Merger Agreement is terminated by either Solectron
or Smart because the Merger shall not have been consummated by March 31, 2000,
or because the Smart stockholders fail to approve the Merger Agreement and the
Merger.
Pursuant to the Voting Agreements, the Stockholders have irrevocably
appointed Solectron as their lawful attorney and proxy. Such proxy gives
Solectron the limited right to vote each of the 17,238,400 shares (including
options exercisable within 60 days of September 13, 1999) of Smart Common Stock
beneficially owned by the Stockholders in all matters related to the Merger. In
exercising its right to vote the Shares as lawful attorney and proxy of the
Stockholders, Solectron (or any nominee of Solectron) will be limited, at every
Smart stockholders meeting and every written consent in lieu of such a meeting
to vote the Shares in favor of approval and adoption of the Merger Agreement, in
favor of approval of the Merger and in favor of
CUSIP NO. 831690102 SCHEDULE 13D Page 4 of 11
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each matter that could reasonably be expected to facilitate the Merger. The
Stockholders may vote the Shares on all other matters. The Voting Agreements
terminate upon the earlier to occur of (i) such date and time as the Merger
shall become effective in accordance with the terms and provisions of the Merger
Agreement, or (ii) such date and time as the Merger Agreement shall have been
terminated pursuant to Article VII thereof.
The purpose of the transactions under the Voting Agreements and the
Stock Option Agreement are to enable Solectron and Smart to consummate the
transactions contemplated under the Merger Agreement.
(c) Not applicable.
(d) It is anticipated that upon consummation of the Merger, the
directors of the Surviving Corporation shall be the current directors of Merger
Sub. It is anticipated that the initial officers of the Surviving Corporation
shall be the officers of Smart, until their respective successors are duly
appointed.
(e) Other than as a result of the Merger described in Item 3 above, not
applicable.
(f) Not applicable.
(g) Upon consummation of the Merger, the Articles of Incorporation of
Merger Sub, as in effect immediately prior to the Merger, shall be the Articles
of Incorporation of the Surviving Corporation until thereafter amended as
provided by California Law and such Articles of Incorporation. Upon consummation
of the Merger, the Bylaws of Merger Sub, as in effect immediately prior to the
Merger, shall be the Bylaws of the Surviving Corporation until thereafter
amended.
(h) - (i) If the Merger is consummated as planned, the Smart Common
Stock will be deregistered under the Act and delisted from The Nasdaq National
Market.
(j) Other than described above, Solectron currently has no plan or
proposals which relate to, or may result in, any of the matters listed in Items
4(a) - (j) of Schedule 13D (although Solectron reserves the right to develop
such plans).
References to, and descriptions of, the Merger Agreement, the Stock
Option Agreement and the Voting Agreements as set forth above in this Item 4 are
qualified in their entirety by reference to the copies of the Merger Agreement,
the Stock Option Agreement and the Voting Agreement, respectively, included as
Exhibits 1, 2 and 3, respectively, to this Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) - (b) As a result of the Voting Agreements, Solectron may be deemed
to be the beneficial owner of at least 17,238,400 shares of Smart Common Stock.
Such Smart Common Stock constitutes approximately 37.9% of the issued and
outstanding shares of Smart Common Stock based on the number of shares of Smart
Common Stock outstanding as of September 9, 1999 (as represented by Smart in the
Merger Agreement discussed in Items 3 and 4). Solectron may be deemed to have
the shared power to vote the Shares with respect to those matters described
above. However, Solectron (i) is not entitled to any rights as a stockholder of
Smart as to the Shares and (ii) disclaims any beneficial ownership of the shares
of Smart Common Stock which are covered by the Voting Agreements.
In the event the Stock Option becomes exercisable and is exercised in
full, Solectron will have the sole power to vote, and the sole power to dispose
of, that number of shares equal to 19.9% of the then outstanding shares of Smart
Common Stock, which, based upon the 45,380,699 shares of Smart Common
CUSIP NO. 831690102 SCHEDULE 13D Page 5 of 11
<PAGE> 6
Stock outstanding as of September 9, 1999 (as represented by Smart in the Merger
Agreement discussed in Items 3 and 4) currently equals 9,030,759 shares of Smart
Common Stock.
To Solectron's knowledge, no person listed on Schedule A has an
ownership interest in Smart.
Set forth on Schedule B is the name of those stockholders of Smart that
have entered into a Voting Agreement with Solectron, and their present principal
occupation or employment, including the name, principal business and address of
any corporation or other organization in which such employment is conducted, to
Solectron's knowledge.
To Solectron's knowledge, no transactions in the class of securities
reported have been effected during the past sixty days by any person named
pursuant to Item 2.
(c) To the knowledge of Solectron, no transactions in the class of
securities reported have been effected during the past sixty days by any person
named pursuant to Item 2.
(d) To the knowledge of Solectron, no other person has the right to
receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, the securities of Smart reported on herein.
(e) N/A.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Other than the Merger Agreement and the exhibits thereto, including the
Voting Agreements and the Stock Option Agreement, to the knowledge of Solectron,
there are no contracts, arrangements, understandings or relationships among the
persons named in Item 2 and between such persons and any person with respect to
any securities of Smart, including but not limited to transfer or voting of any
of the securities, finder's fees, joint ventures, loan or option arrangement,
puts or calls, guarantees of profits, division of profits or loss, or the giving
or withholding of proxies.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
The following documents are filed as exhibits:
1. Agreement and Plan of Reorganization, dated September 13,
1999, by and among Solectron, Merger Sub and Smart.
2. Stock Option Agreement, dated September 13, 1999, by and
between Solectron and Smart.
3. Form of Voting Agreement, dated September 13, 1999, between
Solectron and certain stockholders of Smart.
CUSIP NO. 831690102 SCHEDULE 13D Page 6 of 11
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 22, 1999 SOLECTRON CORPORATION
By: /s/ Susan Wang
-------------------------
Susan Wang
Chief Financial Officer
CUSIP NO. 831690102 SCHEDULE 13D Page 7 of 11
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SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF
SOLECTRON CORPORATION
The following table sets forth the name, business address and present
principal occupation or employment of each director and executive officer of
Solectron. Except as indicated below, the business address of each such person
is 777 Gibraltar Drive, Milpitas, CA 95035.
<TABLE>
<CAPTION>
OFFICERS NAME TITLE AND PRESENT PRINCIPAL OCCUPATION
<S> <C>
Dr. Koichi Nishimura President, Chief Executive Officer & Chairman of the Board of Solectron
Director
Dr. Winston H. Chen Chairman, Paramitas Foundation
Director
Richard A. D'Amore General Partner, North Bridge Venture Partners
Director
Charles A. Dickinson Independent Management Consultant
Director
Heinz Fridrich Professor, Univ. of Florida
Director
Dr. Philip Gerdine Independent Consultant
Director
William Hasler Co-Chief Executive Officer, Aphton Corporation
Director
Dr. Kenneth E. Houghton Independent Consultant
Director
Dr. Paul R. Low President, PRL Associates
Director
Osamu Yamada* Independent International Management Consultant
Director
</TABLE>
* Citizen of Japan
CUSIP NO. 831690102 SCHEDULE 13D Page 8 of 11
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EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
<TABLE>
<CAPTION>
NAME TITLE AND PRESENT PRINCIPAL OCCUPATION
<S> <C>
David Kynaston* President, Solectron Europe and Vice President, Solectron Corporation
Ken K. T. Tsai** Senior Vice President, Solectron Corporation and President, Solectron Asia
Susan S. Wang Senior Vice President, Solectron Corporation, Chief Financial Officer and Corporate
Secretary
Walt W. Wilson Senior Vice President of Supply Chain Integration and Information Technology
Saeed Zohouri, Ph.d. President, Solectron Americas, Senior Vice President and Chief Technology Officer
</TABLE>
* Citizen of the United Kingdom
** Citizen of Taiwan
CUSIP NO. 831690102 SCHEDULE 13D Page 9 of 11
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SCHEDULE B
The following table sets forth the name and present principal
occupation or employment of each Smart stockholder that entered into a voting
agreement with Solectron. Except as indicated below, the business address of
each such person is 435 Cushing Parkway, Fremont, CA 94538.
<TABLE>
<CAPTION>
VOTING AGREEMENT STOCKHOLDER SHARES BENEFICIALLY OWNED
<S> <C>
Ajay Shah (a), Chairman of the Board of Directors, President and Chief 6,501,782
Executive Officer of Smart
Mukesh Patel (b), Vice President and General Manager Memory Division 4,922,200
Lata Krishnan Shah (c), Vice President, Administration and Secretary of Smart 2,146,718
Krishnan Shah Family Ltd. Partners 1,840,000
Patel Family Partners 1,715,000
Erik Anderson (d), President and Chief Executive Officer of Matthew G. Norton Co. 66,600
Tor Braham (e), Managing Director, Technology Mergers and Acquisitions of 46,100
Warburg Dillon Read LLC
TOTAL 17,238,400
</TABLE>
(a) Represents 6,441,330 shares of outstanding Smart Common Stock and
60,452 shares subject to options exercisable within 60 days of
September 13, 1999.
(b) Represents 4,915,000 shares of outstanding Smart Common Stock and 7,200
shares subject to options exercisable within 60 days of September 13,
1999.
(c) Represents 2,084,750 shares of outstanding Smart Common Stock and
61,968 shares subject to options exercisable within 60 days of
September 13, 1999.
(d) Represents 45,000 shares of outstanding Smart Common Stock and 21,600
shares subject to options exercisable within 60 days of September 13,
1999.
(e) Represents 24,500 shares of outstanding Smart Common Stock and 21,600
shares subject to options exercisable within 60 days of September 13,
1999.
CUSIP NO. 831690102 SCHEDULE 13D Page 10 of 11
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
1 Agreement and Plan of Reorganization, dated September 13, 1999
by and among Solectron, Merger Sub and Smart.
2 Stock Option Agreement dated September 13, 1999 by and between
Solectron and Smart.
3 Form of Voting Agreement, dated September 13, 1999, between
Solectron and certain stockholders of Smart.
</TABLE>
CUSIP NO. 831690102 SCHEDULE 13D Page 11 of 11
<PAGE> 12
EXHIBIT 1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
SOLECTRON CORPORATION,
SM ACQUISITION CORP.
AND
SMART MODULAR TECHNOLOGIES, INC.
Dated as of September 13, 1999
<PAGE> 13
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE I THE MERGER..................................................................................................2
1.1 The Merger..........................................................................................2
1.2 Effective Time; Closing.............................................................................2
1.3 Effect of the Merger................................................................................2
1.4 Articles of Incorporation; Bylaws...................................................................2
1.5 Directors and Officers..............................................................................3
1.6 Effect on Capital Stock.............................................................................3
1.7 Dissenting Shares...................................................................................4
1.8 Surrender of Certificates...........................................................................5
1.9 No Further Ownership Rights in Company Common Stock.................................................6
1.10 Lost, Stolen or Destroyed Certificates..............................................................7
1.11 Tax and Accounting Consequences.....................................................................7
1.12 Taking of Necessary Action; Further Action..........................................................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY..................................................................7
2.1 Organization and Qualification; Subsidiaries........................................................8
2.2 Articles of Incorporation and Bylaws................................................................8
2.3 Capitalization......................................................................................8
2.4 Authority Relative to this Agreement...............................................................10
2.5 No Conflict; Required Filings and Consents.........................................................10
2.6 Compliance; Permits................................................................................11
2.7 SEC Filings; Financial Statements..................................................................12
2.8 No Undisclosed Liabilities.........................................................................13
2.9 Absence of Certain Changes or Events...............................................................13
2.10 Absence of Litigation..............................................................................13
2.11 Employee Benefit Plans.............................................................................14
2.12 Registration Statement; Proxy Statement............................................................16
2.13 Restrictions on Business Activities................................................................16
2.14 Title to Property..................................................................................17
2.15 Taxes..............................................................................................17
2.16 Brokers............................................................................................19
2.17 Intellectual Property..............................................................................19
2.18 Agreements, Contracts and Commitments..............................................................22
2.19 Opinion of Financial Advisor.......................................................................24
2.20 Board Approval.....................................................................................24
2.21 Vote Required......................................................................................24
2.22 Pooling of Interests...............................................................................24
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..................................................25
3.1 Organization and Qualification; Subsidiaries.......................................................25
3.2 Certificate of Incorporation and Bylaws............................................................25
3.3 Capitalization.....................................................................................25
3.4 Authority Relative to this Agreement...............................................................26
3.5 No Conflict; Required Filings and Consents.........................................................26
3.6 SEC Filings; Financial Statements..................................................................27
3.7 No Undisclosed Liabilities.........................................................................27
3.8 Absence of Litigation..............................................................................28
3.9 Registration Statement; Proxy Statement............................................................28
3.10 Title to Property..................................................................................28
3.11 Pooling of Interests...............................................................................28
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME.......................................................................29
4.1 Conduct of Business by Company.....................................................................29
4.2 Conduct of Business by Parent......................................................................32
ARTICLE V ADDITIONAL AGREEMENTS......................................................................................32
5.1 Proxy Statement/Prospectus; Registration Statement; Other Filings; Board Recommendations...........32
5.2 Meeting of Company Shareholders....................................................................33
5.3 Confidentiality; Access to Information.............................................................35
5.4 No Solicitation....................................................................................35
5.5 Public Disclosure..................................................................................37
5.6 Reasonable Efforts; Notification...................................................................37
5.7 Third Party Consents...............................................................................38
5.8 Stock Options and Employee Benefits................................................................38
5.9 Form S-8...........................................................................................40
5.10 Indemnification....................................................................................40
5.11 NYSE Listing.......................................................................................40
5.12 Company Affiliate Agreement........................................................................41
5.13 Regulatory Filings; Reasonable Efforts.............................................................41
ARTICLE VI CONDITIONS TO THE MERGER..................................................................................41
6.1 Conditions to Obligations of Each Party to Effect the Merger.......................................42
6.2 Additional Conditions to Obligations of Company....................................................42
</TABLE>
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<PAGE> 15
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
6.3 Additional Conditions to the Obligations of Parent and Merger Sub..................................43
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER........................................................................44
7.1 Termination........................................................................................44
7.2 Notice of Termination; Effect of Termination.......................................................46
7.3 Fees and Expenses..................................................................................46
7.4 Amendment..........................................................................................47
7.5 Extension; Waiver..................................................................................47
ARTICLE VIII GENERAL PROVISIONS......................................................................................47
8.1 Non-Survival of Representations and Warranties.....................................................47
8.2 Notices............................................................................................47
8.3 Interpretation; Knowledge..........................................................................48
8.4 Counterparts.......................................................................................49
8.5 Entire Agreement; Third Party Beneficiaries........................................................49
8.6 Severability.......................................................................................50
8.7 Other Remedies; Specific Performance...............................................................50
8.8 Governing Law......................................................................................50
8.9 Rules of Construction..............................................................................50
8.10 Assignment.........................................................................................50
8.11 WAIVER OF JURY TRIAL...............................................................................50
</TABLE>
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<PAGE> 16
INDEX OF EXHIBITS
Exhibit A Form of Company Voting Agreement
Exhibit B Form of Stock Option Agreement
Exhibit C Form of Company Affiliate Agreement
-iv-
<PAGE> 17
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as
of September 13, 1999, among Solectron Corporation, a Delaware corporation
("PARENT"), SM Acquisition Corp., a California corporation and a wholly-owned
subsidiary of Parent ("MERGER SUB"), and SMART Modular Technologies, Inc., a
California corporation ("COMPANY").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement (as
defined in Section 1.2 below) and in accordance with the California Corporations
Code ("CALIFORNIA LAW"), Parent and Company intend to enter into a business
combination transaction.
B. The Board of Directors of Company (i) has determined that the Merger
(as defined in Section 1.1) is consistent with and in furtherance of the
long-term business strategy of Company and fair to, and in the best interests
of, Company and its shareholders, (ii) has approved this Agreement, the Merger
(as defined in Section 1.1) and the other transactions contemplated by this
Agreement and (iii) has determined to recommend that the shareholders of Company
adopt and approve this Agreement and approve the Merger.
C. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
certain affiliates of Company are entering into Voting Agreements in
substantially the form attached hereto as Exhibit A (the "COMPANY VOTING
AGREEMENTS").
D. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
Company shall execute and deliver a Stock Option Agreement in favor of Parent in
substantially the form attached hereto as Exhibit B (the "STOCK OPTION
AGREEMENT"). The Board of Directors of Company has approved the Stock Option
Agreement.
E. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
certain affiliates of Company (the "COMPANY AFFILIATES") are entering into
Company Affiliate Agreements in substantially the form attached hereto as
Exhibit C (the "COMPANY AFFILIATE Agreements").
F. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "CODE").
G. It is also intended by the parties hereto that the Merger shall
qualify for accounting treatment as a pooling of interests.
<PAGE> 18
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of California Law, Merger Sub shall be merged with and
into Company (the "MERGER"), the separate corporate existence of Merger Sub
shall cease and Company shall continue as the surviving corporation. Company as
the surviving corporation after the Merger is hereinafter sometimes referred to
as the "SURVIVING CORPORATION."
1.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
this Agreement (or other entities of merger) with the Secretary of State of the
State of California in accordance with the relevant provisions of California Law
(the "MERGER DOCUMENTS") (the time of such filing (or such later time as may be
agreed in writing by Company and Parent and specified in the Merger Documents)
being the "EFFECTIVE TIME") as soon as practicable on or after the Closing Date
(as herein defined). Unless the context otherwise requires, the term "AGREEMENT"
as used herein refers collectively to this Agreement and Plan of Reorganization
and the Certificate of Merger. The closing of the Merger (the "CLOSING") shall
take place at the offices of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, at a time and date to be specified by the parties, which shall be
no later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VI, or at such other time, date and location as
the parties hereto agree in writing (the "CLOSING DATE").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
California Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of Company and Merger Sub shall vest in the Surviving Corporation,
and all debts, liabilities and duties of Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.4 Articles of Incorporation; Bylaws.
(a) At the Effective Time, the Articles of Incorporation of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the Articles
of Incorporation of the Surviving Corporation until thereafter amended as
provided by law and such Articles of Incorporation of the Surviving Corporation;
provided, however, that at the Effective Time the Articles of Incorporation of
the Surviving Corporation shall be amended so that the name of the Surviving
Corporation shall be "SMART Modular Technologies, Inc."
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<PAGE> 19
(b) The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be, at the Effective Time, the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time.
