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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 10, 1997
METRICOM, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-19903 77-0294597
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
980 UNIVERSITY AVENUE, LOS GATOS, CALIFORNIA 95030-2375
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 399-8200
NOT APPLICABLE
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On October 13, 1997, Metricom, Inc., a Delaware corporation (the
"Company"), announced the execution of a Common Stock Purchase Agreement, dated
as of October 10, 1997 (the "Agreement"), between the Company and Vulcan
Ventures Incorporated, a Washington corporation ("Vulcan"), a copy of which is
attached as Exhibit 99.1. The Agreement contemplates that, subject to the
satisfaction of certain conditions set forth therein, including the approval
and adoption of the Agreement by the requisite vote of the Company's
stockholders as set forth in the Agreement, the Company would, among other
things, issue and sell 4,650,000 shares of the Company's Common Stock, $0.001
par value per share ("Common Stock"), to Vulcan for $12.00 per share in cash.
In a separate transaction, Vulcan entered into an agreement by which
it would acquire 2,583,000 shares of Common Stock from Lindner Investments, the
Company's largest stockholder. The transactions contemplated by the Agreement
and the subsequent agreement with Lindner Investments could result in Vulcan
owning up to 49.9% of the outstanding Common Stock.
The press release announcing the execution of the Agreement and the
separate agreement with Lindner Investments is attached hereto as Exhibit 99.2.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(C) Exhibits.
EXHIBIT NO. DESCRIPTION
99.1 Stock Purchase Agreement, dated as
of October 10, 1997, between
Metricom, Inc., a Delaware
corporation, and Vulcan Ventures
Incorporated, a Washington
corporation.
99.2 Joint Press Release of Metricom,
Inc. and Vulcan Ventures
Incorporated, dated as of October
13, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
METRICOM, INC.
Date: October 14, 1997 By: /s/ Donald F. Wood
-------------------------
Donald F. Wood
President
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EXHIBIT 99.1
COMMON STOCK
PURCHASE AGREEMENT
This COMMON STOCK AGREEMENT is made as of October 10, 1997 between
METRICOM, INC. (the "Company"), a corporation organized under the laws of the
State of Delaware with its principal office at 980 University Avenue, Los
Gatos, California 95030, and VULCAN VENTURES INCORPORATED, a corporation
organized under the laws of the State of Washington ("Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Company and Purchaser agree as follows:
1. AUTHORIZATION. The Board of Directors of the Company has
authorized the issuance and sale of up to six million four thousand one hundred
sixty-seven (6,004,167) shares of its Common Stock (the "Shares"), consisting
of one tranche of four million six hundred fifty thousand (4,650,000) shares of
its Common Stock (the "Firm Shares") and one tranche of up to one million three
hundred fifty-four thousand one hundred sixty-seven (1,354,167) shares (the
"Contingent Shares").
2. AGREEMENT TO SELL AND PURCHASE THE SHARES. Subject to the
terms and conditions hereof:
(A) Purchaser agrees to purchase the Firm Shares from the
Company, and the Company agrees to sell and issue the Firm Shares to Purchaser
at a price of twelve dollars ($12.00) per share.
(B) If, by October 15, 1997, Purchaser does not own or
have the right to acquire at least three million (3,000,000) shares of Common
Stock (excluding the Shares), Purchaser agrees to purchase from the Company,
and the Company agrees to sell and issue to Purchaser, at a price of twelve
dollars ($12.00) per share, a portion (or all) of the Contingent Shares equal
to the difference between (i) one million three hundred fifty-four thousand one
hundred sixty-seven (1,354,167) and (ii) the number of shares, if any, by which
the number of shares of Common Stock (excluding the Shares) which Purchaser
owns or has the right to acquire as of the Closing Date exceeds one million
nine hundred thirteen thousand two hundred forty-five (1,913,245).
(C) Notwithstanding the foregoing, the number of Shares
to be purchased by Purchaser shall not under any circumstances exceed that
number which causes Purchaser, together with its Affiliates (as hereinafter
defined), to be the beneficial owner as of the Closing Date of more than
forty-nine and nine-tenths percent (49.9%) of the outstanding Common Stock of
the Company.
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3. DELIVERY OF THE SHARES. The completion of the purchase and
sale of the Shares (the "Closing") shall occur at the offices of Cooley Godward
LLP, One Maritime Plaza, 20th Floor, San Francisco, California, as soon as
practicable (but not more than three business days) after the satisfaction or
waiver of all of the conditions to closing set forth herein, or at such other
place and time as the Company and Purchaser may agree. At the Closing, the
Company shall deliver to Purchaser one or more stock certificates registered in
the name of Purchaser.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Purchaser as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, has all requisite corporate power and authority
to conduct its business as currently conducted and is duly qualified in each
state of the United States in which the failure to be so qualified would have a
material adverse effect on its business or properties.
4.2 AUTHORIZED CAPITAL STOCK. As of the date hereof, the
authorized capital stock of the Company consists of (a) fifty million
(50,000,000) shares of Common Stock, $.001 par value per share, of which
thirteen million six hundred eighty-three thousand seven hundred fifty-six
(13,683,756) shares were outstanding as of October 9, 1997 and (b) two million
(2,000,000) shares of undesignated Preferred Stock, $.001 par value per share,
none of which is issued and outstanding. All of the outstanding shares of
Common Stock were validly issued and are outstanding, fully paid and
nonassessable. Except for (i) four million sixty-four thousand nine hundred
eighty-one (4,064,981) shares of Common Stock subject to options granted under
the Company's 1988 Stock Option Plan, 1993 Non-Employee Directors' Stock Option
Plan, 1997 Equity Incentive Plan and 1997 Non-Officer Equity Incentive Plan
(the "Option Plans"), (ii) three hundred fifty thousand (350,000) shares of
Common Stock reserved for issuance under the Company's 1991 Employee Stock
Purchase Plan (the "Purchase Plan"), (iii) two hundred fifty thousand (250,000)
shares of Common Stock subject to outstanding warrants held by a financial
advisor to the Company, (iv) two hundred twenty- five thousand (225,000) shares
of Common Stock subject to options granted to members of the Company's Board of
Directors and Wireless Communications Industry Advisory Board and (v) three
million ninety-two thousand seven hundred eight-four (3,092,784) shares of
Common Stock issuable upon conversion of 8% Convertible Subordinated Notes due
2003, there are not outstanding as of the date of this Agreement any options,
warrants, rights (including conversion or preemptive rights) or agreements for
the purchase or acquisition from the Company of any shares of its capital stock
or any securities exercisable for or convertible into shares of its capital
stock. As of the date of this Agreement, the Company has available for future
grant nine hundred fifty-four thousand four hundred forty-seven (954,447)
shares of Common stock for issuance pursuant to the Option Plans.
