EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
among
SUPERCONDUCTOR TECHNOLOGIES INC.
STI ACQUISITION, INC.
and
CONDUCTUS, INC.
Dated as of October 10, 2002
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of October 10, 2002 (this
"Agreement") among Superconductor Technologies Inc., a Delaware
corporation ("Parent"), STI Acquisition, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"),
and Conductus, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the Delaware General Corporation
Law (the "DGCL"), Parent will combine with the Company through the
merger of Merger Sub with and into the Company with the Company
being the surviving corporation (the "Merger");
WHEREAS, the Board of Directors of Parent has (i) approved, and
deems it advisable and in the best interests of Parent and its
stockholders to consummate, the Merger, upon the terms and subject
to the conditions set forth in this Agreement and (ii) recommended
the approval of the Merger and the adoption of this Agreement by the
stockholders of Parent;
WHEREAS, the Board of Directors of the Company has (i) approved, and
deems it advisable and in the best interests of the Company and its
stockholders to consummate, the Merger, upon the terms and subject
to the conditions set forth in this Agreement and (ii) recommended
the approval of the Merger and the adoption of this Agreement by the
stockholders of the Company;
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to Company's willingness to enter into this
Agreement, certain stockholders of Parent are entering into voting
agreements (the "Voting Agreements") with Company in substantially
the form attached as Exhibit A hereto;
WHEREAS, for United States federal income tax purposes, the Merger
is intended to qualify as a reorganization under the provisions of
section 368(a) of the United States Internal Revenue Code of 1986,
as amended (the "Code");
WHEREAS, pursuant to the Merger, (i) each outstanding share of
Common Stock of the Company and all outstanding options or other
rights to acquire or receive shares of Common Stock of the Company
and (ii) each outstanding warrant to acquire or receive shares of
Common Stock of the Company (a "Warrant") that does not by its terms
terminate at or prior to the Effective Time (as defined below) shall
be converted into the right to acquire or receive shares of Parent's
authorized Common Stock at the rate determined in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be
legally bound hereby, Parent, Merger Sub and the Company hereby
agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms of this Agreement and
subject to the conditions set forth in Article VII, and in
accordance with the DGCL, at the Effective Time (as defined below),
Merger Sub shall be merged with and into the Company. As a result
of the Merger, the separate corporate existence of Merger Sub shall
cease and the Company shall continue as the surviving corporation of
the Merger (the "Surviving Corporation").
SECTION 1.02 Effective Time; Closing. As promptly as practicable and
in no event later than the second business day following the
satisfaction or, if permissible, waiver of each of the conditions
set forth in Article VII (or such other date as may be agreed in
writing by each of the parties hereto), the parties shall cause the
Merger to be consummated by filing a certificate of merger (the
"Certificate of Merger") with the Secretary of State of the State of
Delaware in such form as is required by, and executed in accordance
with, the relevant provisions of the DGCL. The term "Effective
Time" means the date and time of the filing with, and the acceptance
by, the Secretary of State of the State of Delaware of the
Certificate of Merger (or such later time, not to exceed 30 days
after such acceptance for record, as may be agreed in writing by
each of the parties and specified in the Certificate of Merger).
Immediately prior to the filing of the Certificate of Merger, a
closing (the "Closing") will be held at the offices of
Xxxx|Xxxxxxxxxxx LLP (or such other place as the parties hereto may
agree). The date on which the Closing shall occur is referred to
herein as the "Closing Date."
SECTION 1.03 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 the DGCL. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all
the property, rights, privileges, powers and franchises of the
Company and Merger Sub shall vest in the Surviving Corporation, and
all debts, liabilities, obligations, restrictions, disabilities and
duties of each of the Company and Merger Sub shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of
the Surviving Corporation.
SECTION 1.04 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of
Incorporation of the Company as the Surviving Corporation shall be
amended and restated to read the same as the Certificate of
Incorporation of Merger Sub, as in effect immediately prior to the
Effective Time, except that Article I of the amended and restated
Certificate of Incorporation of Company, instead of reading the same
as the Certificate of Incorporation of Merger Sub, shall read as
follows: "The name of this corporation is Conductus, Inc."
(b) At the Effective Time, the Bylaws of
Merger Sub, as in effect immediately prior to the Effective Time,
shall, subject to SECTION 6.06(a) of this Agreement, be the Bylaws
of the Surviving Corporation until thereafter amended as provided by
law, the Certificate of Incorporation of the Surviving Corporation
and such Bylaws.
SECTION 1.05 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of
the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and Bylaws of the Surviving
Corporation, and the officers of Merger Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation,
in each case until their respective successors are duly elected or
appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01 Conversion of Securities.
(a) At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Merger Sub, the
Company or the holders of any of the following securities, the
following actions shall occur:
(i) Each share of Common Stock of the
Company, par value $.0001 per share (the "Company Common Stock"),
including, with respect to each such share of Company Common Stock,
the associated Rights (as defined in that certain Rights Agreement
dated January 29, 1998, by and between the Company and Boston
EquiServe, L.P., as Rights Agent (the "Rights Plan") (all issued and
outstanding shares of Company Common Stock being hereinafter
collectively referred to as the "Shares"), issued and outstanding
immediately prior to the Effective Time (other than any Shares to be
canceled pursuant to SECTION 2.01(a)(ii)) shall be converted,
subject to SECTION 2.02(e), into the right to receive that number of
shares of Common Stock of Parent, par value $.001 per share (the
"Parent Common Stock"), equal to 0.6 (the "Exchange Ratio"). At the
Effective Time, each Share shall be canceled, cease to be
outstanding and cease to exist and each holder of Shares shall
thereafter cease to have any rights with respect to such Shares,
except the right to receive, without interest, shares of Parent
Common Stock in accordance with this SECTION 2.01(a)(i) and cash for
any fractional shares of Parent Common Stock in accordance with
SECTION 2.02(e).