1.6 Effect on Capital Stock. Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Merger Sub, Company or the holders of any of the following
securities, the following shall occur:
(a) Conversion of Company Common Stock. Each share of Common Stock,
no par value per share, of Company (the "COMPANY COMMON STOCK") issued and
outstanding immediately prior to the Effective Time, other than any shares of
Company Common Stock to be canceled pursuant to Section 1.6(b) and any
Dissenting Shares (as defined and to the extent provided in Section 1.7), will
be canceled and extinguished and automatically converted (subject to Sections
1.6(e) and (f)) into the right to receive 0.51 shares of Common Stock of Parent
(the "PARENT COMMON STOCK") (the "EXCHANGE RATIO") upon surrender of the
certificate representing such share of Company Common Stock in the manner
provided in Section 1.8 (or in the case of a lost, stolen or destroyed
certificate, upon delivery of an affidavit (and bond, if required) in the manner
provided in Section 1.10). If any shares of Company Common Stock outstanding
immediately prior to the Effective Time are unvested or are subject to a
repurchase option, risk of forfeiture or other condition under any applicable
restricted stock purchase agreement or other agreement with Company, then the
shares of Parent Common Stock issued in exchange for such shares of Company
Common Stock will also be unvested and subject to the same repurchase option,
risk of forfeiture or other condition, and the certificates representing such
shares of Parent Common Stock may accordingly be marked with appropriate
legends. Company shall take all action that may be necessary to ensure that,
from and after the Effective Time, Parent is entitled to exercise any such
repurchase option or other right set forth in any such restricted stock purchase
agreement or other agreement.
(b) Cancellation of Parent-Owned Stock. Each share of Company
Common Stock held by Company or owned by Merger Sub, Parent or any direct or
indirect wholly-owned subsidiary of Company or of Parent immediately prior to
the Effective Time shall be canceled and extinguished without any conversion
thereof.
(c) Stock Options; Employee Stock Purchase Plans. At the Effective
Time, all options to purchase Company Common Stock then outstanding under
Company's 1989 Incentive Stock Plan, 1995 Director Option Plan and 1995 Stock
Plan (the "COMPANY OPTION PLANS") shall be assumed by Parent in accordance with
Section 5.8 hereof. Purchase rights outstanding under Company's 1995 Employee
Stock Purchase Plan (the "ESPP") shall be treated as set forth in Section 5.8.
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<PAGE> 20
(d) Capital Stock of Merger Sub. Each share of Common Stock, no par
value per share, of Merger Sub (the "MERGER SUB COMMON STOCK") issued and
outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable share of Common Stock, no par value
per share, of the Surviving Corporation. Each certificate evidencing ownership
of shares of Merger Sub Common Stock shall evidence ownership of such shares of
capital stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Common Stock), extraordinary
cash dividends, reorganization, recapitalization, reclassification, combination,
exchange of shares or other like change with respect to Parent Common Stock or
Company Common Stock occurring on or after the date hereof and prior to the
Effective Time.
(f) Fractional Shares. No fraction of a share of Parent Common
Stock will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Company Common Stock who would otherwise be entitled to a fraction of
a share of Parent Common Stock (after aggregating all fractional shares of
Parent Common Stock that otherwise would be received by such holder) shall, upon
surrender of such holder's Certificates(s) (as defined in Section 1.8(c))
receive from Parent an amount of cash (rounded to the nearest whole cent),
without interest, equal to the product of (i) such fraction, multiplied by (ii)
the average closing price of one share of Parent Common Stock for the five (5)
most recent days that Parent Common Stock has traded ending on the trading day
immediately prior to the Effective Time, as reported on the New York Stock
Exchange ("NYSE") Composite Transaction Tape.
1.7 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of Company Common Stock held by a holder who has demanded
and perfected dissenters' rights for such shares in accordance with the
California Law and who, as of the Effective Time, has not effectively withdrawn
or lost such dissenters' rights ("Dissenting Shares") shall not be converted
into or represent a right to receive Parent Common Stock pursuant to Section
1.6, but the holder thereof shall only be entitled to such rights as are granted
by the California Law.
(b) Notwithstanding the provisions of subsection (a) above, if any
holder of shares of Company Common Stock who demands purchase of such shares
under the California Law shall effectively withdraw or lose (through failure to
perfect or otherwise) such holder's dissenters' rights, then, as of the later of
(i) the Effective Time or (ii) the occurrence of such event, such holder's
shares shall automatically be converted into and represent only the right to
receive Parent Common Stock as provided in Section 1.6, without interest
thereon, upon surrender of the certificate representing such shares.
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<PAGE> 21
(c) Company shall give Parent (i) prompt notice of its receipt of
any written demands for purchase of any shares of Company Common Stock,
withdrawals of such demands, and any other instruments relating to the Merger
served pursuant to the California Law and received by Company and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
demands for purchase of any shares of Company Common Stock under the California
Law. Company shall not, except with the prior written consent of Parent or as
may be required under applicable law, voluntarily make any payment with respect
to any demands for purchase of Company Common Stock or offer to settle or settle
any such demands
1.8 Surrender of Certificates.
(a) Exchange Agent. Parent shall select a bank or trust company
reasonably acceptable to Company to act as the exchange agent (the "EXCHANGE
AGENT") in the Merger.
(b) Parent to Provide Common Stock. Promptly after the Effective
Time, Parent shall make available to the Exchange Agent, for exchange in
accordance with this Article I, the shares of Parent Common Stock issuable
pursuant to Section 1.6 in exchange for outstanding shares of Company Common
Stock, and cash in an amount sufficient for payment in lieu of fractional shares
pursuant to Section 1.6(f) and any dividends or distributions to which holders
of shares of Company Common Stock may be entitled pursuant to Section 1.8(d).
(c) Exchange Procedures. Promptly after the Effective Time, Parent
shall cause the Exchange Agent to mail to each holder of record (as of the
Effective Time) of a certificate or certificates (the "Certificates"), which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into the right to receive
shares of Parent Common Stock pursuant to Section 1.6, cash in lieu of any
fractional shares pursuant to Section 1.6(f) and any dividends or other
distributions pursuant to Section 1.8(d), (i) a letter of transmittal in
customary form (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall contain such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing shares
of Parent Common Stock, cash in lieu of any fractional shares pursuant to
Section 1.6(f) and any dividends or other distributions pursuant to Section
1.8(d). Upon surrender of Certificates for cancellation to the Exchange Agent or
to such other agent or agents as may be appointed by Parent, together with such
letter of transmittal, duly completed and validly executed in accordance with
the instructions thereto, the holders of such Certificates shall be entitled to
receive in exchange therefor certificates representing the number of whole
shares of Parent Common Stock into which their shares of Company Common Stock
were converted at the Effective Time, payment in lieu of fractional shares which
such holders have the right to receive pursuant to Section 1.6(f) and any
dividends or distributions payable pursuant to Section 1.8(d), and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, for
all corporate purposes, subject to Section 1.8(d) as to dividends and other
distributions, to evidence only the ownership of the number of full shares of
Parent Common
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<PAGE> 22
Stock into which such shares of Company Common Stock shall have been so
converted and the right to receive an amount in cash in lieu of the issuance of
any fractional shares in accordance with Section 1.6(f) and any dividends or
distributions payable pursuant to Section 1.8(d).
(d) Distributions With Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the date of this Agreement with
respect to Parent Common Stock with a record date after the Effective Time will
be paid to the holders of any unsurrendered Certificates with respect to the
shares of Parent Common Stock represented thereby until the holders of record of
such Certificates shall surrender such Certificates. Subject to applicable law,
following surrender of any such Certificates, the Exchange Agent shall deliver
to the record holders thereof, without interest, certificates representing whole
shares of Parent Common Stock issued in exchange therefor along with payment in
lieu of fractional shares pursuant to Section 1.6(f) hereof and the amount of
any such dividends or other distributions with a record date after the Effective
Time payable with respect to such whole shares of Parent Common Stock.
(e) Transfers of Ownership. If certificates representing shares of
Parent Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of certificates
representing shares of Parent Common Stock in any name other than that of the
registered holder of the Certificates surrendered, or established to the
satisfaction of Parent or any agent designated by it that such tax has been paid
or is not payable.
(f) Required Withholding. Each of the Exchange Agent, Parent and
the Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Company Common Stock such amounts as may be required
(as advised by tax counsel for Parent) to be deducted or withheld therefrom
under the Code or under any provision of state, local or foreign tax law or
under any other applicable legal requirement. To the extent such amounts are so
deducted or withheld, such amounts shall be treated for all purposes under this
Agreement as having been paid to the person to whom such amounts would otherwise
have been paid.
(g) No Liability. Notwithstanding anything to the contrary in this
Section 1.8, neither the Exchange Agent, Parent, the Surviving Corporation nor
any party hereto shall be liable to a holder of shares of Parent Common Stock or
Company Common Stock for any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
1.9 No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Section 1.6(f) and 1.8(d)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Company Common Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Company
Common
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<PAGE> 23
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article I.
1.10 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of Company
Common Stock represented by such Certificates were converted pursuant to Section
1.6, cash for fractional shares, if any, as may be required pursuant to Section
1.6(f) and any dividends or distributions payable pursuant to Section 1.8(d);
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance of such certificates representing shares of Parent
Common Stock, cash and other distributions, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
1.11 Tax and Accounting Consequences.
(a) It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368 of the Code. The
parties hereto adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax
Regulations.
(b) It is intended by the parties hereto that the Merger shall be
treated as a pooling of interests for accounting purposes.
1.12 Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Company and Merger Sub, the officers and directors of Company
and Merger Sub will take all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Parent and Merger Sub, subject to
such exceptions as are specifically disclosed in writing in the disclosure
letter supplied by Company to Parent dated as of the date hereof and certified
by a duly authorized officer of Company, which disclosure shall provide an
exception to or otherwise qualify the representations or warranties of Company
specifically referred to in such disclosure and such other representations and
warranties to the extent such disclosure shall reasonably appear to be
applicable to such other representations or warranties (the "COMPANY SCHEDULE"),
as follows:
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<PAGE> 24
2.1 Organization and Qualification; Subsidiaries.
(a) Each of Company and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted, except where the failure to do so
would not, individually, or in the aggregate, have a Material Adverse Effect on
Company. Each of Company and its subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders ("APPROVALS") necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being conducted, except where the failure to have such
Approvals would not, individually or in the aggregate, have a Material Adverse
Effect on Company.
(b) Company has no significant subsidiaries (as defined in SEC
Regulation S-X) ("SIGNIFICANT SUBSIDIARIES") except for the corporations
identified in the Company SEC Reports (as hereinafter defined). Neither Company
nor any of its subsidiaries has agreed nor is obligated to make nor is bound by
any written, oral or other agreement, contract, subcontract, lease, binding
understanding, instrument, note, option, warranty, purchase order, license,
sublicense, insurance policy, benefit plan, commitment or undertaking of any
nature, as of the date hereof or as may hereafter be in effect (a "CONTRACT")
under which it may become obligated to make, any future investment in or capital
contribution to any other entity. Neither Company nor any of its subsidiaries
directly or indirectly owns any equity or similar interest in or any interest
convertible, exchangeable or exercisable for, any equity or similar interest in,
any corporation, partnership, joint venture or other business, association or
entity.
(c) Company and each of its subsidiaries is qualified to do
business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the nature of their business requires such qualification
and where the failure to so qualify would have a Material Adverse Effect (as
defined in Section 8.3) on the Company.
2.2 Articles of Incorporation and Bylaws. Company has previously
furnished to Parent a complete and correct copy of its Articles of Incorporation
and Bylaws as amended to date (together, the "COMPANY CHARTER DOCUMENTS"). Such
Company Charter Documents and equivalent organizational documents of each of its
subsidiaries are in full force and effect. Company is not in violation of any of
the provisions of the Company Charter Documents, and no subsidiary of Company is
in violation of its equivalent organizational documents except where the
violation of any such equivalent organizational documents of a subsidiary of
Company would not, individually or in the aggregate, have a Material Adverse
Effect on Company.
2.3 Capitalization.
(a) The authorized capital stock of Company consists of 200,000,000
shares of Company Common Stock and 30,000,000 shares of Preferred Stock
("COMPANY PREFERRED STOCK"), each
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having no par value per share. As of September 9, 1999, (i) 45,380,699 shares of
Company Common Stock were issued and outstanding, all of which were validly
issued, fully paid and nonassessable; (ii) no shares of Company Preferred Stock
were issued and outstanding; (iii) no shares of Company Common Stock were held
by subsidiaries of Company; (iv) 699,859 shares of Company Common Stock were
available for future issuance pursuant to Company's ESPP; (v) 7,731,095 shares
of Company Common Stock were reserved for issuance upon the exercise of
outstanding options to purchase Company Common Stock under the Company Option
Plans; and (vi) 53,111,794 shares of Company Common Stock are issued and
outstanding or reserved for issuance upon the exercise of outstanding options to
purchase Company Common Stock. Section 2.3(a) of the Company Schedule sets forth
the following information with respect to the Company Stock Options (as defined
in Section 5.8) outstanding as of the date of this Agreement: (i) the number of
shares of Company Common Stock subject to such Company Stock Options; (ii) the
average exercise price of such Company Stock Options as of September 9, 1999;
(iii) the number of options and applicable vesting schedule for each officer of
the Company; and (iv) whether the exercisability of any Company Stock Option
will be accelerated in any way by the transactions contemplated by this
Agreement, and indicates the extent of acceleration. Company has made available
to Parent accurate and complete copies of all stock option plans pursuant to
which the Company has granted such Company Stock Options that are currently
outstanding and the form of all stock option agreements evidencing such Company
Stock Options. Section 2.3(a) of the Company Disclosure Schedule also has
attached to it the form of the Company's option schedule. All shares of Company
Common Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instrument pursuant to which they are issuable,
would be duly authorized, validly issued, fully paid and nonassessable. Except
as set forth in Section 2.3(a) of the Company Schedule, there are no commitments
or agreements of any character to which the Company is bound obligating the
Company to accelerate the vesting of any Company Stock Option as a result of the
Merger. All outstanding shares of Company Common Stock, all outstanding Company
Stock Options, and all outstanding shares of capital stock of each subsidiary of
the Company have been issued and granted in compliance with (i) all applicable
securities laws and other applicable Legal Requirements (as defined below) and
(ii) all requirements set forth in applicable Contracts. For the purposes of
this Agreement, "LEGAL REQUIREMENTS" means any federal, state, local, municipal,
foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issues, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Entity (as defined
below) and (ii) all requirements set forth in applicable contracts, agreements,
and instruments.
(b) Except for securities Company owns free and clear of all liens,
pledges, hypothecations, charges, mortgages, security interests, encumbrances,
claims, infringements, interferences, options, right of first refusals,
preemptive rights, community property interests or restriction of any nature
(including any restriction on the voting of any security, any restriction on the
transfer of any security or other asset, any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset) directly
or indirectly through one or more subsidiaries, and except for shares of capital
stock or other similar ownership interests of subsidiaries of the
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<PAGE> 26
Company that are owned by certain nominee equity holders as required by the
applicable law of the jurisdiction of organization of such subsidiaries (which
shares or other interests do not materially affect the Company's control of such
subsidiaries), as of the date of this Agreement, there are no equity securities,
partnership interests or similar ownership interests of any class of equity
security of any subsidiary of the Company, or any security exchangeable or
convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. Except as set forth in Section 2.3(b) of the Company Schedule or as
set forth in Section 2.3(a) hereof and except for the Stock Option Agreement,
there are no subscriptions, options, warrants, equity securities, partnership
interests or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which Company or any of
its subsidiaries is a party or by which it is bound obligating Company or any of
its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition of, any shares of capital stock, partnership interests
or similar ownership interests of the Company or any of its subsidiaries or
obligating the Company or any of its subsidiaries to grant, extend, accelerate
the vesting of or enter into any such subscription, option, warrant, equity
security, call, right, commitment or agreement. As of the date of this
Agreement, except as contemplated by this Agreement, there are no registration
rights and there is, except for the Company Voting Agreements, no voting trust,
proxy, rights plan, antitakeover plan or other agreement or understanding to
which the Company or any of its subsidiaries is a party or by which they are
bound with respect to any equity security of any class of the Company or with
respect to any equity security, partnership interest or similar ownership
interest of any class of any of its subsidiaries.
2.4 Authority Relative to this Agreement. Company has all necessary
corporate power and authority to execute and deliver this Agreement and the
Stock Option Agreement and to perform its obligations hereunder and thereunder
and, subject to obtaining the approval of the shareholders of Company of the
Merger, to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Stock Option Agreement by
Company and the consummation by Company of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action on the part of Company and no other corporate proceedings on the part of
Company are necessary to authorize this Agreement, the Stock Option Agreement or
to consummate the transactions so contemplated (other than the approval and
adoption of this Agreement and the Merger by holders of a majority of the
outstanding shares of Company Common Stock in accordance with California Law and
the Company Charter Documents). This Agreement and the Stock Option Agreement
have been duly and validly executed and delivered by Company and, assuming the
due authorization, execution and delivery by Parent and Merger Sub, constitute
legal and binding obligations of Company, enforceable against Company in
accordance with their respective terms.
2.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and the Stock
Option Agreement by Company do not, and the performance of this Agreement and
the Stock Option
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Agreement by Company shall not, (i) conflict with or violate the Company Charter
Documents or the equivalent organizational documents of any of Company's
subsidiaries, (ii) subject to obtaining the approval of Company's shareholders
of this Agreement and the Merger and compliance with the requirements set forth
in Section 2.5(b) below, conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Company or any of its subsidiaries or by
which its or any of their respective properties is bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or materially impair
Company's or any of its subsidiaries' rights or alter the rights or obligations
of any third party under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the properties or assets of Company or any of its
subsidiaries pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Company or any of its subsidiaries is a party or by which
Company or any of its subsidiaries or its or any of their respective properties
are bound or affected.
(b) The execution and delivery of this Agreement and the Stock
Option Agreement by Company do not, and the performance of this Agreement by
Company shall not, require any consent, approval, authorization or permit of, or
filing with or notification to, any court, administrative agency, commission,
governmental or regulatory authority, domestic or foreign (a "GOVERNMENTAL
ENTITY"), except (i) for applicable requirements, if any, of the Securities Act
of 1933, as amended (the "SECURITIES ACT"), the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), state securities laws ("BLUE SKY LAWS"), the
pre-merger notification requirements (the "HSR APPROVAL") of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR ACT")
and of foreign Governmental Entities and the rules and regulations thereunder,
the rules and regulations of the Nasdaq National Market System ("NASDAQ"), and
the filing and recordation of the Agreement of Merger as required by California
Law and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, (A) could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Company or, after the Effective Time, Parent, or (B) would not
prevent consummation of the Merger or otherwise prevent the parties hereto from
performing their obligations under this Agreement.
2.6 Compliance; Permits.
(a) Neither Company nor any of its subsidiaries is in conflict
with, or in default or violation of, (i) any law, rule (including environmental
laws), regulation, order, judgment or decree applicable to Company or any of its
subsidiaries or by which its or any of their respective properties is bound or
affected, or (ii) any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Company or any of its subsidiaries is a party or by which Company or
any of its subsidiaries or its or any of their respective properties is bound or
affected, except for any conflicts, defaults or violations that (individually or
in the aggregate) would not cause the Company to lose any material benefit or
incur any material liability. No investigation or review by any governmental or
regulatory body or authority is pending
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<PAGE> 28
or, to the knowledge of Company, threatened against Company or its subsidiaries,
nor has any governmental or regulatory body or authority indicated to the
Company an intention to conduct the same, other than, in each such case, those
the outcome of which could not, individually or in the aggregate, reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of the Company or any of its subsidiaries, any acquisition of material
property by the Company or any of its subsidiaries or the conduct of business by
the Company or any of its subsidiaries.