4.3 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE
AGREEMENT. The Company's execution, delivery and performance of the Agreement,
the Seventh Amendment to Registration Rights Agreement (the "Seventh
Amendment") and the transactions contemplated hereby and thereby, based on the
representations of Purchaser set forth in Section 5.4 hereof, (a) have been
duly authorized under applicable Delaware law by all requisite corporate action
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by the Company, including the unanimous vote of those directors in attendance
at the meeting at which such authorization was given, and (b) will not violate
any law or the Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") or By-Laws of the Company or any provision of
any material indenture, mortgage, agreement, contract or other material
instrument to which the Company or any subsidiary is a party or by which the
Company or any subsidiary or any of their respective properties or assets is
bound as of the date hereof, or result in a breach of or constitute (upon
notice or lapse of time or both) a default under any such indenture, mortgage,
agreement, contract or other material instrument or result in the creation or
imposition of any lien, security interest, mortgage, pledge, charge or other
encumbrance, of any material nature whatsoever, upon any properties or assets
of the Company or any subsidiary. Upon execution and delivery, and assuming the
valid execution thereof by Purchaser, the Agreement and the Seventh Amendment
will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.4 APPROVAL OF PURCHASER AS "INTERESTED STOCKHOLDER."
In connection with its approval of the transactions contemplated hereby, the
Board of Directors of the Company understands and intends that, by virtue of
and upon Purchaser's entry into this Agreement, Purchaser will become an
"interested stockholder" of the Company within the meaning of Section 203 of
the Delaware General Corporation Law.
4.5 ISSUANCE, SALE AND DELIVERY OF THE SHARES. When
issued and paid for pursuant to the terms of this Agreement, the Shares to be
sold hereunder by the Company will be validly issued and outstanding, fully
paid and nonassessable.
4.6 ADDITIONAL INFORMATION. The Company represents and
warrants that the information contained in the following documents, which the
Company has furnished to Purchaser or will furnish prior to the Closing, did
not or will not, as the case may be, at the respective dates of filing with the
Securities and Exchange Commission (the "Commission") or, with respect to any
proxy statement, the date of mailing to stockholders, contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading:
(a) the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996 (without exhibits);
(b) the Company's Quarterly Reports on Form 10-Q
for the three-month periods ended June 30, 1997 and September 30, 1997;
(c) Notice to Stockholders and Proxy Statement
for its Annual Meeting of Stockholders held on May 1, 1997;
(d) Notice to Stockholders and Proxy Statement
for the Special Meeting of Stockholders to be held in connection with the
transactions contemplated hereby (except for
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information included therein that is furnished by or related to Purchaser and
its affiliates or associates of such affiliates, as those terms are defined in
Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (collectively, "Affiliates")); and
(e) all other documents, if any, filed by the
Company with the Commission since January 1, 1997 pursuant to the reporting
requirements of the Exchange Act.
4.7 NO MATERIAL CHANGE. As of the date of this
Agreement, other than continuing operating losses not materially inconsistent
with past operating results, there has been no material adverse change in the
financial condition or results of operations of the Company since June 30,
1997.
4.8 LOS ANGELES CONTRACT. Termination by the Company of
its contractual arrangements with respect to the deployment and operation of
Ricochet wireless data transmission systems for the City of Los Angeles would
not result in material contractual liability (in excess of $500,000) to the
Company.
4.9 COMPLIANCE WITH LAWS. To its knowledge, the Company
is not in violation of any applicable statute, rule, regulation or order of the
United States or any state in which the Company is engaged in business the
effect of which violation would be materially adverse to the financial
condition or results of operations of the Company and would seriously undermine
the prospects of the Company.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents and warrants to the Company as follows:
5.1 ORGANIZATION AND QUALIFICATION. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Washington and has all requisite corporate power and
authority to conduct its business as currently conducted.
5.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE
AGREEMENT. Purchaser has full right, power, authority and capacity to enter
into this Agreement and the Seventh Amendment and to consummate the
transactions contemplated hereby and thereby and has taken all necessary action
to authorize the execution, delivery and performance of this Agreement and the
Seventh Amendment, and (ii) upon execution and delivery, this Agreement and the
Seventh Amendment shall constitute valid and binding obligations of Purchaser
enforceable against Purchaser in accordance with their respective terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
5.3 INVESTMENT REPRESENTATIONS. Purchaser understands
that the Shares have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"). Purchaser also understands that the Shares are
being offered and sold pursuant to an exemption from registration contained in
the Securities Act based in part upon Purchaser's representations contained in
this Agreement. Purchaser hereby represents and warrants as follows:
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(a) Purchaser, taking into account the personnel
and resources it can practically bring to bear on the purchase of the Shares
contemplated hereby, is knowledgeable, sophisticated and experienced in making,
and is qualified to make, decisions with respect to investments in shares
presenting an investment decision like that involved in the purchase of the
Shares, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Shares.
(b) Purchaser is acquiring the number of Shares
set forth in Section 2 above in the ordinary course of its business and for its
own account for investment only and with no present intention of distributing
any of such Shares and no arrangement or understanding with any other persons
regarding the distribution of such Shares.
(c) Purchaser will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Shares
except in compliance with the Securities Act, the rules and regulations
promulgated thereunder and the terms and conditions hereof.
(d) Purchaser is an "accredited investor" within
the meaning of Rule 501 of Regulation D promulgated under the Securities Act.
5.4 INTERESTED STOCKHOLDER. In each case within the
meaning of Section 203 of the Delaware General Corporation Law:
(a) at no time since immediately prior to the
time the Company's Board of Directors approved the transactions contemplated by
this Agreement through the time of the signing hereof, has Purchaser or any
"affiliate" or "associate" of Purchaser "owned" fifteen percent (15%) or more
of the Company's "voting stock"; and
(b) there are no facts, known to Purchaser or any
"affiliate" or "associate" of Purchaser, that have not been disclosed to the
Company that relate to whether Purchaser or any "affiliate" or "associate" of
Purchaser, directly or indirectly, through one or more intermediaries,
"controls" or "controlled" or is or was "controlled by" or is or was "under
common control with" the Company.
5.5 PROXY STATEMENT. All information included in the
Proxy Statement (as defined in Section 8.3) furnished by or relating to
Purchaser and its Affiliates will not, at the date of mailing of the Proxy
Statement to the stockholders of the Company, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which made, not
misleading.
6. COVENANTS OF THE COMPANY. The Company hereby covenants and
agrees with Purchaser as follows:
6.1 STOCKHOLDERS MEETING. The Company shall cause a
meeting of its stockholders to be duly called and held as soon as reasonably
practicable for the purpose of voting on the approval of this Agreement and the
transactions contemplated hereby. The proxy
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materials relating to such meeting shall contain the recommendation of the
Board of Directors of the Company that the stockholders approve this Agreement
and the transactions contemplated hereby unless the Board of Directors
determines that the making of such recommendation is not consistent with the
fulfillment of its fiduciary duties.
6.2 CONDUCT OF BUSINESS.
(a) Subject to Section 6.2(b) below, from and
after the date of this Agreement to and including the Closing Date, the Company
will carry on its business consistent with its past practices and, except with
Purchaser's consent, will not effect any corporate actions other than in the
ordinary course of business, including (i) soliciting, initiating or engaging
in any discussions or negotiations concerning any Transaction Proposal (as
hereinafter defined), (ii) substantially altering the Company's business plan
or adopting a new business plan, (iii) electing a new Chief Executive Officer,
(iv) making new commitments for capital expenditures in excess of five million
dollars ($5,000,000) in any one quarter or (v) making new contractual
commitments (excluding commitments to the parties identified on SCHEDULE I)
involving disbursements in excess of one million dollars ($1,000,000) for any
one contract.