(ii) Each Share held in the treasury
of the Company and each Share owned by Parent or any direct or
indirect wholly owned subsidiary of Parent or of the Company
immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof and no payment or
distribution shall be made with respect thereto.
(iii) Each share of Common Stock, par
value $0.001 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and
exchanged for one duly authorized, validly issued, fully paid and
nonassessable share of common stock, par value $0.001 per share, of
the Surviving Corporation.
(b) If between the date of this Agreement and
the Effective Time, the outstanding shares of Parent Common Stock or
outstanding shares of Company Common Stock are changed into a
different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares or any similar event, the
Exchange Ratio shall be correspondingly adjusted to the extent
appropriate to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange
of shares or similar event.
(c) 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 the Company, then (i) the shares of Parent
Common Stock issued in exchange for such shares of Company Common
Stock will also be unvested and/or subject to the same repurchase
option, risk of forfeiture or other condition, (ii) the certificates
representing such shares of Parent Common Stock may accordingly be
marked with appropriate legends and (iii) the 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.
SECTION 2.02 Exchange of Certificates.
(a) Exchange Agent. Promptly after the
Effective Time, Parent shall deposit, or shall cause to be
deposited, with any bank or trust company designated by Parent and
reasonably satisfactory to the Company (the "Exchange Agent"), for
the benefit of the holders of Shares, for exchange in accordance
with this Article II through the Exchange Agent, certificates
representing shares of Parent Common Stock issuable pursuant to
SECTION 2.01 as of the Effective Time and cash, from time to time as
required to make payments in lieu of any fractional shares pursuant
to SECTION 2.02(e) (such cash and certificates for shares of Parent
Common Stock, together with any dividends or distributions with
respect thereto, being hereinafter referred to as the "Exchange
Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the shares of Parent Common Stock contemplated
to be issued pursuant to SECTION 2.01 out of the Exchange Fund.
Except as contemplated by SECTION 2.02(f) hereof, the Exchange Fund
shall not be used for any other purpose.
(b) Exchange Procedures. As promptly as
practicable after the Effective Time, Parent shall cause the
Exchange Agent to mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") (i) a letter of
transmittal (which shall be in customary form and shall specify that
delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for
certificates representing shares of Parent Common Stock and cash in
lieu of any fractional shares. Upon surrender to the Exchange Agent
of a Certificate for cancellation, together with such letter of
transmittal, duly executed and completed in accordance with the
instructions thereto, and such other documents as may be reasonably
required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent
Common Stock that such holder has the right to receive in respect of
the Shares formerly represented by such Certificate (after taking
into account all Shares then held by such holder), cash in lieu of
any fractional share of Parent Common Stock to which such holder is
entitled pursuant to SECTION 2.02(e) and any dividends or other
distributions to which such holder is entitled pursuant to SECTION
2.02(c), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Shares that is
not registered in the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common Stock,
cash in lieu of any fractional share of Parent Common Stock to which
such holder is entitled pursuant to SECTION 2.02(e) and any
dividends or other distributions to which such holder is entitled
pursuant to SECTION 2.02(c) may be issued to a transferee if the
Certificate representing such Shares is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence satisfactory to the Surviving
Corporation that any applicable share transfer taxes have been paid.
Until surrendered as contemplated by this SECTION 2.02, each
Certificate shall be deemed at all times after the Effective Time to
represent only the right to receive upon such surrender the
certificate representing shares of Parent Common Stock, cash in lieu
of any fractional share of Parent Common Stock to which such holder
is entitled pursuant to SECTION 2.02(e) and any dividends or other
distributions to which such holder is entitled pursuant to SECTION
2.02(c).
(c) Distributions with Respect to Unexchanged
Shares of Parent Common Stock. No dividends or other distributions
declared or made after the Effective Time with respect to the shares
of Parent Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby,
and no cash payment in lieu of any fractional shares shall be paid
to any such holder pursuant to SECTION 2.02(e), until the holder of
such Certificate shall surrender such Certificate as provided in
SECTION 2.02(b). Subject to the effect of escheat, tax or other
applicable Laws following surrender of any such Certificate, there
shall be paid to the holder of the certificates representing whole
shares of Parent Common Stock issued in exchange therefor, without
interest, (i) the amount of any cash payable with respect to a
fractional Parent Common Share to which such holder is entitled
pursuant to SECTION 2.02(e) and the amount of dividends or other
distributions with a record date after the Effective Time and
theretofore payable with respect to such whole shares of Parent
Common Stock and (ii) at the appropriate payment date, the amount of
dividends or other distributions, with a record date after the
Effective Time but prior to surrender and a payment date occurring
after surrender, payable with respect to such whole shares of Parent
Common Stock.
(d) No Further Rights in Company Common Stock.
All shares of Parent Common Stock issued upon conversion of the
Shares in accordance with the terms hereof and any cash paid
pursuant to SECTION 2.02(c) or (e) shall be deemed to have been
issued or paid in full satisfaction of all rights pertaining to such
Shares.