(b) Company and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities which
are material to operation of the business of Company and its subsidiaries taken
as a whole (collectively, the "COMPANY PERMITS"). Company and its subsidiaries
are in compliance in all material respects with the terms of the Company
Permits.
2.7 SEC Filings; Financial Statements.
(a) Company has made available to Parent a correct and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by Company with the Securities and Exchange Commission ("SEC")
since December 31, 1996 (the "COMPANY SEC REPORTS"), which are all the forms,
reports and documents required to be filed by Company with the SEC since
December 31, 1996. The Company SEC Reports (A) were prepared in accordance with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and (B) did not at the time they were filed (and if amended or superseded by a
filing prior to the date of this Agreement then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of Company's subsidiaries is required to file any reports or
other documents with the SEC.
(b) Each set of consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports and
the set of consolidated financial statements set forth on Section 2.7 of the
Company Schedule (the "JULY 31 FINANCIAL STATEMENTS") was prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited statements, do not contain footnotes as
permitted by Form 10-Q of the Exchange Act) and each fairly presents in all
material respects the consolidated financial position of Company and its
subsidiaries at the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal adjustments which
were not or are not expected to be material in amount.
(c) Company has previously furnished to Parent a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are
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<PAGE> 29
required to be filed, to agreements, documents or other instruments which
previously had been filed by Company with the SEC pursuant to the Securities Act
or the Exchange Act.
2.8 No Undisclosed Liabilities. Neither Company nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of
a nature required to be disclosed on a balance sheet or in the related notes to
the consolidated financial statements prepared in accordance with GAAP which
are, individually or in the aggregate, material to the business, results of
operations, assets or financial condition of Company and its subsidiaries taken
as a whole, except (i) liabilities provided for in Company's balance sheet as of
July 31, 1999 set forth in the July 31 Financial Statements or (ii) liabilities
incurred since July 31, 1999 in the ordinary course of business, none of which
is material to the business, results of operations or financial condition of
Company and its subsidiaries, taken as a whole.
2.9 Absence of Certain Changes or Events. Since October 31, 1998 (or,
in the case of clauses (i), (ii), (iii) and (v), July 31, 1999), there has not
been: (i) any Material Adverse Effect on Company, (ii) any declaration, setting
aside or payment of any dividend on, or other distribution (whether in cash,
stock or property) in respect of, any of Company's or any of its subsidiaries'
capital stock, or any purchase, redemption or other acquisition by Company of
any of Company's capital stock or any other securities of Company or its
subsidiaries or any options, warrants, calls or rights to acquire any such
shares or other securities except for repurchases from employees following their
termination pursuant to the terms of their pre-existing stock option or purchase
agreements, (iii) any split, combination or reclassification of any of Company's
or any of its subsidiaries' capital stock, (iv) any granting by Company or any
of its subsidiaries of any increase in compensation or fringe benefits, except
for normal increases of cash compensation in the ordinary course of business
consistent with past practice, or any payment by Company or any of its
subsidiaries of any bonus, except for bonuses made in the ordinary course of
business consistent with past practice, or any granting by Company or any of its
subsidiaries of any increase in severance or termination pay or any entry by
Company or any of its subsidiaries into any currently effective employment,
severance, termination or indemnification agreement or any agreement the
benefits of which are contingent or the terms of which are materially altered
upon the occurrence of a transaction involving Company of the nature
contemplated hereby, (v) entry by Company or any of its subsidiaries into any
licensing or other agreement with regard to the acquisition or disposition of
any Intellectual Property (as defined in Section 2.19) other than licenses in
the ordinary course of business consistent with past practice or any amendment
or consent with respect to any licensing agreement filed or required to be filed
by Company with the SEC, (vi) any material change by Company in its accounting
methods, principles or practices, except as required by concurrent changes in
GAAP, or (vii) any revaluation by Company of any of its assets, including,
without limitation, writing down the value of capitalized inventory or writing
off notes or accounts receivable or any sale of assets of the Company other than
in the ordinary course of business.
2.10 Absence of Litigation. Except as specifically disclosed in the
Company SEC Reports as of the date hereof, there are no claims, actions, suits
or proceedings pending or, to the knowledge of Company, threatened (or, to the
knowledge of Company, any governmental or regulatory
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<PAGE> 30
investigation pending or threatened) against Company or any of its subsidiaries
or any properties or rights of Company or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign.
2.11 Employee Benefit Plans.
(a) All employee compensation, incentive, fringe or benefit plans,
programs, policies, commitments or other arrangements (whether or not set forth
in a written document and including, without limitation, all "employee benefit
plans" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) covering any active, former
employee, director or consultant of Company, any subsidiary of Company or any
trade or business (whether or not incorporated) which is a member of a
controlled group or which is under common control with Company within the
meaning of Section 414 of the Code (an "AFFILIATE"), or with respect to which
Company has liability, are listed in Section 2.11(a) of the Company Schedule
(the "PLANS"). Company has provided to Parent: (i) correct and complete copies
of all documents embodying each Plan including (without limitation) all
amendments thereto, all related trust documents, and all material written
agreements and contracts relating to each such Plan; (ii) the three (3) most
recent annual reports (Form Series 5500 and all schedules and financial
statements attached thereto), if any, required under ERISA or the Code in
connection with each Plan; (iii) the most recent summary plan description
together with the summary(ies) of material modifications thereto, if any,
required under ERISA with respect to each Plan; (iv) all IRS or DOL
determination, opinion, notification and advisory letters; (v) all material
correspondence to or from any governmental agency relating to any Plan; (vi) all
COBRA forms and related notices; (vii) all discrimination tests for each Plan
for the most recent three (3) plan years; (viii) the most recent annual
actuarial valuations, if any, prepared for each Plan; (xi) if the Plan is
funded, the most recent annual and periodic accounting of Plan assets; (x) all
material written agreements and contracts relating to each Plan, including, but
not limited to, administrative service agreements, group annuity contracts and
group insurance contracts; (xi) all material communications to employees or
former employees regarding in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules or other events which would result in any
material liability under any Plan or proposed Plan; (xii) all policies
pertaining to fiduciary liability insurance covering the fiduciaries for each
Plan; and (xiii) all registration statements, annual reports (Form 11-K and all
attachments thereto) and prospectuses prepared in connection with any Plan.
(b) Each Plan has been maintained and administered in all material
respects in compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations, including but not limited
to ERISA and the Code, which are applicable to such Plans. No suit, action or
other litigation (excluding claims for benefits incurred in the ordinary course
of Plan activities) has been brought or, to the knowledge of Company, is
threatened, against or with respect to any such Plan. There are no audits,
inquiries or proceedings pending or, to the knowledge of Company, threatened by
the Internal Revenue Service (the "IRS") or Department of Labor (the "DOL") with
respect to any Plans. All contributions, reserves or premium payments required
to be made or accrued as of the date hereof to the Plans have been timely made
or accrued.
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<PAGE> 31
Any Plan intended to be qualified under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the Code (i) has either
obtained a favorable determination, notification, advisory and/or opinion
letter, as applicable, as to its qualified status from the IRS or still has a
remaining period of time under applicable Treasury Regulations or IRS
pronouncements in which to apply for such letter and to make any amendments
necessary to obtain a favorable determination, and (ii) incorporates or has been
amended to incorporate all provisions required to comply with the Tax Reform Act
of 1986 and subsequent legislation to the extent such amendment or incorporation
is required as of the Closing Date. Company does not have any plan or commitment
to establish any new Plan, to modify any Plan (except to the extent required by
law or to conform any such Plan to the requirements of any applicable law, in
each case as previously disclosed to Parent in writing, or as required by this
Agreement), or to enter into any new Plan. Each Plan can be amended, terminated
or otherwise discontinued after the Effective Time in accordance with its terms,
without liability to Parent, Company or any of its Affiliates (other than
ordinary administration expenses and expenses for benefits accrued but not yet
paid).
(c) Neither Company, any of its subsidiaries, nor any of their
Affiliates has at any time ever maintained, established, sponsored, participated
in, or contributed to any plan subject to Title IV of ERISA or Section 412 of
the Code and at no time has Company or any of its subsidiaries contributed to or
been requested to contribute to any "multiemployer plan," as such term is
defined in ERISA or to any plan described in Section 413(c) of the Code. Neither
Company, any of its subsidiaries, nor any officer or director of Company or any
of its subsidiaries is subject to any liability or penalty under Section 4975
through 4980B of the Code or Title I of ERISA. No "prohibited transaction,"
within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA,
and not otherwise exempt under Section 408 of ERISA, has occurred with respect
to any Plan which could subject Company or its subsidiaries to material
liabilities.
(d) None of the Plans promises or provides retiree medical or
other retiree welfare benefits to any person except as required by applicable
law, and neither Company nor any of its subsidiaries has represented, promised
or contracted (whether in oral or written form) to provide such retiree benefits
to any employee, former employee, director, consultant or other person, except
to the extent required by statute.
(e) Neither Company nor any of its subsidiaries is bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union. No employee of Company or any
of its subsidiaries is represented by any labor union or covered by any
collective bargaining agreement and, to the knowledge of Company, no campaign to
establish such representation is in progress. There is no pending or, to the
knowledge of Company, threatened labor dispute involving Company or any of its
subsidiaries and any group of its employees nor has Company or any of its
subsidiaries experienced any labor interruptions over the past three (3) years,
and Company and its subsidiaries consider their relationships with their
employees to be good. The Company and its subsidiaries are in compliance in all
material respects with all applicable material foreign, federal, state and local
laws, rules and regulations respecting employment, employment practices, terms
and conditions of employment and wages and hours.
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<PAGE> 32
(f) Except as disclosed on Schedule 2.11(f) of the Company
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, bonus
or otherwise) becoming due to any shareholder, director or employee of Company
or any of its subsidiaries under any Plan or otherwise, (ii) materially increase
any benefits otherwise payable under any Plan, or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
(g) Each International Employee Plan (as defined below) has been
established, maintained and administered in compliance with its terms and
conditions and with the requirements prescribed by any and all statutory or
regulatory laws that are applicable to such International Employee Plan.
Furthermore, no International Employee Plan has unfunded liabilities that, as of
the Effective Time, will not be offset by insurance or fully accrued. Except as
required by law, no condition exists that would prevent the Company or Parent
from terminating or amending any International Employee Plan at any time for any
reason. For purposes of this Section "INTERNATIONAL EMPLOYEE PLAN" shall mean
each Plan that has been adopted or maintained by the Company or any of its
subsidiaries, whether informally or formally, for the benefit of current or
former employees of the Company or any of its subsidiaries outside the United
States.
2.12 Registration Statement; Proxy Statement. None of the information
supplied or to be supplied by Company for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of the Parent Common Stock in or as a
result of the Merger (the "S-4") will, at the time the S-4 becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading; and (ii) the proxy statement/prospectus to be
filed with the SEC by Company pursuant to Section 5.1(a) hereof (the "PROXY
STATEMENT/PROSPECTUS") will, at the dates mailed to the shareholders of Company,
at the times of the shareholders meeting of Company (the "COMPANY SHAREHOLDERS'
MEETING") in connection with the transactions contemplated hereby and as of the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. The Proxy Statement/Prospectus will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to any information
supplied by Parent or Merger Sub which is contained in any of the foregoing
documents.
2.13 Restrictions on Business Activities. There is no agreement,
commitment, judgment, injunction, order or decree binding upon Company or its
subsidiaries or to which the Company or any of its subsidiaries is a party which
has or could reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of Company or any of its
subsidiaries, any
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<PAGE> 33
acquisition of property by Company or any of its subsidiaries or the conduct of
business by Company or any of its subsidiaries as currently conducted.
2.14 Title to Property. Neither Company nor any of its subsidiaries
owns any material real property. Company and each of its subsidiaries have good
and defensible title to all of their material properties and assets, free and
clear of all liens, charges and encumbrances except liens for taxes not yet due
and payable and such liens or other imperfections of title, if any, as do not
materially detract from the value of or materially interfere with the present
use of the property affected thereby; and all leases pursuant to which Company
or any of its subsidiaries lease from others material real or personal property
are in good standing, valid and effective in accordance with their respective
terms, and there is not, under any of such leases, any existing material default
or event of default of Company or any of its subsidiaries or, to the Company's
knowledge, any other party (or any event which with notice or lapse of time, or
both, would constitute a material default and in respect of which Company or
subsidiary has not taken adequate steps to prevent such default from occurring).
All the plants, structures and equipment of Company and its subsidiaries, except
such as may be under construction, are in good operating condition and repair,
in all material respects.
2.15 Taxes.
(a) Definition of Taxes. For the purposes of this Agreement, "TAX"
or "TAXES" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for Taxes of a predecessor entity.
(b) Tax Returns and Audits.
(i) The Company and each of its subsidiaries have timely filed
all federal, state, local and foreign returns, estimates, forms, information
statements and reports ("RETURNS") relating to Taxes required to be filed by the
Company and each of its subsidiaries with any Tax authority, except such Returns
which are not, individually or in the aggregate, material to the Company. The
Company and each of its subsidiaries have paid all Taxes shown to be due on such
Returns.
(ii) The Company and each of its subsidiaries as of the
Effective Time will have withheld with respect to its employees all federal and
state income Taxes, Taxes pursuant to the Federal Insurance Contribution Act,
Taxes pursuant to the Federal Unemployment Tax Act and other Taxes required to
be withheld, except such Taxes which are not, individually or in the aggregate,
material to the Company.
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<PAGE> 34
(iii) Neither the Company nor any of its subsidiaries has been
delinquent in the payment of any material Tax nor is there any material Tax
deficiency outstanding, proposed or assessed against the Company or any of its
subsidiaries, nor has the Company or any of its subsidiaries executed any
unexpired waiver of any statute of limitations on or extension of any period for
the assessment or collection of any Tax.
(iv) No audit or other examination of any Return of the
Company or any of its subsidiaries by any Tax authority is presently in
progress, nor has the Company or any of its subsidiaries been notified of any
request for such an audit or other examination.
(v) No adjustment relating to any Returns filed or required to
be filed by the Company or any of its subsidiaries has been proposed in writing,
formally or informally, by any Tax authority to the Company or any of its
subsidiaries or any representative thereof.
(vi) Neither the Company nor any of its subsidiaries has any
liability for any material unpaid Taxes (whether or not shown to be done on any
Return) which has not been accrued for or reserved on the Company balance sheet
dated July 31, 1999 in accordance with GAAP, whether asserted or unasserted,
contingent or otherwise, which is material to the Company, other than any
liability for unpaid Taxes that may have accrued since August 1, 1999 in
connection with the operation of the business of the Company and its
subsidiaries in the ordinary course. There are no liens with respect to Taxes on
any of the assets of the Company or any of its subsidiaries, other than liens
which are not individually or in the aggregate material, or customary liens for
current Taxes not yet due and payable
(vii) There is no contract, agreement, plan or arrangement to
which the Company or any of its subsidiaries is a party as of the date of this
Agreement, including but not limited to the provisions of this Agreement, that,
individually or collectively, should give rise to the payment of any amount that
would not be deductible pursuant to Sections 280G, 404 or 162(m) of the Code.
There is no contract, agreement, plan or arrangement to which the Company or any
of its subsidiaries is a party or by which it is bound to compensate any
individual for excise taxes paid pursuant to Section 4999 of the Code.
(viii) Neither the Company nor any of its subsidiaries has
filed any consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as defined in Section 341(f)(4) of the Code) owned by the Company or any of its
subsidiaries.
(ix) Neither the Company nor any of its subsidiaries is party
to or has any obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement.
(x) None of the Company's or its subsidiaries' assets are tax
exempt use property within the meaning of Section 168(h) of the Code.
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<PAGE> 35
(xi) Neither the Company nor any of its subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation" in
a distribution of stock qualifying for tax-free treatment under Section 355 of
the Code (x) in the two years prior to the date of this Agreement or (y) in a
distribution which could otherwise constitute part of a "plan" or "series of
related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
(xii) The Company and each of its subsidiaries are in full
compliance with all terms and conditions of any Tax exemptions, Tax holiday or
other Tax reduction agreement or order of a territorial or foreign government
and the consummation of the Merger will not have any adverse effect on the
continued validity and effectiveness of any such Tax exemptions, Tax holiday or
other Tax reduction agreement or order.
2.16 Brokers. Company has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders fees or agent's commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
2.17 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and all
worldwide common law and statutory rights in, arising out of, or
associated therewith: (i) patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations
and continuations-in-part thereof ("PATENTS"); (ii) inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know how, technology, technical data and
customer lists, and all documentation relating to any of the foregoing;
(iii) copyrights, copyrights registrations and applications therefor,
and all other rights corresponding thereto throughout the world; (iv)
domain names, uniform resource locators ("URLS") and other names and
locators associated with the Internet ("DOMAIN NAMES"); (v) industrial
designs and any registrations and applications therefor; (vi) trade
names, logos, common law trademarks and service marks, trademark and
service mark registrations and applications therefor; (vii) all
databases and data collections and all rights therein; (viii) all moral
and economic rights of authors and inventors, however denominated, and
(ix) any similar or equivalent rights to any of the foregoing (as
applicable).
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual Property
that is owned by, or exclusively licensed to, Company and it
subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" means all Intellectual Property that
is the subject of an application, certificate, filing, registration or
other document issued, filed with, or recorded by any private, state,
government or other legal authority.
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, the Company or
any of its subsidiaries.
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<PAGE> 36
(a) Section 2.17(a) of the Company Schedule is a complete and
accurate list of all Company Registered Intellectual Property and specifies,
where applicable, the jurisdictions in which each such item of Company
Registered Intellectual Property has been issued or registered and lists any
proceedings or actions before any court or tribunal (including the United States
Patent and Trademark Office (the "PTO") or equivalent authority anywhere in the
world) related to any of the Company Registered Intellectual Property.
(b) No Company Intellectual Property or product or service offering
of Company or any of its subsidiaries (a "COMPANY PRODUCT") is subject to any
proceeding or outstanding decree, order, judgment, contract, license, agreement,
or stipulation restricting in any manner the use, transfer, or licensing thereof
by Company or any of its subsidiaries, or which may affect the validity, use or
enforceability of such Company Intellectual Property or Company Product.
(c) Each material item of Company Registered Intellectual Property
is valid and subsisting, all necessary registration, maintenance and renewal
fees currently due in connection with such Company Registered Intellectual
Property have been made and all necessary documents, recordations and
certificates in connection with such Company Registered Intellectual Property
have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Company Registered Intellectual Property.