(b) Notwithstanding anything to the contrary
contained in this Section 6.2 or elsewhere in this Agreement, nothing in this
Agreement shall be construed to prohibit the Company, its subsidiaries,
officers, directors or advisors from: (i) with respect to certain parties
previously identified to Purchaser in a memorandum dated October 10, 1997 (the
"Identified Companies"), directly or indirectly soliciting or initiating the
submission of any Transaction Proposal (as hereinafter defined); (ii)
continuing preexisting discussions with the parties identified in the Schedule
of Exceptions attached hereto as SCHEDULE I (none of which discussions
presently involves a Transaction Proposal) and consummating the transactions
contemplated by such discussions; or (iii) with respect to any Transaction
Proposal from any of the Identified Companies or any unsolicited Transaction
Proposal from any other party (A) participating in any discussions or
negotiations regarding, or furnishing to any persons or entities any non-public
information with respect to, such Transaction Proposal or potential Transaction
Proposal; (B) approving, endorsing or recommending such Transaction Proposal or
(C) entering into any letter of intent, contract or other instrument with
respect to such Transaction Proposal. In its sole discretion, the Board of
Directors of the Company may recommend approval of any such Transaction
Proposal to the stockholders of the Company.
(c) If, prior to the Closing Date or the
termination of this Agreement, the Company receives any Transaction Proposal,
it will so advise Purchaser a reasonable period of time prior to such time, if
any, as the Board of Directors of the Company approves such Transaction
Proposal and will afford Purchaser an opportunity to discuss with the Company
what, if any, response Purchaser may desire to make with respect to such
Transaction Proposal.
(d) If, prior to the Closing Date or the
termination of this Agreement, the Board of Directors recommends to its
stockholders, or enters into a definitive agreement to consummate, a
Transaction Proposal (other than with Purchaser or its Affiliates) that
involves (i) a merger involving the Company in which the stockholders of the
Company immediately prior to the transaction would own a minority of the
surviving or acquiring entity, (ii) a sale or other disposition of more than
twenty percent (20%) of the consolidated assets of the Company
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and its subsidiaries, (iii) a liquidation or dissolution of the Company, or
(iv) a sale or disposition of, or other business combination involving, the
issuance of capital stock of the Company representing more than twenty percent
(20%) of the outstanding Common Stock of the Company, then the Company shall
pay to Purchaser, by wire transfer or certified check, a fee of three million
dollars ($3,000,000); provided, however, that if the transactions contemplated
by this Agreement are subsequently consummated, Purchaser shall immediately
repay to the Company, by wire transfer or certified check, such fee of three
million dollars ($3,000,000).
(e) For purposes of this Agreement, "Transaction
Proposal" shall mean any proposal (other than any proposal by Purchaser or its
Affiliates) regarding (i) any merger, consolidation, share exchange, business
combination or other similar transaction or series of related transactions
involving the Company; (ii) any sale, lease, exchange, transfer or other
disposition of more than twenty percent (20%) of the assets of the Company or
any subsidiary of the Company; and (iii) any offer to purchase (whether from
the Company or otherwise), tender offer, exchange offer or similar transaction
involving the capital stock of the Company.
(f) Notwithstanding anything to the contrary
contained in this Section 6.2 or elsewhere in this Agreement, at any time after
the date hereof, the Company may file with the Commission a Current Report on
Form 8-K with respect to this Agreement and may file a copy of this Agreement
and any related agreement as an exhibit to such Report.
6.3 ADDITIONAL ISSUANCES.
(a) At any time after the Closing, so long as
Purchaser (together with its Affiliates) holds of record or beneficially owns
at least twenty percent (20%) of the Common Stock of the Company (the "Minimum
Percentage"), in the event the Company shall issue (an "Additional Issuance")
any capital stock, including securities of any type that are, or may become,
convertible into or exercisable or exchangeable for capital stock of the
Company (the "Additional Securities"), Purchaser shall have the right to
subscribe for and to purchase that number of Additional Securities such that
Purchaser holds the same percentage of the Company's outstanding capital stock
immediately prior to and immediately following the Additional Issuance (the
"Pro Rata Share"); provided, however, that this Section 6.3 shall not apply to
shares issued
(i) to employees, officers or directors
of, or consultants or advisors to the Company or any subsidiary, pursuant to
stock purchase or stock option plans or other arrangements;
(ii) pursuant to any options, warrants,
conversion rights or other rights or agreements outstanding as of the date of
this Agreement;
(iii) for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business
combination;
(iv) in connection with any stock split,
stock dividend or recapitalization by the Company;
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(v) pursuant to any equipment leasing
arrangement or debt financing from a bank or similar financial institution; and
(vi) in connection with any strategic
transaction involving the Company and other entities, including (A) joint
ventures, manufacturing, marketing or distribution arrangements or (B)
technology transfer or development arrangements; provided, however, that the
exception set forth in this subsection (vi) shall not apply to the extent any
individual strategic transaction involves the issuance of shares of Common
Stock in excess of five percent (5%) of the currently outstanding shares of
Common Stock or all such strategic transactions together involve the issuance
of shares of Common Stock in excess of ten percent (10%) of the currently
outstanding shares of Common Stock.
(b) If the Company proposes an Additional
Issuance, the Company shall, at least thirty (30) days prior to the proposed
closing date of such issuance, give written notice to Purchaser and offer to
sell to Purchaser its Pro Rata Share of the Additional Securities at the lowest
price per share, and otherwise on the same terms and conditions, offered to
other investors. Such notice shall describe the type of Additional Securities
which the Company is offering to Purchaser, the price of the Additional
Securities and the general terms upon which the Company will issue same.
Purchaser shall have fifteen (15) days from the date of mailing of any such
notice to agree to purchase its Pro Rata Share of such Additional Securities
for the price and upon the general terms specified in the notice by giving
written notice to the Company and stating therein the quantity of Additional
Securities to be purchased. Sale and issuance of the Additional Securities
which Purchaser has elected to purchase shall be effected within forty-five
(45) days of the date of the original notice, but only after compliance with
all governmental regulations, including but not limited to the expiration of
the applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvement Act of 1976 and the rules promulgated thereunder (the "HSR Act").
(c) In the event that, at any time, Purchaser's
percentage ownership (calculated pursuant to Section 6.3(a) above) shall be
decreased as a result of (i) any transfer by Purchaser or any of its Affiliates
to one or more transferees that are not Affiliates of Purchaser of any Shares
or other securities held of record or beneficially owned by Purchaser or its
Affiliates, or (ii) Purchaser's not purchasing the full amount of Additional
Securities offered for purchase pursuant to this Section 6.3, a new percentage
ownership level shall be established based on Purchaser's percentage ownership
in effect immediately following such transfer or Additional Issuance (the
"Reduced Percentage Ownership"), and thereafter the Company shall be required
to offer to Purchaser only such number of Additional Securities pursuant to
this Section 6.3 as would permit Purchaser to maintain the Reduced Percentage
Ownership.