(e) No Fractional Shares. No certificates or
scrip representing fractional shares of Parent Common Stock shall be
issued upon the surrender for exchange of Certificates, and such
fractional share interests will not entitle the owner thereof to
vote or to any other rights of a stockholder of Parent. Each holder
of a fractional share interest shall be paid an amount in cash
(without interest) equal to the product obtained by multiplying (i)
such fractional share interest to which such holder (after taking
into account all fractional share interests then held by such
holder) would otherwise be entitled by the average closing price per
share of Parent Common Stock for the 20 trading day period up to and
including the trading day immediately preceding the Effective Time,
as reported on The Nasdaq National Market ("Nasdaq"). As promptly
as practicable after the determination of the amount of cash, if
any, to be paid to holders of fractional share interests, the
Exchange Agent shall so notify Parent, and Parent shall deposit such
amount with the Exchange Agent and shall cause the Exchange Agent to
forward payments to such holders of fractional share interests
subject to and in accordance with the terms of SECTION 2.02(b) and (c).
(f) Termination of Exchange Fund. Any portion
of the Exchange Fund that remains undistributed to the holders of
Shares for three months after the Effective Time shall be delivered
to Parent, upon demand, and any holders of Shares who have not
theretofore complied with this Article II shall thereafter look only
to Parent for the shares of Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock to which they are entitled
pursuant to SECTION 2.02(e) and any dividends or other distributions
with respect to the shares of Parent Common Stock to which they are
entitled pursuant to SECTION 2.02(c). Any portion of the Exchange
Fund remaining unclaimed by holders of Shares as of a date that is
immediately prior to such time as such amounts would otherwise
escheat to or become property of any government entity shall, to the
extent permitted by applicable Law, become the property of Parent
free and clear of any claims or interest of any person previously
entitled thereto.
(g) No Liability. Neither Parent nor the
Surviving Corporation shall be liable to any holder of Shares for
any shares of Parent Common Stock (or dividends or distributions
with respect thereto) or cash delivered to a public official
pursuant to any abandoned property, escheat or similar Law.
(h) Withholding Rights. Each of the Surviving
Corporation, Parent and the Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Shares such amounts as
it is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or
foreign tax Law. To the extent that amounts are so withheld by the
Surviving Corporation, Parent or the Exchange Agent, as the case may
be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect
of which such deduction and withholding was made by the Surviving
Corporation, Parent or the Exchange Agent, as the case may be.
(i) Lost, Stolen or Destroyed Certificates.
If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed, and, if required by the
Surviving Corporation or the Exchange Agent, the posting by such
person of a bond, in such reasonable amount as the Surviving
Corporation or the Exchange Agent may direct, as indemnity against
any claim that may be made against the Surviving Corporation or the
Exchange Agent with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Parent Common Stock, any cash in lieu of
any fractional share of Parent Common Stock to which the holder
thereof is entitled pursuant to SECTION 2.02(e) and any dividends or
other distributions to which the holder thereof is entitled pursuant
to SECTION 2.02(c).
SECTION 2.03 Stock Transfer Books.
(a) At the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further
registration of transfers of Shares thereafter on the records of the
Company. From and after the Effective Time, the holders of
Certificates representing Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to
such Shares, except as otherwise provided in this Agreement or by
Law. On or after the Effective Time, any Certificates presented to
the Exchange Agent or Parent for any reason shall be converted into
shares of Parent Common Stock, any cash in lieu of any fractional
share of Parent Common Stock to which the holders thereof are
entitled pursuant to SECTION 2.02(e) and any dividends or other
distributions to which the holders thereof are entitled pursuant to
SECTION 2.02(c).
(b) Notwithstanding anything herein to the
contrary, Certificates surrendered for exchange by any person
constituting an Affiliate (as defined in SECTION 3.23 below) of the
Company shall not be exchanged until Parent shall have received from
such person a Company Affiliate Agreement as provided in SECTION 6.15.
SECTION 2.04 Company Stock Options and Stock Purchase Plan.
(a) At the Effective Time, Parent shall
assume (i) all options to acquire Company Common Stock (the "Company
Stock Options") outstanding immediately prior to the Effective Time,
whether or not exercisable and whether or not vested, under the
Company's 1992 Stock Option/Stock Purchase Plan (the "Company Stock
Option Plan"), and (ii) each Company Stock Option Plan, and the
Company's repurchase right with respect to any unvested shares
acquired through the Company Stock Option Plan, shall be assigned to
Parent by virtue of the Merger and without any further action on the
part of the Company or the holder of the outstanding Company Stock
Option. 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), 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
(rounded down to the nearest whole share) equal to the number of
shares of Company Common Stock subject to such Company Stock Option
multiplied by the Exchange Ratio 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 exercise
price per share of such Company Stock Option in effect immediately
prior to the Effective Time divided by the Exchange Ratio (the
exercise price per share, as so determined, being rounded upward to
the nearest full cent). It is the intention of the parties that
each Company Stock Option assumed by Parent shall qualify following
the Effective Time as an incentive stock option as defined in
section 422 of the Code to the extent permitted under section 422 of
the Code and to the extent such option qualified as an incentive
stock option prior to the Effective Time. All purchase rights of
employees outstanding as of the date of this Agreement under the
Company's 1994 Employee Stock Purchase Plan (the "Company Purchase
Plan") shall be exercised immediately prior to the Effective Time,
and each participant in the Company Purchase Plan shall accordingly
be issued shares of Company Common Stock at that time pursuant to
the terms of the Company Purchase Plan and each share of Company
Common Stock so issued shall by virtue of the Merger, and without
any action on the part of the holder thereof, be converted into the
right to receive shares of Parent Common Stock in accordance with
Section 2.01(a)(i) and cash for any fractional share of Parent
Common Stock in accordance with Section 2.02(e). Except with
respect to the purchase rights outstanding under the Company
Purchase Plan on the date of this Agreement, the Company shall not
accept nor process any subscriptions or requests for the purchase of
Company Common Stock under the Company Purchase Plan and any
purchase rights arising after the date of this Agreement under the
Company Purchase Plan shall be terminated immediately prior to the
Effective Time. The Company Purchase Plan shall be terminated as of
the Effective Time.