(d) Company owns and has good and exclusive title to, each material
item of Company Intellectual Property owned by it free and clear of any lien or
encumbrance (excluding non-exclusive licenses and related restrictions granted
in the ordinary course). Without limiting the foregoing: (i) Company is the
exclusive owner of all trademarks and trade names used in connection with the
operation or conduct of the business of Company and its subsidiaries, including
the sale, distribution or provision of any Company Products by Company or its
subsidiaries; (ii) Company owns exclusively, and has good title to, all
copyrighted works that are Company Products or which Company or any of its
subsidiaries otherwise purports to own; and (iii) to the extent that any Patents
would be infringed by any Company Products, Company is the exclusive owner of
such Patents.
(e) To the extent that any material technology, software or
Intellectual Property has been developed or created independently or jointly by
a third party for Company or any of its subsidiaries or is incorporated into any
of the Company Products, Company has a written agreement with such third party
with respect thereto and Company thereby either (i) has obtained ownership of,
and is the exclusive owner of, or (ii) has obtained a perpetual, non-terminable
license (sufficient for the conduct of its business as currently conducted and
as proposed to be conducted) to all such third party's Intellectual Property in
such work, material or invention by operation of law or by valid assignment, to
the fullest extent it is legally possible to do so.
(f) Neither Company nor any of its subsidiaries has transferred
ownership of, or granted any exclusive license with respect to, any Intellectual
Property that is material Company
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<PAGE> 37
Intellectual Property, to any third party, or knowingly permitted Company's
rights in such material Company Intellectual Property to lapse or enter the
public domain.
(g) Section 2.17(g) of the Company Schedule lists all material
contracts, licenses and agreements to which Company or any of its subsidiaries
is a party: (i) with respect to Company Intellectual Property licensed or
transferred to any third party (other than end-user licenses in the ordinary
course); or (ii) pursuant to which a third party has licensed or transferred any
material Intellectual Property to Company.
(h) All material contracts, licenses and agreements relating to
either (i) Company Intellectual Property or (ii) Intellectual Property of a
third party licensed to Company or any of its subsidiaries, are in full force
and effect. The consummation of the transactions contemplated by this Agreement
will neither violate nor result in the breach, modification, cancellation,
termination or suspension of such contracts, licenses and agreements. Each of
Company and its subsidiaries is in material compliance with, and has not
materially breached any term of any such contracts, licenses and agreements and,
to the knowledge of Company, all other parties to such contracts, licenses and
agreements are in compliance with, and have not materially breached any term of,
such contracts, licenses and agreements. Following the Closing Date, the
Surviving Corporation will be permitted to exercise all of Company's rights
under such contracts, licenses and agreements to the same extent Company and its
subsidiaries would have been able to had the transactions contemplated by this
Agreement not occurred and without the payment of any additional amounts or
consideration other than ongoing fees, royalties or payments which Company would
otherwise be required to pay. Neither this Agreement nor the transactions
contemplated by this Agreement, including the assignment to Parent or Merger Sub
by operation of law or otherwise of any contracts or agreements to which the
Company is a party, will result in (i) either Parent's or the Merger Sub's
granting to any third party any right to or with respect to any material
Intellectual Property right owned by, or licensed to, either of them, (ii)
either the Parent's or the Merger Sub's being bound by, or subject to, any
non-compete or other material restriction on the operation or scope of their
respective businesses, or (iii) either the Parent's or the Merger Sub's being
obligated to pay any royalties or other material amounts to any third party in
excess of those payable by Parent or Merger Sub, respectively, prior to the
Closing.
(i) To the best of Company's knowledge, the operation of the
business of the Company and its subsidiaries as such business currently is
conducted, including (i) Company's and its subsidiaries' design, development,
manufacture, distribution, reproduction, marketing or sale of the products or
services of Company and its subsidiaries (including Company Products ) and (ii)
the Company's use of any product, device or process, has not, does not and, to
its knowledge, will not infringe or misappropriate the Intellectual Property of
any third party or constitute unfair competition or trade practices under the
laws of any jurisdiction.
(j) Neither Company nor any of its subsidiaries has received
written notice from any third party that the operation of the business of
Company or any of its subsidiaries or any act, product or service of Company or
any of its subsidiaries, infringes or misappropriates the Intellectual
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Property of any third party or constitutes unfair competition or trade practices
under the laws of any jurisdiction.
(k) To the knowledge of Company, no person has or is infringing or
misappropriating any Company Intellectual Property.
(l) Company and each of its subsidiaries has taken reasonable steps
to protect Company's and its subsidiaries' rights in Company's confidential
information and trade secrets that it wishes to protect or any trade secrets or
confidential information of third parties provided to Company or any of its
subsidiaries, and, without limiting the foregoing, each of Company and its
subsidiaries has and uses its best efforts to enforce a policy requiring each
employee and contractor to execute a proprietary information/confidentiality
agreement substantially in the form provided to Parent and all current and
former employees and contractors of Company and any of its subsidiaries have
executed such an agreement, except where the failure to do so is not reasonably
expected to be material to Company.
(m) All of the Company Products which have a calendar function (i)
will record, store, process, calculate and present calendar dates falling on and
after (and if applicable, spans of time including) January 1, 2000, and will
calculate any information dependent on or relating to such dates in the same
manner, and with the same functionality, data integrity and performance, as the
products record, store, process, calculate and present calendar dates on or
before December 31, 1999, or calculate any information dependent on or relating
to such dates (collectively, "YEAR 2000 COMPLIANT"), (ii) will lose no
functionality with respect to the introduction of records containing dates
falling on or after January 1, 2000, and (iii) will, to the knowledge of
Company, be interoperable with other products used and distributed by Parent
that may reasonably deliver records to the Company's or any of its subsidiaries'
products or receive records from the Company's or any of its subsidiaries'
products, or interact with the Company's or any of its subsidiaries' products.
All of Company's or its subsidiaries' Information Technology (as defined below)
is Year 2000 Compliant, and will not cause an interruption in the ongoing
operations of the Company's or any of its subsidiaries' business on or after
January 1, 2000. For purposes of the foregoing, the term "INFORMATION
TECHNOLOGY" shall mean and include all software, hardware, firmware,
telecommunications systems, network systems, embedded systems and other systems,
components and/or services (other than general utility services including gas,
electric, telephone and postal) that are owned or used by the Company or any of
its subsidiaries in the conduct of their business, or purchased by the Company
or any of its subsidiaries from third-party suppliers.
2.18 Agreements, Contracts and Commitments. Neither Company nor any of
its subsidiaries is a party to or is bound by:
(a) any written employment or consulting agreement, contract or
commitment with any officer, director, Company employee currently earning an
annual salary in excess of $100,000 or member of Company's Board of Directors,
other than those that are terminable by
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Company or any of its subsidiaries on no more than thirty (30) days' notice
without liability or financial obligation to the Company;
(b) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(c) any material agreement of indemnification or any guaranty
other than any agreement of indemnification entered into in connection with the
sale of products in the ordinary course of business;
(d) any material agreement, contract or commitment containing any
covenant limiting in any respect the right of Company or any of its subsidiaries
to engage in any line of business or to compete with any person or granting any
exclusive distribution rights;
(e) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by Company or any of its subsidiaries
after the date of this Agreement of a material amount of assets not in the
ordinary course of business or pursuant to which Company or any of its
subsidiaries has any material ownership interest in any corporation,
partnership, joint venture or other business enterprise other than Company's
subsidiaries;
(f) any dealer, distributor, joint marketing or development
agreement currently in force under which Company or any of its subsidiaries have
continuing material obligations to jointly market any product, technology or
service and which may not be canceled without penalty upon notice of ninety (90)
days or less, or any material agreement pursuant to which Company or any of its
subsidiaries have continuing material obligations to jointly develop any
intellectual property that will not be owned, in whole or in part, by Company or
any of its subsidiaries and which may not be canceled without penalty upon
notice of ninety (90) days or less;
(g) any agreement, contract or commitment currently in force to
license any third party to manufacture or reproduce any Company product, service
or technology or any agreement, contract or commitment currently in force to
sell or distribute any Company products, service or technology except agreements
with distributors or sales representative in the normal course of business
cancelable without penalty upon notice of ninety (90) days or less and
substantially in the form previously provided to Parent;
(h) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit; on
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(i) any material settlement agreement under which the Company has
ongoing obligations; or
Neither Company nor any of its subsidiaries, nor to Company's
knowledge any other party to a Company Contract (as defined below), is in
breach, violation or default under, and neither Company nor any of its
subsidiaries has received written notice that it has breached, violated or
defaulted under, any of the material terms or conditions of any of the
agreements, contracts or commitments to which Company or any of its subsidiaries
is a party or by which it is bound that are required to be disclosed in the
Company Schedule (any such agreement, contract or commitment, a "COMPANY
CONTRACT") in such a manner as would permit any other party to cancel or
terminate any such Company Contract, or would permit any other party to seek
material damages or other remedies (for any or all of such breaches, violations
or defaults, in the aggregate). Company has made available to Parent true and
correct copies of any contracts Company may have with its top ten customers.
2.19 Opinion of Financial Advisor. Company has been advised in writing
by its financial advisor, Morgan Stanley & Co. Incorporated, that in its
opinion, as of the date of this Agreement, the Exchange Ratio is fair to the
holders of shares of Company Common Stock from a financial point of view.
2.20 Board Approval. The Board of Directors of Company has, as of the
date of this Agreement unanimously (subject to the abstention of Mr. Braham on
the advice of counsel (the "ABSTENTION")) (i) approved, subject to shareholder
approval, this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby, (ii) determined that the Merger is in the best
interests of the shareholders of Company and is on terms that are fair to such
shareholders and (iii) recommended that the shareholders of Company approve this
Agreement and the Merger.
2.21 Vote Required. The affirmative vote of a majority of the votes
that holders of the outstanding shares of Company Common Stock are entitled to
vote with respect to the Merger is the only vote of the holders of any class or
series of Company's capital stock necessary to approve this Agreement and the
transactions contemplated hereby.
2.22 Pooling of Interests. To its knowledge, based on consultation with
its independent accountants, neither the Company nor any of its directors,
officers or affiliates has taken any action which would interfere with (i)
Parent's ability to account for the Merger as a pooling of interests or (ii)
Parent's, Surviving Corporation's or the Company's ability to continue to
account for as a pooling of interests any past acquisition by the Company
currently accounted for as a pooling of interests.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to
Company, subject to such exceptions as are specifically disclosed in writing in
the disclosure letter and referencing a specific representation supplied by
Parent to Company dated as of the date hereof and certified by a duly authorized
officer of Parent (the "PARENT SCHEDULE"), as follows:
3.1 Organization and Qualification; Subsidiaries. Each of Parent and
its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted, except
where the failure to do so would not, individually or in the aggregate, have a
Material Adverse Effect on Parent. Each of Parent and its subsidiaries is in
possession of all Approvals necessary to own, lease and operate the properties
it purports to own, operate or lease and to carry on its business as it is now
being conducted, except where the failure to have such Approvals would not,
individually or in the aggregate, have a Material Adverse Effect on Parent. Each
of Parent and its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not, either individually or in the aggregate, have a Material Adverse Effect on
Parent.
3.2 Certificate of Incorporation and Bylaws. Parent has previously
furnished to Company complete and correct copies of its Certificate of
Incorporation and Bylaws as amended to date (together, the "PARENT CHARTER
DOCUMENTS"). Such Company Charter Documents and equivalent organizational
documents of each of its subsidiaries are in full force and effect. Parent is
not in violation of any of the provisions of the Company Charter Documents, and
no subsidiary of Company is in violation of any of its equivalent organizational
documents.
3.3 Capitalization. As of August 27, 1999, the authorized capital stock
of Parent consists of (i) 400,000,000 shares of Parent Common Stock, par value
$0.001 per share, and (ii) 1,200,000 shares of Preferred Stock, par value $0.001
per share ("PARENT PREFERRED STOCK"). At the close of business on August 27,
1999, (i) 269,807,125 shares of Parent Common Stock were issued and outstanding,
(ii) no shares of Parent Common Stock were held in treasury by Parent or by
subsidiaries of Parent, and (iii) 11,524,087 shares of Parent Common Stock were
reserved for issuance upon the exercise of outstanding options ("PARENT
OPTIONS") to purchase Parent Common Stock. As of the date hereof, no shares of
Parent Preferred Stock were issued or outstanding. The authorized capital stock
of Merger Sub consists of 1,000 shares of common stock, no par value per share,
all of which, as of the date hereof, are issued and outstanding. All of the
outstanding shares of Parent's and Merger Sub's respective capital stock have
been duly authorized and validly issued and are fully paid and nonassessable.
All shares of Parent Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which
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they are issuable, shall, and the shares of Parent Common Stock to be issued
pursuant to the Merger will be, duly authorized, validly issued, fully paid and
nonassessable. All of the outstanding shares of capital stock (other than
directors' qualifying shares) of each of Parent's subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and all such shares
(other than directors' qualifying shares) are owned by Parent or another
subsidiary free and clear of all security interests, liens, claims, pledges,
agreements, limitations in Parent's voting rights, charges or other encumbrances
of any nature whatsoever.
3.4 Authority Relative to this Agreement. Each of Parent and Merger Sub
has all necessary corporate power and authority to execute and deliver this
Agreement and the Stock Option Agreement, and to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Stock Option
Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement and the Stock Option Agreement, or to
consummate the transactions so contemplated. This Agreement and the Stock Option
Agreement have been duly and validly executed and delivered by Parent and Merger
Sub and, assuming the due authorization, execution and delivery by Company,
constitute legal and binding obligations of Parent and Merger Sub, enforceable
against Parent and Merger Sub in accordance with their respective terms.
3.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and
Merger Sub and the Stock Option Agreement by Parent do not, and the performance
of this Agreement by Parent and Merger Sub and the Stock Option Agreement by
Parent shall not, (i) conflict with or violate the Parent Charter Documents or
equivalent organizational documents or any of Parent's subsidiaries, (ii)
subject to compliance with the requirements set forth in Section 3.5(b) below,
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Parent or any of its subsidiaries or by which it or their
respective properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair Parent's or any such subsidiary's
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the properties or
assets of Parent or any of its subsidiaries pursuant to, any material note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries or its or
any of their respective properties are bound or affected, except to the extent
such conflict, violation, breach, default, impairment or other effect could not
in the case of clauses (ii) or (iii) individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent.
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(b) The execution and delivery of this Agreement by Parent and
Merger Sub and the Stock Option Agreement by Parent do not, and the performance
of this Agreement by Parent and Merger Sub shall not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, Blue Sky Laws, the pre-merger notification
requirements of the HSR Act and of foreign governmental entities and the rules
and regulations thereunder, the rules and regulations of Nasdaq, and the filing
and recordation of the Agreement of Merger as required by California Law and
(ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, (A) would not prevent
consummation of the Merger or otherwise prevent Parent or Merger Sub from
performing their respective obligations under this Agreement or (B) could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent.
3.6 SEC Filings; Financial Statements.
(a) Parent has made available to Company a correct and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by Parent with the SEC on or after July 1, 1997 (the "PARENT SEC
REPORTS"), which are all the forms, reports and documents required to be filed
by Parent with the SEC since July 1, 1997. The Parent SEC Reports (A) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (B) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. None of Parent's subsidiaries is required to
file any reports or other documents with the SEC.
(b) Each set of consolidated financial statements (including, in
each case, any related notes thereto) contained in the Parent SEC Reports was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited statements, do not contain footnotes as permitted by Form 10-Q
of the Exchange Act) and each fairly presents in all material respects the
consolidated financial position of Parent and its subsidiaries at the respective
dates thereof and the consolidated results of its operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal adjustments which were not or are not expected to
be material in amount.
(c) Since the date of the balance sheet included in Parent's report
on Form 10-Q filed on May 28, 1999, and until the date hereof, there has not
occurred any Material Adverse Effect on Parent.
3.7 No Undisclosed Liabilities. Neither Parent nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of
a nature required to be disclosed on a
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balance sheet or in the related notes to the consolidated financial statements
prepared in accordance with GAAP which are, individually or in the aggregate,
material to the business, results of operations or financial condition of Parent
and its subsidiaries taken as a whole, except (i) liabilities provided for in
Company's balance sheet as of May 28, 1999 or (ii) liabilities incurred since
May 28, 1999 in the ordinary course of business, none of which is material to
the business, results of operations or financial condition of Parent and its
subsidiaries, taken as a whole.
3.8 Absence of Litigation. There are no claims, suits, actions or
proceedings that have a reasonable likelihood of success on the merits pending
or, to the knowledge of Parent, threatened against, relating to or affecting
Parent or any of its subsidiaries, before any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator that seek to
restrain or enjoin the consummation of the transactions contemplated by this
Agreement.
3.9 Registration Statement; Proxy Statement. None of the information
supplied or to be supplied by Parent for inclusion or incorporation by reference
in (i) the S-4 will, at the time the S-4 becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading; and (ii) the Proxy Statement/Prospectus will, at the dates mailed to
the shareholders of Company, at the time of the Company Shareholders' Meeting
and pas of the Effective Time, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The S-4 will comply as to form in all material
respects with the provisions of the Securities Act and the rules and regulations
promulgated by the SEC thereunder. Notwithstanding the foregoing, Parent makes
no representation or warranty with respect to any information supplied by the
Company which is contained in any of the foregoing documents.
3.10 Title to Property. Parent and each of its subsidiaries have good
and defensible title to all of their material properties and assets, free and
clear of all liens, charges and encumbrances except liens for taxes not yet due
and payable and such liens or other imperfections of title, if any, as do not
materially detract from the value of or materially interfere with the present
use of the property affected thereby; and all leases pursuant to which Parent or
any of its subsidiaries lease from others material real or personal property are
in good standing, valid and effective in accordance with their respective terms,
and there is not, under any of such leases, any existing material default or
event of default of Parent or any of its subsidiaries or, to Parent's knowledge,
any other party (or any event which with notice or lapse of time, or both, would
constitute a material default and in respect of which Parent or subsidiary has
not taken adequate steps to prevent such default from occurring). All the
plants, structures and equipment of Parent and its subsidiaries, except such as
may be under construction, are in good operating condition and repair, in all
material respects.
3.11 Pooling of Interests. To its knowledge, based on consultation with
its independent accountants, neither Parent nor any of its directors, officers
or affiliates has taken any action which would interfere with Parent's ability
to account for the Merger as a pooling of interests.
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ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Company. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Company and each of its
subsidiaries shall, except to the extent that Parent shall otherwise consent in
writing, carry on its business, in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted and in compliance with all
applicable laws and regulations, pay its debts and taxes when due subject to
good faith disputes over such debts or taxes, pay or perform other material
obligations when due, and use its commercially reasonable efforts consistent
with past practices and policies to (i) preserve intact its present business
organization, (ii) keep available the services of its present officers and
employees and (iii) preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has significant
business dealings.