7. COVENANTS OF PURCHASER. Purchaser hereby covenants and agrees
with the Company as follows:
7.1 CREDIT FACILITY. From and after the date of this
Agreement, to and including the Closing Date, Purchaser will, upon written
request of the Company from time to time, make available to the Company up to
ten million dollars ($10,000,000) in the form of an unsecured credit facility
(the "Credit Facility"); provided, however, that any balance under the Credit
Facility outstanding on the Closing Date shall be repaid from the net proceeds
to the
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Company from the sale of the Shares or from the net proceeds to the Company
from the sale of other securities in one or more capital-raising transactions.
The Credit Facility shall have a term of nine (9) months from the initial
drawdown of the Credit Facility, any outstanding balance shall bear interest at
the rate of twelve percent (12%) per annum, payable quarterly, and each advance
under the Credit Facility shall be evidenced by a promissory note to the
foregoing effect. Prior and as a condition to the initial drawdown under the
Credit Facility, Purchaser shall have received an opinion of Cooley Godward LLP
to the effect that such promissory note(s), when delivered by the Company in
connection with each drawdown, will be valid and binding obligations of the
Company, enforceable in accordance with their terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' and contracting parties' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
7.2 RESTRICTIONS ON TRANSFER.
(a) Purchaser agrees not to make any disposition
of all or any portion of the Shares unless and until:
(i) There is then in effect a
registration statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with such registration
statement; or
(ii) (A) The transferee has agreed in
writing to be bound by this Section 7.2, and (B) Purchaser or any transferor
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a detailed statement of the circumstances
surrounding the proposed disposition, and if reasonably requested by the
Company, shall have furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company, that such disposition will not require
registration of such shares under the Securities Act. It is agreed that the
Company will not require agreements of transferees or opinions of counsel for
transactions made pursuant to Rule 144 except in unusual circumstances.
(iii) Notwithstanding the provisions of
paragraphs (i) and (ii) above, no such registration statement or opinion of
counsel shall be necessary for a transfer by Purchaser or any transferor which
is (A) a partnership to its partners or former partners in accordance with
partnership interests, (B) a corporation to its stockholders in accordance with
their interest in the corporation, (C) a limited liability company to its
members or former members in accordance with their interest in the limited
liability company, or (D) to such holder's family member or trust for the
benefit of such holder, provided the transferee will be subject to the terms of
this Section 7.2.
(b) If Purchaser (or Purchaser and its Affiliates
together) proposes to transfer, directly or indirectly, shares of Common Stock
representing more than twenty percent (20%) of the then outstanding Common
Stock of the Company to any single transferee not affiliated with Purchaser
(with any group of affiliated transferees or multiple transferees acting in
concert considered to be a single transferee for purposes of this provision),
Purchaser may effect such transfer only (i) with the prior express approval of
a majority of the directors of the
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Company serving on the Board of Directors prior to and after the Closing Date
or successors to such directors appointed or elected pursuant to the procedure
described in Section 8.1(d) below (such directors being hereinafter referred to
as "Independent Directors" and such approval being hereinafter referred to as
"Approval of the Independent Directors") or (ii) if such transferee or
transferees shall agree to make, as soon as practicable after such transfer, a
bona fide offer, through a tender offer or otherwise, to purchase a pro rata
portion of the outstanding Common Stock held by stockholders other than
Purchaser or the transferee or transferees on the same terms and conditions as
the proposed transfer; provided, however, that such requirement shall not apply
to transfers to Affiliates of Purchaser that agree to be bound by the
restrictions set forth in this Section 7.2.
(c) Any purported transfer of Shares in violation
of this Agreement shall be void and of no effect, and shall not operate to
transfer any interest or title to the purported transferee. Transfers to any
Affiliate of Purchaser shall be effective only if such Affiliate of Purchaser
agrees in writing to be bound by the restrictions contained herein applicable
to Purchaser.
7.3 STANDSTILL AGREEMENT.
(a) Except with the Approval of the Independent
Directors, Purchaser will not (and will not assist or encourage others
affiliated with it to), and Purchaser will ensure that its Affiliates do not
(and will not assist or encourage others affiliated with them to), directly or
indirectly:
(i) make, effect, initiate, cause or
participate in (A) any acquisition of ownership (including, but not limited to,
beneficial ownership as defined in Rule 13d-3 under the Exchange Act) of any
securities of the Company or any subsidiary or other Affiliate of the Company,
(B) any acquisition of any assets of the Company or any subsidiary or other
Affiliate of the Company except as anticipated hereby, or (C) any tender offer,
exchange offer, merger, business combination, recapitalization, restructuring,
liquidation, dissolution or extraordinary transaction involving the Company or
any subsidiary or other Affiliate of the Company, or involving any securities
or assets of the Company or any subsidiary or other Affiliate of the Company;
or
(ii) initiate, propose, make or in any
way participate in, directly or indirectly, any "solicitation" of "proxies" to
vote, or seek to influence any person or entity with respect to voting of, any
securities of the Company against the election of any of the Independent
Directors, or become a "participant" in a "solicitation" or "election contest"
(as such terms are defined or used in Regulation 14A under the Exchange Act) in
any election contest with respect to the removal of any of the Independent
Directors.
(b) Notwithstanding Section 7.3(a)(i) above,
Purchaser and its Affiliates may acquire equity securities of the Company (i)
as provided in Section 7.4 below and (ii) from and after the Closing to the
extent that such acquisition does not cause Purchaser's and its Affiliates'
aggregate beneficial ownership of the outstanding capital stock of the Company
to increase to a percentage of the then outstanding capital stock of the
Company that exceeds the sum of (A) Purchaser's and its Affiliates' aggregate
beneficial ownership of the outstanding
Page 13 of 29
<PAGE> 11
capital stock of the Company immediately after the Closing as a percentage of
the outstanding capital stock of the Company immediately after the Closing and
(B) ten (10) percentage points.
(c) This Section 7.3 shall cease to have any
further force or effect if any person or group makes a bona fide tender offer
to purchase more than fifty percent (50%) of the then outstanding shares of
capital stock of the Company (determined as if all convertible securities were
converted into shares of Common Stock); provided, however, that this paragraph
(c) shall not be applied to any tender offer caused, influenced, encouraged,
induced, assisted or participated in by Purchaser or any of its Affiliates.
(d) Purchaser acknowledges that money damages
would not be a sufficient remedy for any breach of this Section 7.3 by
Purchaser or its directors, officers, employees or agents and that, in addition
to all other remedies, the Company shall be entitled to specific performance
and injunctive or other equitable relief as a remedy for any such breach or any
threatened breach, and Purchaser further agrees to waive and to use its best
efforts to cause Purchaser's directors, officers, employees or agents to waive,
any requirement for the securing or posting of any bond in connection with such
remedy.
7.4 ACQUISITION OF THE COMPANY BY PURCHASER.
(a) If, at any time after the date of this Agreement,
Purchaser or any of its Affiliates intend to acquire all of the outstanding
equity securities not held of record or beneficially owned by Purchaser or its
Affiliates (the "Independent Shares"), Purchaser shall notify the Company in
writing of such intention. The Company may, upon approval of the Board of
Directors, enter into an agreement with respect to such proposal so long as
such agreement does not provide for any "breakup" or "topping" fee, expense
reimbursement or other similar payment by the Company in the event that the
transactions contemplated by such proposal are not consummated. Purchaser will
ensure that any such proposal submitted by Purchaser or any of its Affiliates
and any agreement of the Company with respect thereto will be on terms and
conditions consistent with, and that do not render impracticable, the
procedures set forth in this Section 7.4.