(b) As soon as practicable after the
Effective Time, Parent shall deliver to each person who, immediately
prior to the Effective Time, was a holder of an outstanding Company
Stock Option an appropriate notice setting forth such holder's
rights pursuant thereto. As soon as practicable after the Effective
Time (but in any event not later than 45 days following the
Effective Time), Parent shall file a registration statement on Form
S-8 (or any successor or other appropriate forms) that will register
the shares of Parent Common Stock subject to Company Stock Options
to the extent permitted by federal securities laws and shall use its
reasonable efforts to maintain the effectiveness of such
registration statement or registration statements for so long as
such options remain outstanding. In addition, Parent shall use all
reasonable efforts to cause the shares of Parent Common Stock
subject to Company Stock Options to be listed on Nasdaq and such
exchanges as Parent shall determine.
SECTION 2.05 Warrants. At the Effective Time, each Warrant granted
and outstanding immediately prior to the Effective Time, whether
contingent or earned, that does not terminate by its terms at or
prior to the Effective Time shall be converted into a warrant to
acquire shares of Parent Common Stock, and each Warrant so converted
will continue to have, and be subject to, the same terms and
conditions of such Warrant immediately prior to the Effective Time,
except that (i) each Warrant will be exercisable (or will become
exercisable in accordance with its terms) for that number of whole
shares of Parent Common Stock (rounded down to the nearest whole
share) equal to the number of shares of Company Common Stock
issuable upon exercise of such Warrant prior to the Effective Time
multiplied by the Exchange Ratio and (ii) the per share exercise
price for the shares of Parent Common Stock issuable upon exercise
of such assumed Warrant will be equal to the exercise price per
share of Company Common Stock at which such Warrant was exercisable
immediately prior to the Effective Time divided by the Exchange
Ratio (the exercise price per share, as so determined, being rounded
upward to the nearest whole cent).
SECTION 2.06 Appraisal Rights.
(a) Notwithstanding anything in this
Agreement to the contrary and to the extent applicable as provided
under SECTION 2.06(d), any shares of Company Common Stock
("Dissenting Shares") which are issued and outstanding immediately
prior to the Effective Time and which are held by stockholders of
the Company who have, before the taking of the vote of the
stockholders of the Company to approve the Merger and adopt this
Agreement, properly perfected their appraisal rights under Section
262 of the DGCL or the comparable provisions of the California
General Corporation Law ("CGCL") (collectively, the "Appraisal
Rights Provisions") will not be converted as described in SECTION
2.01 hereof, but will thereafter constitute only the right to
receive payment of the fair value of such shares of Company Common
Stock in accordance with any applicable provisions of the Appraisal
Rights Provisions; provided, however, that all shares of Company
Common Stock held by stockholders who shall have failed to perfect
or who effectively shall have withdrawn or lost their rights to
appraisal of such shares of Company Common Stock under the Appraisal
Rights Provisions shall thereupon be deemed to have been canceled
and retired and to have been converted, as of the Effective Time,
into the right to receive the Merger Consideration, without
interest, in the manner provided in SECTION 2.01 hereof. Persons
who have perfected statutory rights with respect to Dissenting
Shares as aforesaid will not be paid by the Surviving Corporation as
provided in this Agreement and will have only such rights as are
provided by the Appraisal Rights Provisions with respect to such
Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, if Parent or Merger Sub abandons or is finally
enjoined or prevented from carrying out, or the stockholders rescind
their approval of the Merger and adoption of, this Agreement, the
right of each holder of Dissenting Shares to receive the fair value
of such Dissenting Shares in accordance with the Appraisal Rights
Provisions will terminate, effective as of the time of such
abandonment, injunction, prevention or rescission.
(b) The Company shall give Parent (i)
prompt notice of any demands for appraisal received by the Company,
withdrawals of such demands, and any other instruments served
pursuant to the DGCL, or the CGCL if applicable, and received by the
Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the DGCL, or
the CGCL if applicable. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to
any demands for appraisal or offer to settle any such demands.
(c) Each dissenting stockholder who becomes
entitled under the DGCL, or the CGCL if applicable, to payment for
Dissenting Shares shall receive payment therefor after the Effective
Time from the Surviving Corporation (but only after the amount
thereof shall have been agreed upon or finally determined pursuant
to the DGCL, or the CGCL if applicable) and such Dissenting Shares
shall be canceled.