In addition, except as permitted by the terms of this Agreement, and
except as provided in Section 4.1 of the Company Schedule, without the prior
written consent of Parent, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Effective Time, Company shall not do any of the following and
shall not permit its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(b) Grant any severance or termination pay to any officer or
employee except pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in writing or made
available to Parent, or adopt any new severance plan, or amend or modify or
alter in any manner any severance plan, agreement or arrangement existing on the
date hereof;
(c) Transfer or license to any person or entity or otherwise
extend, amend or modify any rights to the Company Intellectual Property, or
enter into grants to transfer or license to any person future patent rights,
other than in the ordinary course of business consistent with past practices,
provided that in no event shall Company license on an exclusive basis or sell
any Company Intellectual Property (other than in connection with the abandonment
of immaterial Company Intellectual Property after the provision of at least five
business days' written notice to Parent);
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine
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or reclassify any capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or indirectly,
any shares of capital stock of Company or its subsidiaries, except repurchases
of unvested shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or purchase agreements
in effect on the date hereof (or any such agreements entered into in the
ordinary course consistent with past practice by Company with employees hired
after the date hereof);
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber
or propose any of the foregoing with respect to, any shares of capital stock or
any securities convertible into shares of capital stock, or subscriptions,
rights, warrants or options to acquire any shares of capital stock or any
securities convertible into shares of capital stock, or enter into other
agreements or commitments of any character obligating it to issue any such
shares or convertible securities, other than (x) the issuance delivery and/or
sale of (i) shares of Company Common Stock pursuant to the exercise of stock
options outstanding as of the date of this Agreement, and (ii) shares of Company
Common Stock issuable to participants in the ESPP consistent with the terms
thereof and (y) the granting of stock options (and the issuance of Common Stock
upon exercise thereof), in the ordinary course of business and consistent with
past practices, in an amount not to exceed options to purchase (and the issuance
of Company Common Stock upon exercise thereof) 200,000 shares in the aggregate.
(g) Cause, permit or propose any amendments to the Company Charter
Documents (or similar governing instruments of any of its Significant
Subsidiaries);
(h) Acquire or agree to acquire by merging or consolidating with,
or by purchasing any equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
enter into any joint ventures, strategic partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets except sales of inventory in the ordinary course of
business consistent with past practice, except for the sale, lease or
disposition (other than through licensing permitted by clause (c)) of property
or assets which are not material, individually or in the aggregate, to the
business of Company and its subsidiaries;
(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Company, enter
into any "keep well" or other agreement to maintain any financial statement
condition or enter into any arrangement having the economic effect of any of the
foregoing other than in connection with the financing of working capital
consistent with past practice;
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(k) Adopt or amend any employee benefit plan, policy or
arrangement, any employee stock purchase or employee stock option plan, or enter
into any employment contract or collective bargaining agreement (other than
offer letters and letter agreements entered into in the ordinary course of
business consistent with past practice with employees who are terminable "at
will"), pay any special bonus or special remuneration to any director or
employee, or increase the salaries or wage rates or fringe benefits (including
rights to severance or indemnification) of its directors, officers, employees or
consultants except, in each case, as may be required by law;
(l) (i) pay, discharge, settle or satisfy any litigation (whether
or not commenced prior to the date of this Agreement) or any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, or liabilities recognized or disclosed in the
most recent consolidated financial statements (or the notes thereto) of Company
included in the Company SEC Reports or incurred since the date of such financial
statements, or (ii) waive the benefits of, agree to modify in any manner,
terminate, release any person from or knowingly fail to enforce any
confidentiality or similar agreement to which Company or any of its subsidiaries
is a party or of which Company or any of its subsidiaries is a beneficiary;
(m) Except in the ordinary course of business consistent with past
practice, modify, amend or terminate any material contract or agreement to which
Company or any subsidiary thereof is a party or waive, delay the exercise of,
release or assign any material rights or claims thereunder;
(n) Except as required by GAAP, revalue any of its assets or make
any change in accounting methods, principles or practices;
(o) Incur or enter into any agreement, contract or commitment
requiring Company or any of its subsidiaries to pay in excess of $10,000,000;
(p) Engage in any action that could reasonably be expected to (i)
cause the Merger to fail to qualify as a "reorganization" under Section 368(a)
of the Code or (ii) interfere with Parent's ability to account for the Merger as
a pooling of interests, whether or not (in each case) otherwise permitted by the
provisions of this Article IV;
(q) Make any Tax election or accounting method change inconsistent
with past practice that, individually or in the aggregate, is reasonably likely
to adversely affect in any material respect the Tax liability or Tax attributes
of Company or any of its subsidiaries, settle or compromise any material Tax
liability or consent to any extension or waiver of any limitation period with
respect to Taxes;
(r) Agree in writing or otherwise to take any of the actions
described in Section 4.1 (a) through (q) above.
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4.2 Conduct of Business by Parent. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, except as permitted by
the terms of this Agreement and the Stock Option Agreement and except as
provided in Section 4.2 of the Parent Schedule, without the prior written
consent of Company, Parent shall not engage in any action that could reasonably
be expected to (i) cause the Merger to fail to qualify as a "reorganization"
under Section 368(a) of the Code or (ii) interfere with Parent's ability to
account for the Merger as a pooling of interests.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement; Other Filings;
Board Recommendations.
(a) As promptly as practicable after the execution of this
Agreement, Company and Parent will prepare, and file with the SEC, the Proxy
Statement/Prospectus, and Parent will prepare and file with the SEC the S-4 in
which the Proxy Statement/Prospectus will be included as a prospectus. Each of
Parent and Company shall provide promptly to the other such information
concerning its business and financial statements and affairs as, in the
reasonable judgment of the providing party or its counsel, may be required or
appropriate for inclusion in the Proxy Statement/Prospectus and the S-4, or in
any amendments or supplements thereto, and to cause its counsel and auditors to
cooperate with the other's counsel and auditors in the preparation of the Proxy
Statement/Prospectus and the S-4. Each of Company and Parent will respond to any
comments of the SEC, and will use its respective commercially reasonable efforts
to have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing, and Company will cause the Proxy
Statement/Prospectus to be mailed to its shareholders at the earliest
practicable time after the S-4 is declared effective by the SEC. As promptly as
practicable after the date of this Agreement, each of Company and Parent will
prepare and file any other filings required to be filed by it under the Exchange
Act, the Securities Act or any other Federal, foreign or Blue Sky or related
laws relating to the Merger and the transactions contemplated by this Agreement
(the "OTHER FILINGS"). Each of Company and Parent will notify the other promptly
upon the receipt of any comments from the SEC or its staff or any other
government officials and of any request by the SEC or its staff or any other
government officials for amendments or supplements to the S-4, the Proxy
Statement/Prospectus or any Other Filing or for additional information and will
supply the other with copies of all correspondence between such party or any of
its representatives, on the one hand, and the SEC or its staff or any other
government officials, on the other hand, with respect to the S-4, the Proxy
Statement/Prospectus, the Merger or any Other Filing. Each of Company and Parent
will cause all documents that it is responsible for filing with the SEC or other
regulatory authorities under this Section 5.1(a) to comply in all material
respects with all applicable requirements of law and the rules and regulations
promulgated thereunder. Whenever any event occurs which is required to be set
forth in an amendment or supplement to the Proxy Statement/Prospectus, the S-4
or any Other Filing, Company or Parent, as the case may be, will promptly inform
the other of such occurrence
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and cooperate in filing with the SEC or its staff or any other government
officials, and/or mailing to shareholders of Company, such amendment or
supplement.
(b) The Proxy Statement/Prospectus will include the unanimous (but
for the Abstention) recommendation of the Board of Directors of Company in favor
of adoption and approval of this Agreement and approval of the Merger (subject
to Section 5.2(c)).
5.2 Meeting of Company Shareholders.
(a) Promptly after the date hereof, Company will take all action
necessary in accordance with California Law and the Company Charter Documents to
convene the Company Shareholders' Meeting to be held as promptly as practicable
after the declaration of the effectiveness of the S-4 for the purpose of voting
upon this Agreement and the Merger. Subject to Section 5.2(c), Company will use
its commercially reasonable efforts to solicit from its shareholders proxies in
favor of the adoption and approval of this Agreement and the approval of the
Merger and will take all other action necessary or advisable to secure the vote
or consent of its shareholders required by the rules of Nasdaq or California Law
to obtain such approvals. Notwithstanding anything to the contrary contained in
this Agreement, Company may adjourn or postpone the Company Shareholders'
Meeting to the extent necessary to ensure that any necessary supplement or
amendment to the Prospectus/Proxy Statement is provided to Company's
shareholders in advance of a vote on the Merger and this Agreement or, if as of
the time for which the Company Shareholders' Meeting is originally scheduled (as
set forth in the Prospectus/Proxy Statement) there are insufficient shares of
Company Common Stock represented (either in person or by proxy) to constitute a
quorum necessary to conduct the business of the Company Shareholders' Meeting.
Company shall ensure that the Company Shareholders' Meeting is called, noticed,
convened, held and conducted, and that all proxies solicited by Company in
connection with the Company Shareholders' Meeting are solicited, in compliance
with California Law, the Company Charter Documents, the rules of Nasdaq and all
other applicable legal requirements. Company's obligation to call, give notice
of, convene and hold the Company Shareholders' Meeting in accordance with this
Section 5.2(a) shall not be limited to or otherwise affected by the
commencement, disclosure, announcement or submission to Company of any
Acquisition Proposal or any change in the Board of Directors recommendation
regarding the Merger.
(b) Subject to Section 5.2(c): (i) the Board of Directors of
Company shall unanimously (but for the Abstention) recommend that Company's
shareholders vote in favor of and adopt and approve this Agreement and the
Merger at the Company Shareholders' Meeting; (ii) the Prospectus/Proxy Statement
shall include a statement to the effect that the Board of Directors of the
Company has unanimously (but for the Abstention) recommended that Company's
shareholders vote in favor of and adopt and approve this Agreement and the
Merger at the Company Shareholders' Meeting; and (iii) neither the Board of
Directors of Company nor any committee thereof shall withdraw, amend or modify,
or propose or resolve to withdraw, amend or modify in a manner adverse to
Parent, the unanimous (but for the Abstention) recommendation of the Board of
Directors of Company that Company's shareholders vote in favor of and adopt and
approve this Agreement
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and the Merger. For purposes of this Agreement, said recommendation of the Board
of Directors shall be deemed to have been modified in a manner adverse to Parent
if said recommendation shall no longer be unanimous (but for the Abstention).
(c) Nothing in this Agreement shall prevent the Board of Directors
of Company from withholding, withdrawing, amending or modifying its unanimous
(but for the Abstention) recommendation in favor of the Merger if (neither
Company nor any of its representatives shall have violated any of the
restrictions set forth in Section 5.4 and the Company is not then in breach of
this Agreement, and (ii) the Board of Directors of Company reasonably concludes
in good faith, after consultation with and receiving advice from its outside
counsel concurring with the Board of Directors, that, the withholding,
withdrawal, amendment or modification of such recommendation is required in
order for the Board of Directors of Company to comply with its fiduciary
obligations to Company's shareholders under applicable law; provided, however,
that prior to any commencement thereof the Company shall have given Parent at
least 72 hours notice thereof and the opportunity to meet with the Company and
its counsel. No such withholding, withdrawal, amendment or modification shall be
publicly announced prior to the mailing of the Prospectus/Proxy Statement.
Nothing contained in this Section 5.2 shall limit Company's obligation to hold
and convene the Company Shareholders' Meeting (regardless of whether the
unanimous (but for the Abstention) recommendation of the Board of Directors of
the Company shall have been withdrawn, amended or modified). For purposes of
this Agreement, "SUPERIOR OFFER" shall mean an unsolicited, bona fide written
offer made by a third party to consummate any of the following transactions: (i)
a merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Company pursuant to which the
shareholders of Company immediately preceding such transaction hold less than
51% of the equity interest in the surviving or resulting entity of such
transaction; (ii) a sale or other disposition by Company of assets (excluding
inventory and used equipment sold in the ordinary course of business)
representing in excess of 51% of the fair market value of Company's business
immediately prior to such sale, or (iii) the acquisition by any person or group
(including by way of a tender offer or an exchange offer or issuance by
Company), directly or indirectly, of beneficial ownership or a right to acquire
beneficial ownership of shares representing in excess of 51% of the voting power
of the then outstanding shares of capital stock of Company, in each case on
terms that the Board of Directors of Company determines, in its reasonable
judgment (based on written advice of a financial advisor of nationally
recognized reputation) to be more favorable to Company shareholders from a
financial point of view than the terms of the Merger; provided, however, that
any such offer shall not be deemed to be a "Superior Offer" if any financing
required to consummate the transaction contemplated by such offer is not
committed and is not likely in the judgment of Company's Board of Directors to
be obtained by such third party on a timely basis.
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5.3 Confidentiality; Access to Information(a) The parties acknowledge
that Company and Parent have previously executed a Mutual Confidentiality
Agreement, dated as of August 9, 1999 (the "CONFIDENTIALITY AGREEMENT"), which
Confidentiality Agreement will continue in full force and effect in accordance
with its terms.
(b) Access to Information. Company will afford Parent and its
accountants, counsel and other representatives reasonable access during normal
business hours, upon reasonable notice, to the properties, books, records and
personnel of Company during the period prior to the Effective Time to obtain all
information concerning the business, including the status of product development
efforts, properties, results of operations and personnel of Company, as Parent
may reasonably request. No information or knowledge obtained by Parent in any
investigation pursuant to this Section 5.3 will affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
5.4 No Solicitation.
(a) From and after the date of this Agreement until the Effective
Time or termination of this Agreement pursuant to Article VII, Company and its
subsidiaries will not, nor will they authorize or permit any of their respective
officers, directors, affiliates or employees or any investment banker, attorney
or other advisor or representative retained by any of them to, directly or
indirectly (i) solicit, initiate, encourage or induce the making, submission or
announcement of any Acquisition Proposal (as defined below), (ii) participate in
any discussions or negotiations regarding, or furnish to any person any
non-public information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes or may reasonably
be expected to lead to, any Acquisition Proposal, (iii) engage in discussions
with any person with respect to any Acquisition Proposal, (iv) subject to
Section 5.2(c), approve, endorse or recommend any Acquisition Proposal or (v)
enter into any letter of intent or similar document or any contract, agreement
or commitment contemplating or otherwise relating to any Acquisition Transaction
(as defined below); provided, however, this Section 5.4(a) shall not prohibit
Company from (A) furnishing information regarding Company and its subsidiaries
to, entering into a confidentiality agreement with or entering into discussions
with, any person or group in response to a Superior Offer submitted by such
person or group (and not withdrawn) if (1) neither Company nor any
representative of Company and its subsidiaries shall have violated any of the
restrictions set forth in this Section 5.4, (2) the Board of Directors of
Company concludes in good faith, after consultation with its outside legal
counsel, that such action is required in order for the Board of Directors of
Company to comply with its fiduciary obligations to Company's shareholders under
applicable law, (3) (x) at least two business days prior to furnishing any such
nonpublic information to, or entering into discussions or negotiations with,
such person or group, Company gives Parent written notice of the identity of
such person or group and of Company's intention to furnish nonpublic information
to, or enter into discussions or negotiations with, such person or group and (y)
the Company receives from such person or group an executed confidentiality
agreement containing customary limitations on the use and disclosure of all
written and oral information furnished to such person or group by or on behalf
of the Company, and (4) contemporaneously with furnishing any such information
to such person or group, Company
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furnishes such information to Parent (to the extent such information has not
been previously furnished by the Company to Parent) or (B) complying with Rule
14e-2 promulgated under the Exchange Act with regard to an Acquisition Proposal
with respect to which no violation of this Section 5.4 shall have occurred.
Company and its subsidiaries will immediately cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding two
sentences by any officer or director of Company or any of its subsidiaries or
any investment banker, attorney or other advisor or representative of Company or
any of its subsidiaries shall be deemed to be a breach of this Section 5.4 by
Company. In addition to the foregoing, the Company shall (i) provide Parent with
at least forty-eight (48) hours prior notice (or such lesser prior notice as
provided to the members of Company's Board of Directors) of any meeting of
Company's Board of Directors at which Company's Board of Directors is reasonably
expected to consider a Superior Offer and (ii) provide Parent with at least five
(5) business days prior written notice (or such lesser prior notice as provided
to the members of Company's Board of Directors) of a meeting of Company's Board
of Directors at which Company's Board of Directors is reasonably expected to
recommend a Superior Offer to its shareholders and together with such notice a
copy of the definitive documentation relating to such Superior Offer.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
offer or proposal (other than an offer or proposal by Parent) relating to any
Acquisition Transaction. For the purposes of this Agreement, "ACQUISITION
TRANSACTION" shall mean any transaction or series of related transactions other
than the transactions contemplated by this Agreement involving: (A) any
acquisition or purchase from the Company by any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a 5% interest in the total outstanding voting
securities of the Company or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 5% or more of the total outstanding voting
securities of Company or any of its subsidiaries or any merger, consolidation,
business combination or similar transaction involving Company pursuant to which
the shareholders of Company immediately preceding such transaction hold less
than 95% of the equity interests in the surviving or resulting entity of such
transaction; (B) any sale, lease (other than in the ordinary course of
business), exchange, transfer, license (other than in the ordinary course of
business), acquisition or disposition of more than 5% of the assets of Company;
or (C) any liquidation or dissolution of Company.
(b) In addition to the obligations of Company set forth in
paragraph (a) of this Section 5.4, Company as promptly as practicable shall
advise Parent orally and in writing of any request received by Company for
information which Company reasonably believes would lead to an Acquisition
Proposal or of any Acquisition Proposal, or any inquiry received by Company with
respect to, or which Company reasonably believes would lead to any Acquisition
Proposal, the material terms and conditions of such request, Acquisition
Proposal or inquiry, and the identity of the person or group making any such
request, Acquisition Proposal or inquiry. Company will keep
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Parent informed in all material respects of the status and details (including
material amendments or proposed amendments) of any such request, Acquisition
Proposal or inquiry.
5.5 Public Disclosure. Parent and Company will consult with each other,
and to the extent practicable, agree, before issuing any press release or
otherwise making any public statement with respect to the Merger, this Agreement
or an Acquisition Proposal and will not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
law or any listing agreement with a national securities exchange. The parties
have agreed to the text of the joint press release announcing the signing of
this Agreement.