(b) For ninety (90) days following receipt of such notice
(or such shorter period, if any, as the Independent Directors may deem
appropriate), the Independent Directors shall have full authority to conduct a
"market check" with respect to the proposed transaction, which may include (i)
authorizing the Company's independent financial advisors to (A) advise the
market and potential acquirors of the Company that Purchaser has submitted a
proposal to acquire the Independent Shares and that offers by other persons or
entities to acquire the Company or the Independent Shares may be submitted for
consideration by the Independent Directors and the Board of Directors as a
whole and (B) provide other customary investment banking services with respect
to any offers that may be received; (ii) causing the Company to enter into
engagement letters or customary terms with such financial advisors with respect
to the foregoing services; and (iii) disclosing any non-public information
concerning the Company or any of its subsidiaries to, or affording any access
to the properties, books or records of the Company or any of its subsidiaries
to any person or entity desiring to submit such an offer.
Page 14 of 29
<PAGE> 12
(c) In the event that, (i) within such ninety (90) day
period (or such shorter period, if any, as the Independent Directors may deem
appropriate), the Company receives a proposal to acquire the Independent Shares
or the Company (whether through merger, acquisition of all or substantially all
of the Company's assets, a tender or exchange offer for the Company's
securities, or otherwise) that the Board of Directors determines, after
consultation with its independent financial advisors, would be reasonably
likely to result in a transaction more favorable than Purchaser's proposal,
from a financial point of view, to the holders of the Independent Shares (a
"Superior Proposal"), and (ii) the Board of Directors causes the Company to
enter into a definitive agreement to effect the transactions contemplated by
the Superior Proposal or recommends to the stockholders of the Company the
acceptance of the Superior Proposal, Purchaser shall (and shall cause its
Affiliates to) cast its votes or submit proxies in favor of such Superior
Proposal at any meeting of stockholders held to approve such Superior Proposal
or shall tender its shares of the Company in response to any tender offer made
in connection with the Superior Proposal, unless such recommendation is
withdrawn or modified because the Company has received a proposal that is
determined by the Board of Directors, as set forth above, to be superior to the
Superior Proposal, or for any other reason.
(d) In the event that, within the ninety (90) day period
(or such shorter period, if any, as the Independent Directors may deem
appropriate), the Company does not receive a Superior Proposal, the Company and
Purchaser may consummate the transactions contemplated by Purchaser's proposal,
provided that the Board has received an opinion from an independent financial
advisor, in form and substance satisfactory to the Independent Directors, to
the effect that the transaction is fair to the holders of the Independent
Shares from a financial point of view and that the price to be received by the
holders of the Independent Shares in the transaction includes a control premium
comparable to that which would be obtained in an auction of the Company
unconstrained by the effects of the existence of any dominant or controlling
ownership interest.
7.5 "MARKET STAND-OFF" AGREEMENT. Purchaser agrees not
to sell or otherwise transfer or dispose of any Common Stock (or other
securities) of the Company held by it during the ninety (90) day period
following the effective date of a registration statement of the Company filed
under the Securities Act in connection with any underwritten public offering of
Common Stock (or other securities) of the Company if so requested by the
Company and the underwriters; provided that:
(a) all officers and directors of the Company
enter into similar agreements; and
(b) such time period may be waived or shortened
by such underwriter.
The Company may impose stop-transfer instructions with respect to the shares
(or securities) subject to the foregoing restriction until the end of such
period.
7.6 DISCLOSURE. Purchaser and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement.
Page 15 of 29
<PAGE> 13
8. ADDITIONAL COVENANTS OF THE PARTIES.
8.1 BOARD COMPOSITION.
(a) Upon the Closing, appropriate action shall be
taken so that the Company's Board of Directors will consist of the individuals
identified in the memorandum dated October 10, 1997 from the Company to
Purchaser (the "Board Memorandum"). If the number of authorized members of the
Board is increased, the number of Independent Directors shall be
proportionately increased.
(b) For so long as any Independent Director
continues as a member of the Board of Directors of the Company, the Company
shall maintain in effect all (or implement equivalent) compensatory plans,
programs and other benefits that are in effect immediately prior to the Closing
for the benefit of non-employee directors of the Company, including without
limitation, stock plans, expense reimbursement, indemnification agreements and
liability insurance, and the Company shall continue to operate such plans,
programs and benefits in a manner consistent with past practice.
(c) At any meeting of stockholders of the Company
at which the election of directors is submitted to a vote of the stockholders,
Purchaser shall cause the Board of Directors of the Company to include on the
slate of nominees for election those Independent Directors who are in the class
whose term of office is then ending and shall recommend to the stockholders the
election of such Independent Directors. In casting votes (or giving proxies)
with respect to the election of any of the Independent Directors submitted for
a vote of the stockholders of the Company, Purchaser shall vote (and Purchaser
shall cause any Affiliate of Purchaser to vote) all shares held of record or
beneficially owned by Purchaser or its Affiliates, respectively, in the same
proportion as the votes cast in favor of or withheld from such nominees for
Independent Directors by other holders of Common Stock of the Company.
(d) In the event of any vacancy on the Board
created as a result of the resignation, death, disability, removal or
disqualification of any of the Independent Directors, an Independent Director
Nominating Committee composed of the remaining Independent Directors, after
consultation with the other directors, shall be entitled to select a nominee to
complete the remaining term of the Independent Director whose position was
vacated and either (i) such nominee shall be elected as an Independent Director
by action of the full Board of Directors or (ii) if such nominee is not so
elected, the Board shall call a special meeting of stockholders of the Company
to consider and vote on the election of such nominee. In connection with such
election, Purchaser shall vote (and Purchaser shall cause any Affiliate of
Purchaser to vote) with respect to the election of such new Independent
Director in accordance with Section 8.1(c) hereof. Nothing contained herein
shall be deemed to preclude or restrict any stockholder of the Company who is
not affiliated or associated with Purchaser from nominating a person for
election to the Board, in accordance with procedure set forth in the Company's
By-Laws, and any person so nominated who is then elected as a director shall be
deemed to be an Independent Director.
Page 16 of 29
<PAGE> 14
8.2 INDEPENDENT DIRECTOR ACTION.
(a) Without the Approval of the Independent
Directors, Purchaser shall not (and shall not permit any of its Affiliates to):
(i) engage in any transaction with the Company or any subsidiary of the Company
other than in the ordinary course of business or having a dollar value less
than twenty-five thousand dollars ($25,000); or (ii) agree to any amendment of,
or waiver of any rights under, this Agreement or any other agreement to which
the Company and Purchaser or any its Affiliates are parties.
(b) No Sale of the Company (as hereinafter
defined) may be authorized by any corporate action on the part of the Company
unless (i) the Company shall have first engaged a nationally recognized
investment banking firm selected with the Approval of the Independent Directors
and (ii) such firm has rendered to the Board an opinion, satisfactory in form
and substance to the Independent Directors, to the effect that the transaction
is fair, from a financial point of view, to the stockholders of the Company and
that the price to be received by the stockholders of the Company in the
transaction includes a control premium comparable to that which would be
obtained in an auction of the Company unconstrained by the effects of the
existence of any dominant or controlling ownership interest.