(d) This SECTION 2.06 is intended only to
govern the appraisal rights provided by the statutory Appraisal
Rights Provisions and only if and to the extent such provisions are
legally applicable. It does not provide any contractual appraisal
rights to holders of Company Common Stock, and the provisions of
this SECTION 2.06 shall be disregarded and of no effect to the
extent that the Appraisal Rights Provisions are not applicable to
holders of Company Common Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub
that the statements contained in this ARTICLE III are true and
correct except as set forth in the disclosure schedule delivered by
the Company to Parent and Merger Sub concurrently with the execution
of this Agreement (the "Company Disclosure Schedule"). The Company
Disclosure Schedule shall be arranged according to specific sections
in this ARTICLE III and shall provide exceptions to, or otherwise
qualify in reasonable detail, only the corresponding section in this
ARTICLE III and any other section in this ARTICLE III where it is
reasonably clear, upon a reading of such disclosure without any
independent knowledge on the part of the reader regarding the matter
disclosed, that the disclosure is intended to apply to such other
section. For purposes of this ARTICLE III, where the context
requires it, the term "Company" shall refer to the Company and the
Company Subsidiaries.
SECTION 3.01 Organization and Qualification; Subsidiaries. The
Company Disclosure Schedule sets forth the jurisdiction of
incorporation of Company and each subsidiary of Company (the
"Company Subsidiaries"). Each of Company and the Company
Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of such jurisdiction and has all
requisite corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and
to carry on its business as it is now being conducted, except where
the failure to obtain such governmental approvals has not had, and
could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect (as defined below).
Each of Company and the Company Subsidiaries is duly qualified or
licensed as a foreign corporation or organization to do business,
and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for
such failures to be so qualified or licensed and in good standing
that have not had, and could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Other than the Company Subsidiaries, there are no corporations,
partnerships, joint ventures, associations or other similar entities
in which Company owns, of record or beneficially, any direct or
indirect equity or other similar interest or any right (contingent
or otherwise) to acquire the same. The term "Company Material
Adverse Effect" means any changes in or effects on the business of
Company that is materially adverse to the business, condition
(financial or otherwise), assets (tangible or intangible),
liabilities (including contingent liabilities), or results of
operations or prospects of Company, except for any such changes or
effects principally resulting from or principally arising in
connection with (i) any changes affecting the wireless
telecommunications equipment industry that do not have a
disproportionate impact on Company, (ii) any changes in general
economic conditions that do not disproportionately impact Company,
(iii) in and of itself, any change in the trading price of the
Company Common Stock (including any proceedings which may be
initiated by Nasdaq with respect to the listing status of the
Company Common Stock based on the failure of the trading price to
meet the minimum bid requirements), (iv) the taking of any action
expressly required by the terms of this Agreement or (v) a decline
in commercial product revenues attributable to the public
announcement of the Merger.
SECTION 3.02 Certificate of Incorporation and Bylaws. The Company
has heretofore made available to Parent a complete and correct copy
of its Certificate of Incorporation and Bylaws, each as amended to
date. Such Certificate of Incorporation and Bylaws are in full
force and effect. The Company is not in violation of any of the
provisions of its Certificate of Incorporation or Bylaws.
SECTION 3.03 Capitalization.
(a) The authorized capital stock of the
Company consists of (i) 75,000,000 shares of Company Common Stock,
and (ii) 5,000,000 shares of Preferred Stock, par value $.0001 per
share (the "Company Preferred Stock").
(b) As of October 5, 2002, (i) 22,519,368
shares of Company Common Stock were issued and outstanding, all of
which are duly authorized, validly issued, fully paid and
non-assessable, (ii) 8,967 shares of Company Common Stock were held
in the treasury of the Company or by Company Subsidiaries, (iii) an
aggregate of 3,371,097 shares of Company Common Stock were reserved
for issuance pursuant to the Company Stock Option Plans, of which an
aggregate of 2,833,757 shares are subject to outstanding,
unexercised options, (iv) 255,273 shares of Company Common Stock are
reserved for issuance pursuant to the Company Purchase Plan, of
which an aggregate of up to 104,135 shares are subject to
outstanding purchase rights and 151,138 shares are available for
future issuance, (v) no shares of Company Preferred Stock were
issued or outstanding, and (vi) an aggregate of 2,819,987 shares of
Company Common Stock are reserved for issuance pursuant to
outstanding warrants to acquire or receive shares of Company Common
Stock.
(c) Except as disclosed in SECTION 3.03(b),
there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or any Company Subsidiary,
or conditionally or absolutely obligating the Company or any Company
Subsidiary to issue or sell any shares of capital stock of, or other
equity interests in, the Company or any Company Subsidiary. All
shares of Company Common Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions (whether conditional or
absolute) specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding obligations of the Company
or any Company Subsidiary to repurchase, redeem or otherwise acquire
any shares of Company Common Stock or any capital stock or other
equity interest of any Company Subsidiary, and the Merger will not
give rise to any such obligations. Each outstanding share of
capital stock or other equity interest of each Company Subsidiary is
duly authorized, validly issued, fully paid and non-assessable, and
each such share or other equity interest owned by the Company or
another Company Subsidiary is free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or such other Company
Subsidiary's voting rights, charges and other encumbrances of any
nature whatsoever. To the knowledge of the Company, there are no
voting trusts, proxies or other agreements or understandings with
respect to the capital stock of the Company.
(d) The terms of each of the Company Stock
Options Plan do not prohibit the assumption of the Company Stock
Options as provided in SECTION 2.04. Neither the execution or
delivery of this Agreement nor consummation of the Merger will
accelerate vesting of any Company Option.