5.6 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including using reasonable efforts to accomplish the following: (i)
the taking of all reasonable acts necessary to cause the conditions precedent
set forth in Article VI to be satisfied, (ii) the obtaining of all necessary
actions or nonactions, waivers, consents, approvals, orders and authorizations
from Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity, (iii) the obtaining of all consents, approvals or waivers
from third parties required as a result of the transactions contemplated in this
Agreement, (iv) the defending of any suits, claims, actions, investigations or
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (v) the execution or delivery of any
additional instruments reasonably necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, Company and its Board of
Directors shall, if any state takeover statute or similar statute or regulation
is or becomes applicable to the Merger, this Agreement or any of the
transactions contemplated by this Agreement, use all reasonable efforts to
ensure that the Merger and the other transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Merger, this Agreement and the transactions contemplated hereby.
Notwithstanding anything herein to the contrary, nothing in this Agreement shall
be deemed to require Parent or Company or any subsidiary or affiliate thereof to
agree to any divestiture by itself or any of its affiliates of shares of capital
stock or of any business, assets or property, or the imposition of any material
limitation on the ability of any of them to conduct their business or to own or
exercise control of such assets, properties and stock.
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(b) Company shall give prompt notice to Parent upon becoming aware
that any representation or warranty made by it contained in this Agreement has
become untrue or inaccurate, or of any failure of Company to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement, in each case, such that
the conditions set forth in Section 6.3(a) or 6.3(b) would not be satisfied;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
(c) Parent shall give prompt notice to Company upon becoming aware
that any representation or warranty made by it or Merger Sub contained in this
Agreement has become untrue or inaccurate, or of any failure of Parent or Merger
Sub to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement, in each
case, such that the conditions set forth in Section 6.2(a) or 6.2(b) would not
be satisfied; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
5.7 Third Party Consents. As soon as practicable following the date
hereof, Parent and Company will each use its commercially reasonable efforts to
obtain any consents, waivers and approvals under any of its or its subsidiaries'
respective agreements, contracts, licenses or leases required to be obtained in
connection with the consummation of the transactions contemplated hereby.
5.8 Stock Options and Employee Benefits.
(a) Stock Options. At the Effective Time, each outstanding option
to purchase shares of Company Common Stock (each, a "COMPANY STOCK OPTION")
under the Company Option Plans, whether or not vested, shall by virtue of the
Merger be assumed by Parent. Each Company Stock Option so assumed by Parent
under this Agreement will continue to have, and be subject to, the same terms
and conditions of such options immediately prior to the Effective Time
(including, without limitation, any repurchase rights or vesting provisions and
provisions regarding the acceleration of vesting on certain transactions, other
than the transactions contemplated by this Agreement), except that (i) each
Company Stock Option will be exercisable (or will become exercisable in
accordance with its terms) for that number of whole shares of Parent Common
Stock equal to the product of the number of shares of Company Common Stock that
were issuable upon exercise of such Company Stock Option immediately prior to
the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest
whole number of shares of Parent Common Stock and (ii) the per share exercise
price for the shares of Parent Common Stock issuable upon exercise of such
assumed Company Stock Option will be equal to the quotient determined by
dividing the exercise price per share of Company Common Stock at which such
Company Stock Option was exercisable immediately prior to the Effective Time by
the Exchange Ratio, rounded up to the nearest whole cent. Parent shall comply
with the terms of all such Company Stock Options and use its best efforts to
ensure, to the extent required by, and subject to the provisions of, the Company
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Option Plans and permitted under the Code that any Company Stock Options that
qualified for tax treatment under Section 424(b) of the Code prior to the
Effective Time continue to so qualify after the Effective Time. Parent shall
take all corporate actions necessary to reserve for issuance a sufficient number
of shares of Parent Common Stock for delivery to the terms set forth in Section
5.8 (a).
(b) ESPP. Prior to the Effective Time, outstanding purchase rights
under Company's ESPP shall be exercised in accordance with the terms of the ESPP
as described in Paragraph 22 of Company's Prospectus Supplement with respect to
and each share of Company Common Stock purchased pursuant to such exercise shall
by virtue of the Merger, and without any action on the part of the holder
thereof, be converted into the right to receive a number of shares of Parent
Common Stock equal to the Exchange Ratio without issuance of certificates
representing issued and outstanding shares of Company Common Stock to ESPP
participants. Company agrees that it shall terminate the ESPP immediately
following the aforesaid purchase of shares of Company Common Stock thereunder.
(c) To the extent permitted by Parent's employee benefit plans and
applicable Law, Parent will, or will cause Company to, give individuals who are
employed by Company and its subsidiaries as of the Effective Time ("AFFECTED
EMPLOYEES") full credit for purposes of eligibility, vesting, benefit accrual
(excluding, however, benefit accrual under any defined benefit pension plans)
and determination of the level of benefits under any employee benefit plans or
arrangements maintained by Parent or any subsidiary of Parent for such Affected
Employees' service with Company or any subsidiary of the Company to the same
extent recognized by Company immediately prior to the Effective Time.
(d) To the extent permitted by Parent's employee benefit plans and
applicable Law, Parent will, or will cause Company to, (i) waive all limitations
as to preexisting conditions exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Affected Employees
under any welfare benefit plans that such employees may be eligible to
participate in after the Effective Time, other than limitations or waiting
periods that are already in effect with respect to such employees and that have
not been satisfied as of the Effective Time under any welfare plan maintained
for the Affected Employees immediately prior to the Effective Time, and (ii)
provide each Affected Employee with credit for any co-payments and deductibles
paid prior to the Effective Time in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans that such employees are
eligible to participate in after the Effective Time.
(e) As of the Effective Time, Parent shall assume and honor and
shall cause Company to honor in accordance with their terms all employment,
severance and other compensation agreements and arrangements existing (and
disclosed by Company to Parent) prior to the execution of this Agreement which
are between Company or any subsidiary and any director, officer or employee
thereof except as otherwise expressly agreed between Parent and such person.
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5.9 Form S-8. Parent agrees to file, if available for use by Parent, a
registration statement on Form S-8 for the shares of Parent Common Stock
issuable with respect to assumed Company Stock Options as soon as is reasonably
practicable after the Effective Time.
5.10 Indemnification.
(a) From and after the Effective Time, Parent will cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
Company pursuant to any indemnification agreements between Company and its
directors and officers in effect immediately prior to the Effective Time (the
"INDEMNIFIED PARTIES") and any indemnification provisions under the Company
Charter Documents as in effect on the date hereof. The Articles of Incorporation
and Bylaws of the Surviving Corporation will contain provisions with respect to
exculpation and indemnification that are at least as favorable to the
Indemnified Parties as those contained in the Company Charter Documents as in
effect on the date hereof, which provisions will not be amended, repealed or
otherwise modified for a period of six (6) years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who,
immediately prior to the Effective Time, were directors, officers, employees or
agents of Company, unless such modification is required by law.
(b) In the event Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers a material amount of its
properties and assets to any person in a single transaction or a series of
transactions, then, and in each such case, Parent will either guaranty the
indemnification obligations referred to in this Section 5.10 or will make or
cause to be made proper provision so that the successors and assigns of Company
or the Surviving Corporation, as the case may be, assume the indemnification
obligations described herein for the benefit of the Indemnified Parties.
(c) The provisions of this Section 5.10 are (i) intended to be for
the benefit of, and will be enforceable by, each of the Indemnified Parties and
(ii) in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by contract or
otherwise.
(d) For a period of six years after the Effective Time, Parent
shall use its best efforts to maintain in effect the directors' and officers'
liability insurance policies maintained by Company; provided, however, that in
no event shall Parent be required to expend in any one year in excess of 150% of
the annual premium currently paid by Company for such coverage, which Company
hereby represents is $288,000.
5.11 NYSE Listing. Parent agrees to cause, prior to the Effective Time,
the listing on the NYSE of the shares of Parent Common Stock issuable, and those
required to be reserved for issuance, in connection with the Merger, subject to
official notice of issuance.
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5.12 Company Affiliate Agreement. Set forth in Section 5.12 the Company
Schedule is a list of those persons who may be deemed to be, in Company's
reasonable judgment, affiliates of Company within the meaning of Rule 145
promulgated under the Securities Act (each, a "COMPANY AFFILIATE"). Company will
provide Parent with such information and documents as Parent reasonably requests
for purposes of reviewing such list. Each Company Affiliate Agreement will be in
full force and effect as of the Effective Time. Parent will be entitled to place
appropriate legends on the certificates evidencing any Parent Common Stock to be
received by a Company Affiliate pursuant to the terms of this Agreement, and to
issue appropriate stop transfer instructions to the transfer agent for the
Parent Common Stock, consistent with the terms of the Company Affiliate
Agreement.
5.13 Regulatory Filings; Reasonable Efforts. As soon as may be
reasonably practicable, Company and Parent each shall file with the United
States Federal Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice ("DOJ") Notification and Report Forms
relating to the transactions contemplated herein as required by the HSR Act, as
well as comparable pre-merger notification forms required by the merger
notification or control laws and regulations of any applicable jurisdiction, as
agreed to by the parties. Company and Parent each shall promptly (a) supply the
other with any information which may be required in order to effectuate such
filings and (b) supply any additional information which reasonably may be
required by the FTC, the DOJ or the competition or merger control authorities of
any other jurisdiction and which the parties may reasonably deem appropriate;
provided, however, that Parent shall not be required to agree to any divestiture
by Parent or the Company or any of Parent's subsidiaries or affiliates of shares
of capital stock or of any business, assets or property of Parent or its
subsidiaries or affiliates or of the Company, its affiliates, or the imposition
of any material limitation on the ability of any of them to conduct their
businesses or to own or exercise control of such assets, properties and stock.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) Company Shareholder Approval. This Agreement shall have been
approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law, by the shareholders of Company.
(b) Registration Statement Effective; Proxy Statement. The SEC
shall have declared the S-4 effective. No stop order suspending the
effectiveness of the S-4 or any part thereof shall have been issued and no
proceeding for that purpose, and no similar proceeding in respect of the Proxy
Statement/Prospectus, shall have been initiated or threatened in writing by the
SEC.
(c) No Order; HSR Act. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or
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other order (whether temporary, preliminary or permanent) which is in effect and
which has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger. All waiting periods, if any, under the HSR Act
relating to the transactions contemplated hereby will have expired or terminated
early and all material foreign antitrust approvals required to be obtained prior
to the Merger in connection with the transactions contemplated hereby shall have
been obtained.
(d) Tax Opinions. Parent and Company shall each have received
written opinions from their respective tax counsel (Wilson Sonsini Goodrich &
Rosati, Professional Corporation, and Morrison & Foerster LLP, respectively), in
form and substance reasonably satisfactory to them, to the effect that the
Merger will constitute a reorganization within the meaning of Section 368(a) of
the Code and such opinions shall not have been withdrawn; provided, however,
that if the counsel to either Parent or Company does not render such opinion,
this condition shall nonetheless be deemed to be satisfied with respect to such
party if counsel to the other party renders such opinion to such party. The
parties to this Agreement agree to make such reasonable representations as
requested by such counsel for the purpose of rendering such opinions.
(e) NYSE Listing. The shares of Parent Common Stock issuable to the
shareholders of Company pursuant to this Agreement and such other shares
required to be reserved for issuance in connection with the Merger shall have
been authorized for listing on NYSE upon official notice of issuance.
(f) Opinion of Parent Accountants. Parent shall have received from
KPMG LLP, independent accountants for Parent, a letter dated as of the Closing
Date in substance reasonably satisfactory to Parent (which may contain customary
qualifications and assumptions) to the effect that KPMG concurs with Parent
management's conclusion that the Merger can properly be accounted for as a
"pooling-of-interests."
6.2 Additional Conditions to Obligations of Company. The obligation of
Company to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Company:
(a) Representations and Warranties. Each representation and
warranty of Parent and Merger Sub contained in this Agreement (i) shall have
been true and correct as of the date of this Agreement and (ii) shall be true
and correct on and as of the Closing Date with the same force and effect as if
made on the Closing Date except, with respect to (i) and (ii), (A) in each case,
or in the aggregate, as does not constitute a Material Adverse Effect on Parent
and Merger Sub, (B) for changes contemplated by this Agreement and (C) for those
representations and warranties which address matters only as of a particular
date (which representations shall have been true and correct (subject to the
qualifications as set forth in the preceding clause A) as of such particular
date) (it being understood that, for purposes of determining the accuracy of
such representations and warranties, (i) all "Material Adverse Effect"
qualifications and other qualifications based on the word "material" or similar
phrases contained in such representations and warranties shall be
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disregarded and (ii) any update of or modification to the Parent Schedule made
or purported to have been made after the date of this Agreement shall be
disregarded). Company shall have received a certificate with respect to the
foregoing signed on behalf of Parent by an authorized officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Closing Date, and Company shall have received a certificate to such
effect signed on behalf of Parent by an authorized officer of Parent.
6.3 Additional Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate and effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) Representations and Warranties. Each representation and
warranty of Company contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct on
and as of the Closing Date with the same force and effect as if made on and as
of the Closing Date except, with respect to (i) and (ii), (A) in each case, or
in the aggregate, as does not constitute a Material Adverse Effect on Company
provided, however, such Material Adverse Effect qualifier shall be inapplicable
with respect to representations and warranties contained in clause (vi) of the
second sentence of Section 2.3, (B) for changes contemplated by this Agreement
and (C) for those representations and warranties which address matters only as
of a particular date (which representations shall have been true and correct
(subject to the qualifications as set forth in the preceding clause A) as of
such particular date) (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (i) all "Material Adverse
Effect" qualifications and other qualifications based on the word "material" or
similar phrases contained in such representations and warranties shall be
disregarded and (ii) any update of or modification to the Company Schedule made
or purported to have been made after the date of this Agreement shall be
disregarded). Parent shall have received a certificate with respect to the
foregoing signed on behalf of Company by an authorized officer of Company.
(b) Agreements and Covenants. Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of Company by the Chief Executive Officer and the Chief Financial Officer
of Company.
(c) Affiliate Agreements. Each of the Company Affiliates shall have
entered into the Company Affiliate Agreement and each of such agreements will be
in full force and effect as of the Effective Time.
(d) Opinion of Company Accountants. Parent shall have received from
Arthur Andersen LLP, independent auditors for Company, a copy of a letter
addressed to Company dated as
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of the Closing Date in substance reasonably satisfactory to Parent (which may
contain customary qualifications and assumptions) to the effect that Arthur
Andersen LLP concurs with Company management's conclusion that no conditions
exist related to Company that would preclude Parent from accounting for the
Merger as a "pooling-of-interests."
(e) Limitation on Dissenters. Holders of no more than 5.0% of the
outstanding shares of Company Capital Stock shall have exercised, nor shall they
have any continued right to exercise, appraisal, dissenters' or similar rights
under applicable law with respect to their shares by virtue of the Merger.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after the requisite approval of the
shareholders of Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and Company;
(b) by either Company or Parent if the Merger shall not have been
consummated by March 31, 2000 for any reason; provided, however, that the right
to terminate this Agreement under this Section 7.1(b) shall not be available to
any party whose action or failure to act has been a principal cause of or
resulted in the failure of the Merger to occur on or before such date and such
action or failure to act constitutes a breach of this Agreement;
(c) by either Company or Parent if a Governmental Entity shall have
issued an order, decree or ruling or taken any other action, in any case having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or other action is final and nonappealable;
(d) by either Company or Parent if the required approval of the
shareholders of Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Company shareholders duly convened therefor or at any adjournment thereof;
provided, however, that the right to terminate this Agreement under this Section
7.1(d) shall not be available to Company or Parent where the failure to obtain
Company shareholder approval shall have been caused by the action or failure to
act of Company or Parent, respectively, and such action or failure to act
constitutes a breach by Company or Parent, respectively, of this Agreement;
(e) by Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or if
any representation or warranty of Parent shall have become untrue, in either
case such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
would not be satisfied as of the time of such breach or as of the time such
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representation or warranty shall have become untrue, provided, that if such
inaccuracy in Parent's representations and warranties or breach by Parent is
curable by Parent through the exercise of its commercially reasonable efforts,
then Company may not terminate this Agreement under this Section 7.1(e) for
thirty (30) days after delivery of written notice from Company to Parent of such
breach, provided Parent continues to exercise commercially reasonable efforts to
cure such breach (it being understood that Company may not terminate this
Agreement pursuant to this paragraph (e) if it shall have materially breached
this Agreement or if such breach by Parent is cured during such thirty (30)-day
period);
(f) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of Company set forth in this Agreement, or if
any representation or warranty of Company shall have become untrue, in either
case such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided, that if such
inaccuracy in Company's representations and warranties or breach by Company is
curable by Company through the exercise of its commercially reasonable efforts,
then Parent may not terminate this Agreement under this Section 7.1(f) for
thirty (30) days after delivery of written notice from Parent to Company of such
breach, provided Company continues to exercise commercially reasonable efforts
to cure such breach (it being understood that Parent may not terminate this
Agreement pursuant to this paragraph (f) if it shall have materially breached
this Agreement or if such breach by Company is cured during such thirty (30)-day
period);
(g) by Parent, upon a breach of the provisions of Section 5.4 of
this Agreement;
(h) by Parent if a Triggering Event (as defined below) shall have
occurred.
For the purposes of this Agreement, a "Triggering Event" shall be
deemed to have occurred if: (i) the Board of Directors of Company or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Parent its unanimous (other than the Abstention)
recommendation in favor of, the adoption and approval of the Agreement or the
approval of the Merger; (ii) Company shall have failed to include in the Proxy
Statement/Prospectus the unanimous (other than the Abstention) recommendation of
the Board of Directors of Company in favor of the adoption and approval of the
Agreement and the approval of the Merger; (iii) Board of Directors of Company
fails to reaffirm its unanimous recommendation in favor of the adoption and
approval of the Agreement and the approval of the Merger within ten (10)
business days after Parent requests in writing that such recommendation be
reaffirmed at any time following the announcement of an Acquisition Proposal;
(iv) the Board of Directors of Company or any committee thereof shall have
approved or recommended any Acquisition Proposal; (v) Company shall have entered
into any letter of intent or similar document or any agreement, contract or
commitment accepting any Acquisition Proposal; or (vi) a tender or exchange
offer relating to securities of Company shall have been commenced by a person
unaffiliated with Parent and Company shall not have sent to its securityholders
pursuant to Rule 14e-2 promulgated under the Securities Act, within ten (10)
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business days after such tender or exchange offer is first published sent or
given, a statement disclosing that Company recommends rejection of such tender
or exchange offer.
7.2 Notice of Termination; Effect of Termination. Any termination of
this Agreement under Section 7.1 above will be effective immediately upon (or,
if the termination is pursuant to Section 7.1(f) or Section 7.1(g) and the
proviso therein is applicable, thirty (30) days after) the delivery of written
notice of the terminating party to the other parties hereto. In the event of the
termination of this Agreement as provided in Section 7.1, this Agreement shall
be of no further force or effect, except (i) as set forth in this Section 7.2,
Section 7.3 and Article 8 (General Provisions), each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability for any intentional or willful breach of this Agreement. No
termination of this Agreement shall affect the obligations of the parties
contained in the Confidentiality Agreement, all of which obligations shall
survive termination of this Agreement in accordance with their terms.