(c) A "Sale of the Company" shall mean any form
of merger with, recapitalization, restructuring, liquidation, dissolution or
sale of all or substantially all the assets of, or similar business combination
or other similar transaction with or involving the Company or any of its
subsidiaries (other than with Purchaser or any of its Affiliates).
8.3 PROXY STATEMENT. As promptly as practicable after
the date of this Agreement, the Company shall prepare and cause to be filed
with the Commission a Proxy Statement in connection with the transactions
contemplated hereby (the "Proxy Statement"), and the Company shall respond
promptly to any comments of the Commission or its staff with respect thereto.
The Company will afford Purchaser a reasonable opportunity to review and
comment on the proposed form of Proxy Statement prior to its filing with the
Commission. Purchaser shall promptly furnish to the Company all information
concerning Purchaser, its subsidiaries and its stockholders as may be required
or reasonably requested in connection with any action contemplated by this
Section 8.3. Such Proxy Statement shall include as an exhibit the opinion from
the Company's financial advisor referred to in Section 9.2(h). The Company
shall (a) notify Purchaser promptly of the receipt of any comments from the
Commission or its staff and of any request by the Commission or its staff for
amendments or supplements to the Proxy Statement or for additional information
and (b) supply Purchaser with copies of all correspondence with the Commission
or its staff with respect to the Proxy Statement. Whenever any event occurs
that should be set forth in an amendment or supplement to the Proxy Statement,
Purchaser or the Company, as the case may be, shall promptly inform the other
of such occurrence and shall cooperate in filing with the Commission or its
staff, and, if appropriate, mailing to stockholders of the Company, such
amendment or supplement.
8.4 REGULATORY APPROVAL. The Company and Purchaser shall
use commercially reasonable efforts to file, as soon as practicable after the
date of this Agreement, all notices, reports and other documents required to be
filed with any federal, state, local, municipal, foreign or other governmental
body ("Governmental Body") with respect to the
Page 17 of 29
<PAGE> 15
transactions contemplated by this Agreement, and to submit promptly any
additional information requested by any such Governmental Body. Without
limiting the generality of the foregoing, the Company and Purchaser shall,
promptly after the date of this Agreement, prepare and file the notifications
required under the HSR Act in connection with the transactions contemplated by
this Agreement. The Company and Purchaser shall respond as promptly as
practicable to (i) any inquiries or requests received from the Federal Trade
Commission or the Department of Justice for additional information or
documentation and (ii) any inquiries or requests received from any state
attorney general or other Governmental Body in connection with antitrust or
related matters. Each of the Company and Purchaser shall (A) give the other
party prompt notice of the commencement of any action, suit, litigation,
arbitration, preceding or investigation ("Legal Proceeding") by or before any
Governmental Body with respect to the transactions contemplated by this
Agreement, (B) keep the other party informed as to the status of any such Legal
Proceeding, and (C) promptly inform the other party of any communication to or
from the Federal Trade Commission, the Department of Justice or any other
Governmental Body regarding the transactions contemplated by this Agreement.
8.5 AMENDMENT OF CERTIFICATE OF INCORPORATION OR BYLAWS.
The Company and Purchaser shall take all steps reasonably necessary to amend
the Company's Certificate of Incorporation and By-Laws to implement the rights
and obligations of the parties contained herein to the extent necessary or
appropriate under Delaware law. The Company's Certificate of Incorporation and
By-Laws shall be amended to provide that, to the full extent permitted by the
Delaware General Corporation Law, the filling of vacancies on the Board of
Directors may be effected by written consent of a majority in interest of the
stockholders.
9. CONDITIONS TO CLOSING.
9.1 CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING.
Purchaser's obligations to purchase the Shares at the Closing are subject to
the satisfaction, at or prior to the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE;
PERFORMANCE OF OBLIGATIONS. The representations and warranties made by the
Company in Section 4 hereof shall have been true and correct in all material
respects as of the Closing Date except for changes contemplated by this
Agreement and except for those representations and warranties that address
matters only as of the date of this Agreement or any other particular date
(other than the Closing Date), which shall remain true and correct in all
material respects as of such particular date, and the Company shall have
performed in all material respects all covenants and obligations herein
required to be performed or observed by it on or prior to the Closing.
(b) CONSENTS, PERMITS, AND WAIVERS. On or prior
to the Closing Date, Purchaser shall have obtained any and all consents,
permits and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement and the Seventh Amendment to
Registration Rights Agreement (except for such as may be properly obtained
subsequent to the Closing).
(c) ABSENCE OF RESTRAINT. No order to restrain,
enjoin or otherwise prevent the consummation of the transactions contemplated
hereby shall have been entered by
Page 18 of 29
<PAGE> 16
any court or other governmental authority and no litigation shall be pending
which challenges or seeks to restrain or prohibit the consummation of the
transactions contemplated hereby.
(d) STATUTORY REQUIREMENTS. All statutory
requirements and regulatory approvals for the valid consummation by Purchaser
of the transactions contemplated by this Agreement, including the termination
of the waiting period of the HSR Act if such filing is required, shall have
been fulfilled or received.
(e) STOCKHOLDER APPROVAL. On or prior to the
Closing Date, the transactions contemplated by this Agreement shall have been
approved by the affirmative vote of the stockholders of the Company as required
by applicable law or the requirements of the Nasdaq Stock Market applicable to
National Market securities.
(f) SEVENTH AMENDMENT TO REGISTRATION RIGHTS
AGREEMENT. The Company and holders of at least fifty-one percent (51%) of the
Registrable Securities (as defined in the original Registration Rights
Agreement, dated June 23, 1986, as amended to date) shall have entered into the
Seventh Amendment to Registration Rights Agreement, in substantially the form
attached hereto as EXHIBIT A.
(g) BOARD OF DIRECTORS. As of the Closing, all
necessary corporate action shall have been taken to the effect that, effective
immediately following the Closing, the Board of Directors of the Company shall
consist of the individuals determined pursuant to the Board Memorandum.
(h) LEGAL OPINION. Purchaser shall have received
from Cooley Godward LLP an opinion addressed to it, dated as of the Closing,
substantially in the form attached hereto as EXHIBIT B.
(i) COMPLIANCE CERTIFICATE. The Company shall
have delivered to Purchaser or its counsel a Compliance Certificate, executed
by the President and the Chief Financial Officer of the Company, dated as of
the date of the Closing, to the effect that the conditions specified in
subsections (a) through (h) of Section 9.2 have been satisfied.
9.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
Company's obligation to issue and sell the Shares at the Closing is subject to
the satisfaction, on or prior to the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE;
PERFORMANCE OF OBLIGATIONS. The representations and warranties made by
Purchaser in Section 5 hereof shall have been true and correct in all material
respects as of the Closing Date except for changes contemplated by this
Agreement and except for those representations and warranties that address
matters only as of the date of this Agreement or any other particular date
(other than the Closing Date), which shall remain true and correct in all
material respects as of such particular date, and Purchaser shall have
performed in all material respects all covenants and obligations herein
required to be performed or observed by it on or prior to the Closing.