SECTION 3.04 Authority Relative to This Agreement. The Company has
all necessary corporate power and authority (a) to execute and
deliver this Agreement, and (b) assuming the approval of the Merger
and adoption of this Agreement by the requisite vote of the
Company's stockholders under the DGCL, the Company's Bylaws and
applicable Nasdaq rules, to perform its obligations hereunder and to
consummate the Merger and the other transactions contemplated
hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the Merger and the other
transactions contemplated hereby have been duly and validly
authorized by the unanimous vote of the board of directors of the
Company, and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate
the Merger and the other transactions so contemplated (other than,
with respect to the Merger, the approval of the Merger and adoption
of this Agreement by the requisite vote of the Company's
stockholders the DGCL, the Company's Bylaws and applicable Nasdaq
rules, and the filing and recordation of appropriate merger
documents as required by the DGCL). The affirmative vote of the
holders of a majority of the shares of Company Common Stock
outstanding on the record date for the Company Stockholder's Meeting
is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve the Merger and adopt
this Agreement. This Agreement has been duly and validly executed
and delivered by the Company and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
SECTION 3.05 No Conflict; Required Filings and Consents.
(a)a 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 of the Company or any equivalent organizational documents of
any Company Subsidiary, (ii) assuming that all consents, approvals,
authorizations and other actions described in SECTION 3.05(b) have
been obtained and all filings and obligations described in SECTION
3.05(b) have been made or complied with, conflict with or violate
any Law applicable to the Company or (iii) conflict with, result in
any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to
others any right of termination, amendment, acceleration or
cancellation of, or require any payment under, or result in the
creation of a lien, claim, security interest or other charge or
encumbrance on any property or asset of the Company pursuant to, any
Company Contract.
(a)b The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not,
require any consent, approval, order, authorization, registration or
permit of, or filing with or notification to, any governmental
entity, except for applicable requirements, if any, of the Exchange
Act, the Securities Act, Nasdaq, and the filing and recordation of
appropriate merger documents as required by the DGCL.
SECTION 1.02 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports
and documents required to be filed by it with the Securities and
Exchange Commission ("SEC") since January 1, 1998 (collectively, the
"Company SEC Reports"). As of the respective dates 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), (i) the Company SEC
Reports complied in all material respects with the requirements of
the Securities Act of 1933 (the "Securities Act") or the Securities
and Exchange Act of 1934 (the "Exchange Act"), as the case may be,
and (ii) none of the Company SEC Reports contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under
which they were made, not misleading. No Company Subsidiary is
required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial
statements (including, in each case, any notes thereto) contained in
the Company SEC Reports was prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods indicated (except as may be indicated
in the notes thereto or, in the case of unaudited statements, as
permitted by Regulation S-X) and each presents fairly, in all
material respects, the consolidated financial position, results of
operations and cash flows of the Company and the consolidated
Company Subsidiaries as at the respective dates thereof and for the
respective periods indicated therein, except as otherwise noted
therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which were not, or are not expected
to be, material in amount). The balance sheet of the Company
contained in the Company SEC Reports as of December 31, 2001 is
hereinafter referred to as the "Company Balance Sheet."
(c) The Company has heretofore 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 required to be filed, to agreements, documents or other
instruments which previously had been filed by the Company with the
SEC pursuant to the Securities Act or the Exchange Act.
SECTION 1.03 Tax Matters. To the knowledge of the Company, neither
the Company nor any of its affiliates has taken or agreed to take
any action that would prevent the Merger from qualifying as a
reorganization within the meaning of section 368(a) of the Code.
The Company is not aware of any agreement, plan or other
circumstance that would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
SECTION 1.04 Brokers. No broker, finder or investment banker (other
than U.S. Bancorp Xxxxx Xxxxxxx ("Company Financial Advisor")) is
entitled to any brokerage, finder's or other fee or commission in
connection with the Merger or the other transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the
Company.
SECTION 1.05 Undisclosed Liabilities. The Company has no
liabilities (absolute, accrued, contingent or otherwise and whether
due or to become due) other than liabilities or obligations: (a)
fully reflected or reserved against on the Company Balance Sheet;
(b) liabilities incurred since the date of the Company Balance Sheet
in the ordinary course of business consistent with past practice,
which, individually or in the aggregate, could not reasonably be
expected to have a Company Material Adverse Effect.
SECTION 1.06 Absence of Certain Changes or Events. Since December
31, 2001, there has not been any Company Material Adverse Effect and
the business of the Company has been conducted in the ordinary course.
SECTION 1.07 Absence of Litigation. Except as disclosed under the
heading "Legal Proceedings" in the Company's SEC Reports, there is
no other litigation, suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company,
threatened against the Company, or any property or asset of the
Company, before any court, arbitrator or governmental entity,
domestic or foreign. Neither the Company nor any material property
or asset of the Company is subject to any continuing order of,
consent decree, settlement agreement or other similar written
agreement with, or, to the knowledge of the Company, continuing
investigation by, any governmental entity, or any order, writ,
judgment, injunction, decree, determination or award of any
governmental entity or arbitrator.
SECTION 1.08 Intellectual Property.
(a) Company owns or is licensed to use, and
in any event possesses sufficient and legally enforceable rights
with respect to, all Company Intellectual Property (as defined
below) necessary for the conduct of its business as currently
conducted without, to Company's knowledge, and without having
conducted any special investigation or patent or trademark search,
Infringement (as defined below) of any other person's Intellectual
Property, except for such items as have yet to be conceived or
developed. The Company Disclosure Schedule sets forth any and all
royalty obligations of Company concerning the Company Intellectual
Property. Company has not developed jointly with any other Person
any Intellectual Property that is material to the business of
Company with respect to which such other person has any material
exclusive rights. There is no Company contract pursuant to which
any person has any right (whether or not currently exercisable) to
use, license or otherwise exploit any material Company Intellectual
Property.