7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; provided, however, that Parent and Company
shall share equally all fees and expenses, other than attorneys' and accountants
fees and expenses, incurred in relation to the printing and filing (with the
SEC) of the Proxy Statement/Prospectus (including any preliminary materials
related thereto) and the S-4 (including financial statements and exhibits) and
any amendments or supplements thereto and any fees required to be paid under the
HSR Act.
(b) Company Payments.
(i) The Company shall pay to Parent in immediately available
funds, within one (1) business day after demand by Parent, an amount equal to
$60,000,000 (the "Termination Fee") if this Agreement is terminated by Parent
pursuant to Section 7.1(g) or (h).
(ii) If (A) this Agreement is terminated by Parent or Company,
as applicable, pursuant to Sections 7.1(b) or (d), (B) prior to such termination
a third party shall have announced an Acquisition Proposal and (C) within twelve
(12) months following the termination of this Agreement a Company Acquisition
(as defined below) is consummated or Company enters into an agreement or letter
of intent providing for a Company Acquisition, then Company shall pay Parent in
immediately available funds at or prior to consummating such Company Acquisition
an amount equal to the Termination Fee.
(iii) Company acknowledges that the agreements contained in
this Section 7.3(b) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Parent would not enter into
this Agreement; accordingly, if Company fails to pay in a timely manner the
amounts due pursuant to this Section 7.3(b) and, in order to obtain
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such payment, Parent makes a claim that results in a judgment against Company
for the amounts set forth in this Section 7.3(b), Company shall pay to Parent
its reasonable costs and expenses (including reasonable attorneys' fees and
expenses) in connection with such suit, together with interest on the amounts
set forth in this Section 7.3(b) at the prime rate of Bank of America N.T. &
S.A. in effect on the date such payment was required to be made. Payment of the
fees described in this Section 7.3(b) shall not be in lieu of damages incurred
in the event of breach of this Agreement. For the purposes of this Agreement,
"COMPANY ACQUISITION" shall mean any of the following transactions (other than
the transactions contemplated by this Agreement): (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Company pursuant to which the shareholders of Company
immediately preceding such transaction hold less than 50% of the aggregate
equity interests in the surviving or resulting entity of such transaction, (ii)
a sale or other disposition by Company of assets representing in excess of 50%
of the aggregate fair market value of Company's business immediately prior to
such sale or (iii) the acquisition by any person or group (including by way of a
tender offer or an exchange offer or issuance by Company), directly or
indirectly, of beneficial ownership or a right to acquire beneficial ownership
of shares representing in excess of 50% of the voting power of the then
outstanding shares of capital stock of Company.
7.4 Amendment. Subject to applicable law, this Agreement may be amended
by the parties hereto at any time by execution of an instrument in writing
signed on behalf of each of Parent and Company.
7.5 Extension; Waiver. At any time prior to the Effective Time, any
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations
and warranties of Company, Parent and Merger Sub contained in this Agreement
shall terminate at the Effective Time, and only the covenants that by their
terms survive the Effective Time shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
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(a) if to Parent or Merger Sub, to:
Solectron Corporation
777 Gibraltar Drive
Milpitas, California 95035
Attention: Susan Wang
Telecopy No.: (408) 956-6059
with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Larry Sonsini, Esq.
Michael J. Kennedy, Esq.
Telecopy No.:(650) 493-6811
(b) if to Company, to:
SMART Modular Technologies, Inc.
4305 Cushing Parkway
Fremont, California 94538
Attention: General Counsel
Telecopy No.: (510) 252-7977
with a copy to:
Morrison & Foerster LLP
425 Market Street
San Francisco, California 94105-2482
Attention: Bruce Alan Mann, Esq.
Telecopy No.: (415) 268-7522
8.3 Interpretation; Knowledge.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement. Unless otherwise indicated the words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. When reference is
made herein to "the business of" an entity, such
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reference shall be deemed to include the business of all direct and indirect
subsidiaries of such entity. Reference to the subsidiaries of an entity shall be
deemed to include all direct and indirect subsidiaries of such entity.
(b) For purposes of this Agreement, the term "KNOWLEDGE" means with
respect to a party hereto, with respect to any matter in question, that any of
the officers of such party has actual knowledge of such matter.
(c) For purposes of this Agreement, the term "MATERIAL ADVERSE
EFFECT" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect, individually or when aggregated
with other changes, events, violations, inaccuracies, circumstances or effects,
that is materially adverse to the business, assets (including intangible
assets), capitalization, financial condition or results of operations of such
entity and its subsidiaries taken as a whole; provided, however that (i) no
change, event, violation, inaccuracy, circumstance or effect directly
attributable to (A) changes in general economic conditions or changes affecting
the semiconductor industry generally or (B) the loss of current or prospective
customers that such entity successfully bears the burden of proving arose from
such entity entering into this Agreement shall constitute a Material Adverse
Effect and (ii) in no event shall a decrease in the trading price of such
entity's common stock in and of itself constitute a Material Adverse Effect.
(d) For purposes of this Agreement, the term "PERSON" shall mean
any individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Disclosure Schedule
and the Parent Disclosure Schedule (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder
(including, without limitation, Section 5.8 (c), (d) and (e), except as
specifically provided in Section 5.10.
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8.6 Severability. In the event that any provision of this Agreement, or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.7 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
8.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.10 Assignment. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
8.11 WAIVER OF JURY TRIAL. EACH OF PARENT, COMPANY AND MERGER SUB
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
*****
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
SOLECTRON CORPORATION
By:_____________________________________
Name:___________________________________
Title:__________________________________
SM ACQUISITION CORP.
By:_____________________________________
Name:___________________________________
Title:__________________________________
SMART MODULAR TECHNOLOGIES, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
**** REORGANIZATION AGREEMENT ****
<PAGE> 68
EXHIBIT 2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of September 13, 1999, among Solectron Corporation, a Delaware corporation
("Parent"), and SMART Modular Technologies, Inc., a California corporation (the
"Company"). Capitalized terms used but not otherwise defined herein will have
the meanings ascribed to them in the Reorganization Agreement (as defined
below).
RECITALS
A. The Company, Merger Sub (as defined below) and Parent have entered
into an Agreement and Plan of Reorganization (the "Reorganization Agreement")
which provides for the merger (the "Merger") of a wholly-owned subsidiary of
Parent ("Merger Sub") with and into the Company. Pursuant to the Merger, all
outstanding capital stock of the Company will be converted into the right to
receive Common Stock of Parent.
B. As a condition to Parent's willingness to enter into the
Reorganization Agreement, Parent has requested that Company agree, and Company
has so agreed, to grant to Parent an option to acquire shares of Company's
Common Stock, no par value per share (the "Company Shares"), upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and in the Reorganization Agreement
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to Parent an irrevocable
option (the "Option") to acquire up to a number of Company Shares equal to 19.9%
of the issued and outstanding shares as of the first date, if any, upon which an
Exercise Event (as defined in Section 2(a) below) occurs (the "Option Shares"),
in the manner set forth below by paying cash at a price of $39.3656 per share
(the "Exercise Price").
2. Exercise of Option.
(a) The Option may be exercised by Parent, in whole or in part, at
any time or from time to time if the Reorganization Agreement is terminated
pursuant to Section 7.1(b), 7.1(d), 7.1(g), or 7.1(h) thereof and an event
causing the Termination Fee to become payable pursuant to Section 7.3(b) of the
Reorganization Agreement occurs (any of the events being referred to herein as
an "Exercise Event"). In the event Parent wishes to exercise the Option, Parent
will deliver to the Company a written notice (each an "Exercise Notice")
specifying the total number of Option Shares it wishes to acquire. Each closing
of a purchase of Option Shares (a "Closing") will occur on a date
<PAGE> 69
and at a time prior to the termination of the Option designated by Parent in an
Exercise Notice delivered at least two business days prior to the date of such
Closing, which Closing will be held at the principal offices of the Company.
(b) The Option will terminate upon the earliest of (i) the Effective
Time, (ii) twelve (12) months following the date on which the Reorganization
Agreement is terminated pursuant to Section 7.1(b) or 7.1(d) thereof, if no
event causing the Termination Fee to become payable pursuant to Section
7.3(b)(ii) of the Reorganization Agreement has occurred, (iii) eighteen (18)
months following the date on which the Reorganization Agreement is terminated
pursuant to Section 7.5(g) or 7.1(h) thereof, (iv) in the event the
Reorganization Agreement has been terminated pursuant to Section 7.1(b) or
7.1(d) thereof and the Termination Fee became payable pursuant to Section
7.3(b)(ii) thereof, 18 months after payment of the Termination Fee; and (v) the
date on which the Reorganization Agreement is terminated if neither a Triggering
Event nor the announcement of an Acquisition Proposal by a third party occurred
on or prior to the date of such termination; provided, however, that if the
Option cannot be exercised by reason of any applicable government order or
because the waiting period related to the issuance of the Option Shares under
the HSR Act will not have expired or been terminated, then the Option will not
terminate until the tenth business day after such impediment to exercise will
have been removed or will have become final and not subject to appeal.
3. Conditions to Closing. The obligation of Company to issue Option
Shares to Parent hereunder is subject to the conditions that (A) any waiting
period under the HSR Act applicable to the issuance of the Option Shares
hereunder will have expired or been terminated; (B) all material consents,
approvals, orders or authorizations of, or registrations, declarations or
filings with, any Federal, state or local administrative agency or commission or
other Federal state or local governmental authority or instrumentality, if any,
required in connection with the issuance of the Option Shares hereunder will
have been obtained or made, as the case may be; and (C) no preliminary or
permanent injunction or other order by any court of competent jurisdiction
prohibiting or otherwise restraining such issuance will be in effect. It is
understood and agreed that at any time during which the Option is exercisable,
the parties will use their respective best efforts to satisfy all conditions to
Closing, so that a Closing may take place as promptly as practicable.
4. Closing. At any Closing, (A) the Company will deliver to Parent a
single certificate in definitive form representing the number of Company Shares
designated by Parent in its Exercise Notice, such certificate to be registered
in the name of Parent and to bear the legend set forth in Section 9 hereof,
against delivery of (B) payment by Parent to the Company of the aggregate
purchase price for the Company Shares so designated and being purchased by
delivery of a certified check or bank check.
5. Representations and Warranties of the Company. Company represents
and warrants to Parent that (A) Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder; (B) the execution and delivery of this Agreement by
the Company and consummation by the Company of the transactions contemplated
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hereby have been duly authorized by all necessary corporate action on the part
of the Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or any of the transactions contemplated
hereby; (C) this Agreement has been duly executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the Company and,
assuming this Agreement constitutes a legal, valid and binding obligation of
Parent, is enforceable against the Company in accordance with its terms; (D)
except for any filings required under the HSR Act, the Company has taken all
necessary corporate and other action to authorize and reserve for issuance and
to permit it to issue upon exercise of the Option, and at all times from the
date hereof until the termination of the Option will have reserved for issuance,
a sufficient number of unissued Company Shares for Parent to exercise the Option
in full and will take all necessary corporate or other action to authorize and
reserve for issuance all additional Company Shares or other securities which may
be issuable pursuant to Section 8(a) upon exercise of the Option, all of which,
upon their issuance and delivery in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable; (E) upon delivery of the
Company Shares and any other securities to Parent upon exercise of the Option,
Parent will acquire such Company Shares or other securities free and clear of
all material claims, liens, charges, encumbrances and security interests of any
kind or nature whatsoever, excluding those imposed by Parent; (F) the execution
and delivery of this Agreement by the Company do not, and the performance of
this Agreement by the Company will not, (i) conflict with or violate the
Certificate of Incorporation or Bylaws or equivalent organizational documents of
the Company or any of its subsidiaries, (ii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties is bound
or affected or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or impair the Company's or any of its subsidiaries' rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or its or any of
their respective properties are bound or affected; and (G) the execution and
delivery of this Agreement by the Company does not, and the performance of this
Agreement by the Company will not, require any consent, approval, authorization
or permit of, or filing with, or notification to, any Governmental Entity except
pursuant to the HSR Act.
6. Certain Rights.
(a) Parent Put. At the request of and upon notice by Parent (the
"Put Notice"), at any time during the period during which the Option is
exercisable pursuant to Section 2 (the "Purchase Period"), the Company (or any
successor entity thereof) will purchase from Parent the Option, to the extent
not previously exercised, at the price set forth in subparagraph (i) below (as
limited by subparagraph (iii) below), and the Option Shares, if any, acquired by
Parent pursuant thereto, at the price set forth in subparagraph (ii) below (as
limited by subparagraph (iii) below):
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(i) The difference between the "Market/Tender Offer Price" for
the Company Shares as of the date Parent gives notice of its intent to exercise
its rights under this Section 6(a) (defined as the higher of (A) the highest
price per share offered as of such date pursuant to any Acquisition Proposal
which was made prior to such date and (B) the highest closing sale price of
Company Shares then on the Nasdaq National Market during the 20 trading days
ending on the trading day immediately preceding such date) and the Exercise
Price, multiplied by the number of Company Shares purchasable pursuant to the
Option, but only if the Market/Tender Offer Price is greater than the Exercise
Price. For purposes of determining the highest price offered pursuant to any
Acquisition Proposal which involves consideration other than cash, the value of
such consideration will be equal to the higher of (x) if securities of the same
class of the proponent as such consideration are traded on any national
securities exchange or by any registered securities association, a value based
on the closing sale price or asked price for such securities on their principal
trading market on such date and (y) the value ascribed to such consideration by
the proponent of such Acquisition Proposal, or if no such value is ascribed, a
value determined in good faith by the Board of Directors of the Company.
(ii) The Exercise Price paid by Parent for Company Shares
acquired pursuant to the Option plus the difference between the Market/Tender
Offer Price and such Exercise Price (but only if the Market/Tender Offer Price
is greater than the Exercise Price) multiplied by the number of Company Shares
so purchased.
(iii) Notwithstanding subparagraphs (i) and (ii) above, pursuant
to this Section 6 Company will not be required to pay Parent in excess of an
aggregate of (x) $120,000,000 plus (y) the Exercise Price paid by Parent for
Company Shares acquired pursuant to the Option minus (z) any amounts paid to
Parent by the Company pursuant to Section 7.3(b) of the Reorganization
Agreement.
(b) Payment and Redelivery of Option or Shares. In the event Parent
exercises its rights under Section 6(a) , the Company will, within five business
days after Parent delivers notice pursuant to Section 6(a), pay the required
amount to Parent in immediately available funds and Parent will surrender to the
Company the Option and the certificates evidencing the Company Shares purchased
by Parent pursuant thereto.
7. Registration Rights.
(a) Following the termination of the Reorganization Agreement,
Parent (sometimes referred to herein as the "Holder") may by written notice (a
"Registration Notice") to the Company (the "Registrant") request the Registrant
to register under the Securities Act all or any part of the shares acquired by
the Holder pursuant to this Agreement (such shares requested to be registered,
the "Registrable Securities") in order to permit the sale or other disposition
of any or all shares of the Registrable Securities that have been acquired by or
are issuable to Holder upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by Holder, including a
"shelf" registration statement under Rule 415 under the Securities Act or any
successor provision. Holder agrees to cause, and to cause any underwriters of
any sale or other disposition to cause, any sale or other disposition pursuant
to such registration statement to be
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effected on a widely distributed basis so that upon consummation thereof no
purchaser or transferee will own beneficially more than 5.0% of the
then-outstanding voting power of Registrant. Upon a request for registration,
the Registrant will have the option exercisable by written notice delivered to
the Holder within ten business days after the receipt of the Registration
Notice, irrevocably to agree to purchase all or any part of the Registrable
Securities for cash at a price (the "Option Price" equal to the product of (i)
the number of Registrable Securities so purchased and (ii) the per share average
of the closing sale prices of the Registrant's Common Stock on the Nasdaq
National Market for the ten trading days immediately preceding the date of the
Registration Notice. Any such purchase of Registrable Securities by the
Registrant hereunder will take place at a closing to be held at the principle
executive offices of the Registrant or its counsel at any reasonable date and
time designated by the Registrant in such notice within ten business days after
delivery of such notice. The payment for the shares to be purchased will be made
by delivery at the time of such closing of the Option Price in immediately
available funds.
(b) If the Registrant does not elect to exercise its option to
purchase pursuant to Section 7(a) with respect to all Registrable Securities,
the Registrant will use all reasonable efforts to effect, as promptly as
practicable, the registration under the Securities Act of the unpurchased
Registrable Securities requested to be registered in the Registration Notice and
to keep such registration statement effective for such period not in excess of
120 calendar days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sale or other
disposition; provided, however, that the Holder will not be entitled to more
than an aggregate of three effective registration statements hereunder. The
obligations of Registrant hereunder to file a registration statement and to
maintain its effectiveness may be suspended for up to 120 calendar days in the
aggregate if the Board of Directors of Registrant shall have determined that the
filing of such registration statement or the maintenance of its effectiveness
would require premature disclosure of material nonpublic information that would
materially and adversely affect Registrant or otherwise interfere with or
adversely affect any pending or proposed offering of securities of Registrant or
any other material transaction involving Registrant. If consummation of the sale
of any Registrable Securities pursuant to a registration hereunder does not
occur within 120 days after the filing with the SEC of the initial registration
statement therefor, the provisions of this Section 7 will again be applicable to
any proposed registration. The Registrant will use all reasonable efforts to
cause any Registrable Securities registered pursuant to this Section 7 to be
qualified for sale under the securities or blue sky laws of such jurisdictions
as the Holder may reasonably request and will continue such registration or
qualification in effect in such jurisdictions; provided, however, that the
Registrant will not be required to qualify to do business in, or consent to
general service of process in, any jurisdiction by reason of this provision. If
Registrant effects a registration under the Securities Act of Company Common
Stock for its own account or for any other stockholders of Registrant (other
than on Form S-4 or Form S-8, or any successor form), it will allow Holder the
right to participate in such registration by selling its Registrable Securities,
and such participation will not affect the obligation of Registrant to effect
demand registration statements for Holder under this Section 7; provided that,
if the managing underwriters of such offering advise Registrant in writing that
in their opinion the number of shares of Company Common Stock requested to be
included in such registration exceeds the number which can be sold in such
offering, Registrant will
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include the shares requested to be included therein by Holder pro rata with the
shares intended to be included therein by Registrant.
(c) The registration rights set forth in this Section 7 are subject
to the condition that the Holder will provide the Registrant with such
information with respect to the Holder's Registrable Securities, the plan for
distribution thereof, and such other information with respect to the Holder as,
in the reasonable judgment of counsel for the Registrant, is necessary to enable
the Registrant to include in a registration statement all facts required to be
disclosed with respect to a registration thereunder.
(d) A registration effected under this Section 7 will be effected at
the Registrant's expense, except for underwriting discounts and commissions and
the fees and expenses of counsel to the Holder, and the Registrant will provide
to the underwriters such documentation (including certificates, opinions of
counsel and "comfort" letters from auditors) as are customary in connection with
underwritten public offerings and as such underwriters may reasonably require.