Page 19 of 29
<PAGE> 17
(b) CONSENTS, PERMITS, AND WAIVERS. On or prior
to the Closing Date, the Company shall have obtained any and all consents,
permits and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement and the Seventh Amendment to
Registration Rights Agreement (except for such as may be properly obtained
subsequent to the Closing).
(c) ABSENCE OF RESTRAINT. No order to restrain,
enjoin or otherwise prevent the consummation of the transactions contemplated
hereby shall have been entered by any court or other governmental authority and
no litigation shall be pending which challenges or seeks to restrain or
prohibit the consummation of the transactions contemplated hereby.
(d) STOCKHOLDER APPROVAL. On or prior to the
Closing Date, the transactions contemplated by this Agreement shall have been
approved by the affirmative vote of the holders of a majority of the capital
stock of the Company represented and voting on such matters, excluding the
shares of capital stock held by Purchaser and its Affiliates or which Purchaser
and its Affiliates have the sole or shared power to vote (the "Requisite
Vote").
(e) STATUTORY REQUIREMENTS. All statutory
requirements and regulatory approvals for the valid consummation by Purchaser
of the transactions contemplated by this Agreement, including the termination
of the waiting period of the HSR Act if such filing is required, shall have
been fulfilled or received.
(f) SEVENTH AMENDMENT TO REGISTRATION RIGHTS
AGREEMENT. Purchaser and holders of at least fifty-one percent (51%) of the
Registrable Securities (as defined in the original Registration Rights
Agreement, dated June 23, 1986, as amended to date) shall have entered into the
Seventh Amendment to Registration Rights Agreement, in substantially the form
attached hereto as EXHIBIT A.
(g) LEGAL OPINION. The Company shall have
received from Irell & Manella an opinion addressed to it, dated as of the
Closing, substantially in the forms attached hereto as Exhibit C.
(h) FAIRNESS OPINION. The opinion of Furman Selz
LLC to the Company's Board of Directors, dated the date hereof, to the effect
that the transactions contemplated by this Agreement are fair from a financial
point of view to the stockholders of the Company shall not have been withdrawn
or modified.
(i) COMPLIANCE CERTIFICATE. Purchaser shall have
delivered to the Company or its counsel a Compliance Certificate, executed by
the President and the Chief Financial Officer of Purchaser, dated as of the
date of the Closing, to the effect that the conditions specified in subsections
(a) through (h) of Section 9.1 have been satisfied.
10. TERMINATION AND AMENDMENT.
10.1 TERMINATION. This Agreement may be terminated at any
time prior to the Closing Date:
Page 20 of 29
<PAGE> 18
(a) by mutual agreement of the Company and
Purchaser;
(b) by either the Company or Purchaser if this
Agreement shall not have been consummated by January 31, 1998, unless extended
by mutual agreement or unless the failure to consummate the Agreement is
attributable to a failure on the part of the party seeking to terminate this
Agreement to perform any material obligation required to be performed by such
party at or prior to the Closing Date; or
(c) by either the Company or Purchaser if the
meeting of the Company's stockholders shall have been concluded and:
(i) with respect to Purchaser, the vote
of the Company's stockholders required by applicable laws to approve the
transactions contemplated by this Agreement shall not have been obtained; or
(ii) with respect to the Company, the
Requisite Vote of the stockholders shall not have been obtained.
10.2 EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to Section 10.1, this Agreement shall
become void and have no effect, without any liability on the part of any party
or its directors, officers or stockholders, except as set forth in Section
6.2(c), and except for the provisions set forth in Sections 7.3(a), (c) and
(d), which shall continue for a period of three (3) years from the date of this
Agreement, unless the failure to consummate this Agreement or the transactions
contemplated hereby is attributable to a failure on the part the Company to
perform any material obligation required to be performed by the Company.
Notwithstanding the foregoing, nothing in this Section 10.2 shall relieve any
party to this Agreement of liability for a material breach of any provision of
this Agreement.
10.3 AMENDMENT. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
11. MISCELLANEOUS.
11.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENT. Notwithstanding any investigation made by any party to this
Agreement, all covenants, agreements, representations and warranties made by
the Company and Purchaser herein and in the certificates for the Shares
delivered pursuant hereto shall survive the execution of this Agreement and
shall expire as of and be of no further force or effect after the Closing.
11.2 NO TRANSFER OF RIGHTS. Except as otherwise provided
herein, no rights granted to Purchaser hereunder may be assigned or otherwise
conveyed by Purchaser to any transferee.
11.3 RESTRICTED SECURITIES; LEGENDS. Notwithstanding the
foregoing, Purchaser understands that (i) the Shares have not been registered
under the Securities Act by reason of a specific exemption therefrom, and may
not be transferred or resold except pursuant to an
Page 21 of 29
<PAGE> 19
effective registration statement or exemption from registration; (ii) each
certificate representing the Shares will be endorsed with the following
legends:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
(b) Any legend required to be placed thereon by
applicable federal or state securities laws.
and (iii) the Company will instruct any transfer agent not to register the
transfer of any of the Shares unless the conditions specified in the foregoing
legends are satisfied.
11.4 FEES AND EXPENSES. Each of the parties hereto shall
bear its own expenses in connection with negotiation, preparation, execution
and consummation of this Agreement and the transactions contemplated hereby,
including, but not limited to, legal, accounting and investment banking fees
and expenses.
11.5 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be in writing, shall be
mailed by first-class registered or certified airmail, or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as follows:
(a) if to the Company, to:
Metricom, Inc.
980 University Avenue
Los Gatos, California 95030
Attention: Chief Executive Officer
with a copy so mailed to:
Cooley Godward LLP
One Maritime Plaza, 20th Floor
San Francisco, CA 94111-3580
Attention: James C. Gaither
or to such other person at such other place as the Company shall designate to
Purchaser in writing; and
Page 22 of 29
<PAGE> 20
(b) if to Purchaser, at its address as set forth
at the end of this Agreement, or at such other address or addresses as may have
been furnished to the Company in writing.
11.6 HEADINGS. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
11.7 SEVERABILITY. In case any provision contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
11.8 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware as to
matters between the Company and its stockholders and other matters of corporate
governance and, as to all other matters, with the laws of the State of
California, without regard to the choice of law provisions thereof, and the
federal law of the United States of America.
11.9 COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
METRICOM, INC.
By: /s/ Robert Dilworth
--------------------------
Robert P. Dilworth
Chief Executive Officer
VULCAN VENTURES INCORPORATED
By: /s/ William Savoy
-------------------------
Address:
110-110th Avenue N.E.
Suite 550
Bellevue, WA 98004
Attention: William Savoy
Page 23 of 29
<PAGE> 21
SCHEDULE I
SCHEDULE OF EXCEPTIONS
[Intentionally Omitted]
Page 24 of 29
<PAGE> 22
EXHIBIT A
SEVENTH AMENDMENT TO
REGISTRATION RIGHTS AGREEMENT
This SEVENTH AMENDMENT TO REGISTRATION RIGHTS AGREEMENT is entered
into as of _________________, 1997, by and between METRICOM, INC., a Delaware
corporation (the "Company"), and VULCAN VENTURES INCORPORATED ("Vulcan
Ventures"), each as indicated by its execution and delivery of the counterpart
signature pages attached hereto.