(b) None of the material issued patents,
registered trademarks, registered service marks and registered
copyrights owned by the Company has been declared invalid or
unenforceable. To the Company's knowledge, no other person is
infringing, misappropriating or making any unlawful or unauthorized
use of any material Company Intellectual Property. The Company has
not (i) licensed any of the material Company Intellectual Property
to any person on an exclusive basis, or (ii) entered into any
covenant not to compete or contract limiting its ability to exploit
fully any material Company Intellectual Property or to transact
business in any market or geographical area or with any person.
(c) Except as disclosed under the heading
"Legal Proceedings" in the Company's SEC Reports, to the knowledge
of the Company, the Company has not been or may not be engaged in,
liable for or contributing to any Infringement. The Company has
received no written notice or, to its knowledge, other communication
of any actual, alleged, possible or potential Infringement, or other
unlawful or unauthorized use of, any Intellectual Property owned or
used by any other Person.
(d) The Company has taken reasonable steps
to protect the Company's rights in its confidential information and
trade secrets. Each employee, consultant and contractor who ha had
access to proprietary Intellectual Property which is necessary for
the conduct of Company's business as currently conducted, has
executed an agreement to maintain the confidentiality of such
Intellectual Property and has executed appropriate agreements that
are substantially consistent with the Company's standard forms
thereof. Except under confidentiality obligations, there has been
no material disclosure of any of the Company's confidential
information or trade secrets to any third party.
(e) "Company Intellectual Property" means
all Intellectual Property that is used in any business of the
Company, or that may be necessary to conduct any such businesses as
conducted. "Intellectual Property" means any: (i) patent, patent
application, trademark (whether registered or unregistered),
trademark application, trade name, fictitious business name, service
xxxx (whether registered or unregistered), service xxxx application,
copyright (whether registered or unregistered), domain name,
copyright application, copyright registration, maskwork, maskwork
application, trade secret, know-how, customer list, franchise,
system, computer software, source code, algorithm, invention,
design, blueprint, engineering drawing, proprietary product,
technology, proprietary right or other intellectual property right
or intangible asset, or (ii) the right to use or exploit any of the
foregoing. "Infringement" means infringing, misappropriating or
making any unlawful or unauthorized use of any Intellectual Property
owned or used by any other person.
SECTION 1.09 Taxes.
(a) Tax Returns. All Tax (as defined
below) returns, statements, reports, declarations and other forms
and documents (including, without limitation, estimated Tax returns
and reports and material information returns and reports) required
to be filed with any Tax Authority (as defined below) with respect
to any Taxable (as defined below) period ending on or before the
Closing, by or on behalf of the Company (collectively, "Company Tax
Returns" and individually a "Company Tax Return"), have been or will
be completed and filed when due (including any extensions of such
due date) and all amounts shown due on such Company Tax Returns on
or before the Effective Time have been or will be paid on or before
such date, except where the failure to complete and file such
Company Tax Returns or to pay such amounts shown would not have a
Company Material Adverse Effect. Except as would not have a Company
Material Adverse Effect, the consolidated financial statements of
the Company contained in the Company SEC Reports (i) fully accrue in
accordance with GAAP all actual and contingent liabilities for Taxes
(as defined below) with respect to all periods through the date of
the Company Balance Sheet. All information set forth in the notes
to the consolidated financial statements of the Company contained in
the Company SEC Reports relating to Tax matters is correct and
complete in all material respects. The Company has withheld and
paid to the applicable financial institution or Tax Authority all
amounts required to be withheld. As used in this SECTION 3.14, the
term the "Company" means the Company and any entity included in, or
required to be included in, any consolidated, combined or untaxed
group with the Company. For purposes of this Agreement, the
following terms have the following meanings: "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means any and all taxes
including, without limitation, (i) any net income, alternative or
add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, value added, net worth,
license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, environmental or windfall profit tax,
custom, duty or other tax of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount
imposed by any governmental entity responsible for the imposition of
any such tax (domestic or foreign) (a "Tax Authority"), (ii) any
liability for the payment of any amounts of the type described in
(i) as a result of being a member of an affiliated, consolidated,
combined or unitary group for any Taxable period or as the result of
being a transferee or successor thereof and (iii) any liability for
the payment of any amounts of the type described in (i) or (ii) as a
result of any express or implied obligation to indemnify any other
person.
(b) Tax Claims. No material claim for
assessment or collection of Taxes is presently being asserted
against Company, and Company is not a party to any pending action,
proceeding, or investigation by any governmental taxing authority.
SECTION 1.10 Assets Other Than Real Property. Company has good
title to all material assets reflected on the Company Balance Sheet
or thereafter acquired, except those sold or otherwise disposed of
since the date of the Company Balance Sheet in the ordinary course
of business consistent with past practice, free and clear of all
mortgages, liens, security interests or other encumbrances of any
nature whatsoever except Permitted Liens. For purposes of this
Agreement, "Permitted Liens" shall mean (i) mechanics', carriers',
workmen's, warehousemen's, repairmen's or other like liens arising
in the ordinary course of business, (ii) liens arising under
original purchase price conditional sale contracts and equipment
leases with third parties entered into in the ordinary course, (iii)
liens for Taxes and other governmental obligations and (iv) other
imperfections of title, restrictions or encumbrances, if any, which
liens, imperfections of title, restrictions or other encumbrances do
not materially impair the continued use in the business of the
respective owner thereof, and operation of the specific assets to
which they relate. This SECTION 3.14 does not relate to real
property or interests in real property, which are the subject of
SECTION 3.15, or to intellectual property, which is the subject of
SECTION 3.12.