In connection with any registration, the Holder and the Registrant agree to
enter into an underwriting agreement reasonably acceptable to each such party,
in form and substance customary for transactions of this type with the
underwriters participating in such offering.
(e) Indemnification.
(i) The Registrant will indemnify the Holder, each of its
directors and officers and each person who controls the Holder within the
meaning of Section 15 of the Securities Act, and each underwriter of the
Registrant's securities, with respect to any registration, qualification or
compliance which has been effected pursuant to this Agreement, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by the Registrant of any rule or regulation
promulgated under the Securities Act applicable to the Registrant in connection
with any such registration, qualification or compliance, and the Registrant will
reimburse the Holder and, each of its directors and officers and each person who
controls the Holder within the meaning of Section 15 of the Securities Act, and
each underwriter for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action; provided, that the Registrant will not be liable in
any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission or alleged
untrue statement or omission, made in reliance upon and in conformity with
written information furnished to the Registrant by such Holder or director or
officer or controlling person or underwriter seeking indemnification.
(ii) The Holder will indemnify the Registrant, each of its
directors and officers and each underwriter of the Registrant's securities
covered by such registration statement
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and each person who controls the Registrant within the meaning of Section 15 of
the Securities Act, against all expenses, claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Holder of any rule or regulation
promulgated under the Securities Act applicable to the Holder in connection with
any such registration, qualification or compliance, and will reimburse the
Registrant, such directors, officers or control persons or underwriters for any
legal or any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Registrant by the Holder for use therein; provided, that in no event will
any indemnity under this Section 7(e) exceed the net proceeds of the offering
received by the Holder.
(iii) Each party entitled to indemnification under this Section
7(e) (the "Indemnified Party") will give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and will
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided, that counsel for the Indemnifying
Party, who will conduct the defense of such claim or litigation, will be
approved by the Indemnified Party (whose approval will not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense; provided, however, that the Indemnifying Party will pay such
expense if representation of the Indemnified Party by counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding, and provided further, however, that the failure of
any Indemnified Party to give notice as provided herein will not relieve the
Indemnifying Party of its obligations under this Section 7(e) unless the failure
to give such notice is materially prejudicial to an Indemnifying Party's ability
to defend such action. No Indemnifying Party, in the defense of any such claim
or litigation will, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnifying Party will be required to indemnify any Indemnified
Party with respect to any settlement entered into without such Indemnifying
Party's prior consent (which will not be unreasonably withheld).
8. Adjustment Upon Changes in Capitalization; Rights Plans.
(a) In the event of any change in the Company Shares by reason of
stock dividends, stock splits, reverse stock splits, mergers (other than the
Merger), recapitalizations, combinations, exchanges of shares and the like, the
type and number of shares or securities subject
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to the Option, the Exercise Price will be adjusted appropriately, and proper
provision will be made in the agreements governing such transaction so that
Parent will receive, upon exercise of the Option, the number and class of shares
or other securities or property that Parent would have received in respect of
the Company Shares if the Option had been exercised immediately prior to such
event or the record date therefor, as applicable.
(b) At any time during which the Option is exercisable, and at any
time after the Option is exercised (in whole or in part, if at all), the Company
will not amend (nor permit the amendment of) the Company Rights Plan nor adopt
(nor permit the adoption of) a new stockholders rights plan, that contains
provisions for the distribution or exercise of rights thereunder as a result of
Parent or any affiliate or transferee being the beneficial owner of shares of
the Company by virtue of the Option being exercisable or having been exercised
(or as a result of beneficially owning shares issuable in respect of any Option
Shares).
9. Restrictive Legends. Each certificate representing Option Shares
issued to Parent hereunder will include a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR
SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS
ON TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF
AUGUST 23, 1999, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER.
It is understood and agreed that (i) the reference to restrictions
arising under the Securities Act in the above legend will be removed by delivery
of substitute certificate(s) without such reference if such Option Shares have
been registered pursuant to the Securities Act, such Option Shares have been
sold in reliance on and in accordance with Rule 144 under the Securities Act or
Holder has delivered to Registrant a copy of a letter from the staff of the SEC,
or an opinion of counsel in form and substance reasonably satisfactory to
Registrant and its counsel, to the effect that such legend is not required for
purposes of the Securities Act and (ii) the reference to restrictions pursuant
to this Agreement in the above legend will be removed by delivery of substitute
certificate(s) without such reference if the Option Shares evidenced by
certificate(s) containing such reference have been sold or transferred in
compliance with the provisions of this Agreement under circumstances that do not
require the retention of such reference.
10. Listing and HSR Filing. The Company, upon the request of Parent,
will promptly file an application to list the Company Shares to be acquired upon
exercise of the Option for quotation on the Nasdaq National Market and will use
its best efforts to obtain approval of such listing as soon as practicable.
Promptly after the date hereof, each of the parties hereto will promptly file
with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice all required premerger notification and report
forms and other documents and exhibits required to be
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filed under the HSR Act to permit the acquisition of the Company Shares subject
to the Option at the earliest possible date.
11. Binding Effect. This Agreement will be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. Nothing contained in this Agreement, express or implied, is intended to
confer upon any person other than the parties hereto and their respective
successors and permitted assigns any rights or remedies of any nature whatsoever
by reason of this Agreement. Any shares sold by a party in compliance with the
provisions of Section 7 will, upon consummation of such sale, be free of the
restrictions imposed with respect to such shares by this Agreement and any
transferee of such shares will not be entitled to the rights of such party.
Certificates representing shares sold in a registered public offering pursuant
to Section 7 will not be required to bear the legend set forth in Section 9.
12. Specific Performance. The parties hereto recognize and agree that
if for any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party hereto agrees that in addition to
other remedies the other party hereto will be entitled to an injunction
restraining any violation or threatened violation of the provisions of this
Agreement or the right to enforce any of the covenants or agreements set forth
herein by specific performance. In the event that any action will be brought in
equity to enforce the provisions of the Agreement, neither party hereto will
allege, and each party hereto hereby waives the defense, that there is an
adequate remedy at law.
13. Entire Agreement. This Agreement and the Reorganization Agreement
(including the appendices thereto) constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all other
prior agreements and understandings, both written and oral, between the parties
hereto with respect to the subject matter hereof.
14. Further Assurances. Each party hereto will execute and deliver all
such further documents and instruments and take all such further action as may
be necessary in order to consummate the transactions contemplated hereby.
15. Validity. The invalidity or unenforceability of any provision of
this Agreement will not affect the validity or enforceability of the other
provisions of this Agreement, which will remain in full force and effect. In the
event any Governmental Entity of competent jurisdiction holds any provision of
this Agreement to be null, void or unenforceable, the parties hereto will
negotiate in good faith and will execute and deliver an amendment to this
Agreement in order, as nearly as possible, to effectuate, to the extent
permitted by law, the intent of the parties hereto with respect to such
provision.
16. Notices. All notices and other communications hereunder will be in
writing and will be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as will be specified by like notice):
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(a) if to Parent, to:
Solectron Corporation
777 Gibraltar Drive
Milpitas, California 95035
Attention: Susan Wang
Telecopy No.: (408) 956-6059
with a copy to:
Wilson, Sonsini, Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Larry Sonsini, Esq.
Michael J. Kennedy, Esq.
Telecopy No.: (650) 493-6811
(b) if to the Company, to:
SMART Modular Technologies, Inc.
4305 Cushing Parkway
Fremont, California 94538
Attention: General Counsel
Telecopy No.: (510) 252-7977
with a copy to:
Morrison & Foerster LLP
425 Market Street
San Francisco, California 94105-2482
Attention: Bruce Alan Mann, Esq.
Telecopy No.: (415) 268-7522
17. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of California applicable to agreements
made and to be performed entirely within such State.
18. Expenses. Except as otherwise expressly provided herein or in the
Reorganization Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement will be paid by the party incurring
such expenses.
19. Amendments; Waiver. This Agreement may be amended by the parties
hereto and the terms and conditions hereof may be waived only by an instrument
in writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.
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20. Assignment. Neither of the parties hereto may sell, transfer,
assign or otherwise dispose of any of its rights or obligations under this
Agreement or the Option created hereunder to any other person, without the
express written consent of the other party, except that the rights and
obligations hereunder will inure to the benefit of and be binding upon any
successor of a party hereto.
21. Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed to be an original, but both of which, taken together,
will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
SOLECTRON CORPORATION
By:_____________________________________
Name:___________________________________
Title:__________________________________
SMART MODULAR TECHNOLOGIES, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
Title:__________________________________
<PAGE> 80
EXHIBIT 3
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Agreement") is made and entered into as of
September 13, 1999, among Solectron Corporation., a Delaware corporation
("Parent"), and the undersigned stockholder and/or option holder (the
"Stockholder") of SMART Modular Technologies, Inc., a California corporation
(the "Company").
RECITALS
A. The Company, Merger Sub (as defined below) and Parent have entered
into an Agreement and Plan of Reorganization (the "Reorganization Agreement"),
which provides for the merger (the "Merger") of a wholly-owned subsidiary of
Parent ("Merger Sub") with and into the Company. Pursuant to the Merger, all
outstanding capital stock of the Company shall be converted into the right to
receive common stock of Parent, as set forth in the Reorganization Agreement;
B. Stockholder is the beneficial owner (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of such
number of shares of the outstanding capital stock of the Company and shares
subject to outstanding options and warrants as is indicated on the signature
page of this Agreement; and
C. In consideration of the execution of the Reorganization Agreement by
Parent, Stockholder (in his or her capacity as such) agrees to vote the Shares
(as defined below) and other such shares of capital stock of the Company over
which Stockholder has voting power so as to facilitate consummation of the
Merger.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
1. Certain Definitions. Capitalized terms not defined herein shall have
the meanings ascribed to them in the Reorganization Agreement. For purposes of
this Agreement:
(a) "Expiration Date" shall mean the earlier to occur of (i) such
date and time as the Reorganization Agreement shall have been terminated
pursuant to Article VII thereof, or (ii) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the
Reorganization Agreement.
(b) "Person" shall mean any (i) individual, (ii) corporation,
limited liability company, partnership or other entity, or (iii) governmental
authority.
(c) "Shares" shall mean: (i) all securities of the Company
(including all shares of Company
<PAGE> 81
Common Stock and all options, warrants and other rights to acquire shares of
Company Common Stock) owned by Stockholder as of the date of this Agreement; and
(ii) all additional securities of the Company (including all additional shares
of Company Common Stock and all additional options, warrants and other rights to
acquire shares of Company Common Stock) of which Stockholder acquires ownership
during the period from the date of this Agreement through the Expiration Date.
(d) Transfer. A Person shall be deemed to have effected a "Transfer"
of a security if such person directly or indirectly: (i) sells, pledges,
encumbers, grants an option with respect to, transfers or disposes of such
security or any interest in such security; or (ii) enters into an agreement or
commitment providing for the sale of, pledge of, encumbrance of, grant of an
option with respect to, transfer of or disposition of such security or any
interest therein.
2. Transfer of Shares.
(a) Transferee of Shares to be Bound by this Agreement. Stockholder
agrees that, during the period from the date of this Agreement through the
Expiration Date, Stockholder shall not cause or permit any Transfer of any of
the Shares to be effected unless such Transfer is in accordance with any
affiliate agreement between Stockholder and Parent contemplated by the
Reorganization Agreement and each Person to which any of such Shares, or any
interest in any of such Shares, is or may be transferred shall have: (a)
executed a counterpart of this Agreement and a proxy in the form attached hereto
as Exhibit A (with such modifications as Parent may reasonably request); and (b)
agreed in writing to hold such Shares (or interest in such Shares) subject to
all of the terms and provisions of this Agreement.
(b) Transfer of Voting Rights. Stockholder agrees that, during the
period from the date of this Agreement through the Expiration Date, Stockholder
shall not deposit (or permit the deposit of) any Shares in a voting trust or
grant any proxy or enter into any voting agreement or similar agreement in
contravention of the obligations of Stockholder under this Agreement with
respect to any of the Shares.
3. Agreement to Vote Shares. At every meeting of the stockholders of
the Company called, and at every adjournment thereof, and on every action or
approval by written consent of the stockholders of the Company, Stockholder (in
his or her capacity as such) shall cause the Shares to be voted in favor of
approval of the Reorganization Agreement and the Merger and in favor of any
matter that could reasonably be expected to facilitate the Merger.
4. Irrevocable Proxy. Concurrently with the execution of this
Agreement, Stockholder agrees to deliver to Parent a proxy in the form attached
hereto as Exhibit A (the "Proxy"), which shall be irrevocable to the fullest
extent permissible by law, with respect to the Shares.
5. Representations and Warranties of the Stockholder. Stockholder (i)
is the beneficial owner of the shares of Company Common Stock, Preferred Stock
of the Company and the options and warrants to purchase shares of Common Stock
of the Company indicated on the final page of this
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Agreement, free and clear of any liens, claims, options, rights of first
refusal, co-sale rights, charges or other encumbrances; (ii) does not
beneficially own any securities of the Company other than the shares of Company
Common Stock, Preferred Stock of the Company and options and warrants to
purchase shares of Common Stock of the Company indicated on the final page of
this Agreement; and (iii) has full power and authority to make, enter into and
carry out the terms of this Agreement and the Proxy.
6. Additional Documents. Stockholder (in his or her capacity as such)
hereby covenants and agrees to execute and deliver any additional documents
necessary or desirable, in the reasonable opinion of Parent, to carry out the
intent of this Agreement.
7. Consent and Waiver. Stockholder (not in his capacity as a director
or officer of the Company) hereby gives any consents or waivers that are
reasonably required for the consummation of the Merger under the terms of any
agreements to which Stockholder is a party or pursuant to any rights Stockholder
may have.
8. Legending of Shares. If so requested by Parent, Stockholder agrees
that the Shares shall bear a legend stating that they are subject to this
Agreement and to an irrevocable proxy. Subject to the terms of Section 2 hereof,
Stockholder agrees that Stockholder shall not Transfer the Shares without first
having the aforementioned legend affixed to the certificates representing the
Shares.
9. Termination. This Agreement shall terminate and shall have no
further force or effect as of the Expiration Date.
10. Miscellaneous.
(a) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, then the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
(b) Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without prior written consent of the other.
(c) Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
(d) Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Parent shall be irreparably harmed and that there shall be no
adequate remedy at law for a violation of
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any of the covenants or agreements of Stockholder set forth herein. Therefore,
it is agreed that, in addition to any other remedies that may be available to
Parent upon any such violation, Parent shall have the right to enforce such
covenants and agreements by specific performance, injunctive relief or by any
other means available to Parent at law or in equity.
(e) Notices. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following address (or at such other address for a party as shall
be specified by like notice):
If to Parent: Solectron Corporation
777 Gibraltar Drive
Milpitas, California 95035
Attention: Susan Wang
Telecopy No.: (408) 956-6059
With a copy to: Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: Larry Sonsini, Esq.
Michael J. Kennedy, Esq.
Telecopy No.: (650) 493-6811
If to Stockholder: To the address for notice set forth on
the signature page hereof.
(f) Governing Law. This Agreement shall be governed by the laws of
the State of California, without reference to rules of conflicts of law.
(g) Entire Agreement. This Agreement and the Proxy contain the
entire understanding of the parties in respect of the subject matter hereof, and
supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
(h) Effect of Headings. The section headings are for convenience
only and shall not affect the construction or interpretation of this Agreement.
(i) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
-4-
<PAGE> 84
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
SOLECTRON CORPORATION STOCKHOLDER
By:_________________________________ By:_____________________________
Signature of Authorized Signatory Signature
Name:_______________________________ Name:___________________________
Title: _____________________________ Title: _________________________
________________________________
________________________________
Print Address
________________________________
Telephone
________________________________
Facsimile No.
Share beneficially owned:
____________ shares of Company
Common Stock
____________ shares of Company
Common Stock issuable upon
exercise of outstanding options
or warrants
[SIGNATURE PAGE TO VOTING AGREEMENT]
<PAGE> 85
IRREVOCABLE PROXY
The undersigned stockholder of SMART Modular Technologies, Inc., a
California corporation (the "Company"), hereby irrevocably (to the fullest
extent permitted by law) appoints the directors on the Board of Directors of
Solectron Corporation, a Delaware corporation ("Parent"), and each of them, as
the sole and exclusive attorneys and proxies of the undersigned, with full power
of substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of capital stock of the Company that now are or
hereafter may be beneficially owned by the undersigned, and any and all other
shares or securities of the Company issued or issuable in respect thereof on or
after the date hereof (collectively, the "Shares") in accordance with the terms
of this Proxy. The Shares beneficially owned by the undersigned stockholder of
the Company as of the date of this Proxy are listed on the final page of this
Proxy. Upon the undersigned's execution of this Proxy, any and all prior proxies
given by the undersigned with respect to any Shares are hereby revoked and the
undersigned agrees not to grant any subsequent proxies with respect to the
Shares until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the fullest extent permitted by law), is
coupled with an interest and is granted pursuant to that certain Voting
Agreement of even date herewith by and among Parent and the undersigned
stockholder (the "Voting Agreement"), and is granted in consideration of Parent
entering into that certain Agreement and Plan of Reorganization (the
"Reorganization Agreement"), among Parent, SM Acquisition Corp., a California
corporation and a wholly-owned subsidiary of Parent ("Merger Sub"), and the
Company. The Reorganization Agreement provides for the merger of Merger Sub with
and into the Company in accordance with its terms (the "Merger"). As used
herein, the term "Expiration Date" shall mean the earlier to occur of (i) such
date and time as the Reorganization Agreement shall have been validly terminated
pursuant to Article VIII thereof or (ii) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the
Reorganization Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares, and to
exercise all voting, consent and similar rights of the undersigned with respect
to the Shares (including, without limitation, the power to execute and deliver
written consents) at every annual, special or adjourned meeting of stockholders
of the Company and in every written consent in lieu of such meeting in favor of
approval of the Merger, the execution and delivery by the Company of the
Reorganization Agreement and the adoption and approval of the terms thereof and
in favor of each of the other actions contemplated by the Reorganization
Agreement and any action required in furtherance hereof and thereof.
<PAGE> 86
The attorneys and proxies named above may not exercise this Proxy on
any other matter except as provided above. The undersigned stockholder may vote
the Shares on all other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
<PAGE> 87
This Proxy is irrevocable (to the fullest extent permitted by law).
This Proxy shall terminate, and be of no further force and effect, automatically
upon the Expiration Date.
Dated: , 1999
Signature of Stockholder: _________________
Print Name of Stockholder: ________________
Shares beneficially owned:
____________ shares of Company
Common Stock
____________ shares of Company
Common Stock issuable upon
exercise of outstanding options
or warrants
[SIGNATURE PAGE TO IRREVOCABLE PROXY]