WITNESSETH
WHEREAS, the Company and certain of its security holders (including
Vulcan Ventures) are parties to that certain Registration Rights Agreement,
originally dated as of June 23, 1986, as amended to date (the "Registration
Rights Agreement"); and
WHEREAS, pursuant to that certain Common Stock Purchase Agreement dated
as of October __, 1997, between the Company and Vulcan Ventures (the "Vulcan
Ventures Agreement"), Vulcan Ventures has purchased from the Company
[________________] shares of the Company's Common Stock (the "Vulcan Shares")
and has the right, under certain circumstances, to purchase Additional
Securities (as defined in the Vulcan Ventures Agreement); and
WHEREAS, the Company and the holders of the requisite percentage of
Registrable Securities (as defined in the Registration Rights Agreement) desire
to amend the Registration Rights Agreement to permit the Company to grant to
Vulcan Ventures registration rights as set forth in Sections 2 ("Form S-3
Registration") and 3 ("Piggyback Registration"), respectively, of the
Registration Rights Agreement with respect to the Vulcan Shares and any
Additional Securities; and
WHEREAS, the Company and the holders of the requisite percentage of
Registrable Securities desire to amend the Registration Rights Agreement to
provide that any individual holder of Registrable Securities who holds at least
twenty-five percent (25%) of the then outstanding Registrable Securities can
request that the Company effect any Registration (as defined in the
Registration Rights Agreement) on Form S-3.
NOW, THEREFORE, the parties hereto agree as follows:
1. The execution and delivery by Vulcan Ventures of this Seventh
Amendment to Registration Rights Agreement shall for all purposes be deemed to
be, as of the date first set forth above, the execution of a counterpart of the
Registration Rights Agreement as required pursuant to Section 8 of the
Registration Rights Agreement. Accordingly, Vulcan Ventures shall be deemed to
be, as of the date first set forth above, a party to the Registration Rights
Agreement with respect to the Vulcan Shares and any Additional Securities, in
addition to any
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<PAGE> 23
other Registrable Securities currently held by it, and shall continue to be
considered an "Investor" for all purposes of the Registration Rights Agreement.
Notwithstanding the foregoing, the Vulcan Shares and any Additional Securities
shall be eligible for Form S-3 Registration and Piggyback Registration only.
2. In accordance with Section 8 of the Registration Rights
Agreement, Schedule A to the Registration Rights Agreement shall be amended to
include the Vulcan Shares upon execution and delivery of this Seventh Amendment
to Registration Rights Agreement by Vulcan Ventures.
3. Schedule A to the Registration Rights Agreement shall be
further amended to include only those holders and those holders' shares which
are eligible for registration rights as of the date first set forth above.
4. In accordance with Section 12.6 of the Registration Rights
Agreement, the first sentence of Section 2.3 thereof is hereby amended to read
as follows:
Subject to the terms of this Agreement, in the event that the
Company receives from either (a) an individual Holder who
holds at least twenty-five percent (25%) of the then
outstanding Registrable Securities (each of such Holders being
referred to herein as a "Major Holder") or (b) Holders who in
the aggregate hold at least twenty-five percent (25%) of the
then outstanding Registrable Securities, excluding Registrable
Securities held by Major Holders, a written request that the
Company effect any Registration on Form S-3 (or any successor
form to Form S-3 regardless of its designation) at a time when
the Company is eligible to register securities on Form S-3 (or
any successor form to Form S-3 regardless of its designation)
for an offering of Registrable Securities, the Company will
promptly give written notice of the proposed Registration to
all Holders and will as soon as practicable use its best
efforts to effect Registration of the Registrable Securities
specified in such request, together with all or such portion
of the Registrable Securities of any Holder joining in such
request as are specified in a written request delivered to the
Company within 30 days after written notice from the Company
of the proposed Registration.
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<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have executed this Seventh
Amendment to Registration Rights Agreement as of the date first set forth
above.
COMPANY REGISTRABLE SECURITIES HOLDER
METRICOM, INC. -------------------------------
By: By:
------------------------------ ---------------------------
Robert P. Dilworth (signature)
Chief Executive Officer
Name:
-------------------------
(printed name)
Title:
-------------------------
(if a corporation)
Common Shares
Outstanding:
----------------
Common Shares
Exercisable
Under Warrant:
-----------------
VULCAN VENTURES INCORPORATED
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Page 27 of 29
<PAGE> 1
EXHIBIT 99.2
PAUL G. ALLEN'S VULCAN VENTURES
BUYING CONTROLLING INTEREST IN METRICOM, INC.
October 13, 1997 8:34 AM EDT
BELLEVUE, Wash.--(BUSINESS WIRE)--Oct. 13, 1997--Vulcan Ventures Inc., the
investment organization for Paul G. Allen, today announced that it plans to
increase its ownership in Metricom, Inc. (NASDAQ:MCOM) by 4.65 million shares
purchased for $56 million, and will take a leadership position on the company's
board of directors.
In a separate transaction, Vulcan Ventures entered into an agreement whereby it
would acquire 2.583 million shares of Metricom from the Lindner Group. The
transactions raise Vulcan's interest in Metricom to 49%, and are subject to
shareholder and Hart-Scott approval. Vulcan has been an investor in Metricom
since 1993.
"We were impressed by the marketability and potential industry impact of the
technology currently under development at Metricom," said William Savoy,
president of Vulcan Ventures. "After careful review of the company, its plans
and its products, we felt the new technology could be taken to market sooner
and more effectively deployed nationally under our guidance and management."
"Our employees and board of directors welcome this investment and commitment by
Vulcan," said Bob Dilworth, Metricom CEO and chairman. "Paul Allen is a
visionary who has repeatedly identified great business opportunities and helped
enable their success. His investment will ensure that Metricom can deploy its
next generation high-speed wireless data networks rapidly and maintain its
technology and market leadership. We look forward to the increased involvement
of Vulcan and its staff of financial and technical advisers as we move Metricom
forward with this revolutionary technology."
Based on this significant development, Metricom will defer its pending $125
million bond offering.
ABOUT VULCAN VENTURES
New-media investor Paul G. Allen founded Vulcan Ventures Inc. of Bellevue,
Wash. in 1986 to research and implement his investments. Through Vulcan
Ventures, Allen invests in companies that offer products, services or
technologies that fit his wired world strategy, and can contribute to or
benefit from the technology and strategy of other Paul Allen companies.
William D. Savoy is president of Vulcan Ventures and represents Allen in his
professional and personal financial transactions as well as managing the Vulcan
analysts who investigate and secure investment opportunities. Allen remains
chairman of Vulcan.
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<PAGE> 2
ABOUT METRICOM, INC.
Metricom, Inc. is the leading provider of wide-area, high-speed, portable
wireless data services. The company's Ricochet products and services division,
headquarted in Los Gatos, Calif., provides portable and desktop computer users
with high-performance, cost-effective wireless access to the Internet, private
intranets, local-area networks, e-mail and online services.
Ricochet is currently available in the greater San Francisco Bay Area, Seattle
and Washington, D.C., and on several university campuses and airports
throughout the United States. Metricom's industrial communications division
provides both networks and communications services to the electric, gas, oil
and water industries. For more information, call (800) Go-Wireless, or visit
Metricom's Web site at http://www.metricom.com.
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