SECTION 1.11 Real Property.
(a) Owned Property. Company does not own
in fee any real property.
(b) Leased Property. The Company
Disclosure Schedule sets forth a complete list of all real property
and interests in real property leased by Company ("Company Leased
Properties") and identifies any leases relating to the Leased
Properties.
(c) Rights in Leased Property. The lease
for each of the Company Leased Properties is in full force and
effect, and the interest of Company in each of the Company Leased
Properties is free and clear of all mortgages, liens, security
interests, easements, covenants, rights-of-way and other similar
restrictions of any nature whatsoever, except (A) Permitted Liens,
(B) easements, covenants, rights-of-way and other similar
restrictions of record and (C) (x) zoning, building and other
similar restrictions, (y) mortgages, liens, security interests or
encumbrances that have been placed by any developer, landlord or
other third party on property over which Company has easement rights
or on any Company Leased Property and subordination or similar
agreements relating thereto and (z) unrecorded easements, covenants,
rights-of-way or other similar restrictions, none of which items set
forth in clauses (x), (y) and (z) above materially impairs the
continued use in the business of Company and the operation of the
property to which they relate.
SECTION 1.12 Contracts. The Company Disclosure Schedule sets forth
a true and complete list of each of the following types of contracts
to which Company is a party (together with the leases related to the
Company Leased Properties, "Company Contracts"):
(a) Employment, Independent Contractor and
Consulting Agreements. (i) Any employment agreement, employment
contract or any agreement or contract providing for the payment of
any severance compensation by Company to any person or for the
provision, vesting and/or acceleration of any employee benefits
following a change of ownership or control of Company and (ii) any
independent contractor or consulting agreement that has an aggregate
liability after the Effective Time in excess of $25,000 and is not
terminable by notice of less than 60 calendar days for a cost of
less than $25,000;
(b) Collective Bargaining Agreements. Any
employee collective bargaining agreement or other contract with any
labor union;
(c) Non-Competition Agreements. Any
covenant or agreement that restricts the ability of Company to
compete in any line of business in any place in the world;
(d) Agreements with Officers and Directors.
Any material agreement or contract with any officer or director of
Company (other than employment agreements covered by paragraph (a)
above);
(e) Subleases of Leased Property. Any
sublease or similar agreement under which Company makes available
for use by any third party, all or any portion of any Company Leased
Property;
(f) Personal Property Leases. Any lease or
similar agreement under which (i) Company is lessee of, or holds or
uses, any machinery, equipment, vehicle or other tangible personal
property owned by a third party or (ii) Company is a lessor or
sublessor of, or makes available for use by any third party, any
tangible personal property owned or leased by Company, in any such
case which has an aggregate liability after the Effective Time in
excess of $25,000 and is not terminable by notice of less than 60
calendar days for a cost of less than $25,000;
(g) Supply and Service Agreements. (i) Any
continuing agreement or contract for the future purchase by Company
of materials, supplies or equipment or (ii) any advertising
agreement or arrangement, in any such case which has an aggregate
liability after the Effective Time in excess of $25,000 and is not
terminable by notice of less than 60 calendar days for a cost of
less than $25,000;
(h) Indebtedness. Any agreement or
contract under which Company has borrowed or loaned any money or
issued any note, bond, indenture or other evidence of indebtedness
or directly or indirectly guaranteed indebtedness, liabilities or
obligations of others (other than endorsements for the purpose of
collection in the ordinary course of business), or any other note,
bond, indenture or other evidence of indebtedness where the
principal amount borrowed, loaned or guaranteed is in excess of
$25,000;
(i) Guarantees. Any agreement or contract
under which any other person has directly or indirectly guaranteed
indebtedness, liabilities or obligations of Company (other than
endorsements for the purpose of collection in the ordinary course of
business);
(j) Partnerships, Limited Liability
Companies and Joint Ventures. Any partnership agreement, limited
liability company agreement or other joint venture agreement to
which Company is a party; and
(k) Other Agreements. Any other agreement,
contract, lease, license (including exclusive Intellectual Property
licenses), commitment or instrument to which Company is a party or
by or to which the assets or business of Company is bound or
subject, which in any case has an aggregate liability after the
Effective Time in excess of $25,000, and is not terminable by notice
of less than 60 calendar days for a cost of less than $25,000.
Except as disclosed in the Company Disclosure Schedule, Company has
performed all material obligations required to be performed by it to
date under the Company Contracts to which it is a party and it is
not in breach or default in any material respect thereunder and, to
the knowledge of Company, no other party to any of the Company
Contracts is in breach or default in any material respect thereunder.
SECTION 1.13 Employee Benefit Plans; ERISA.
(a) Plans. The Company Disclosure Schedule
sets forth each employee pension, retirement, profit sharing, stock
bonus, stock option, stock purchase, incentive, deferred
compensation, hospitalization, medical, dental, vision, life
insurance, accidental death and dismemberment insurance, business
travel insurance, cafeteria and flexible spending, sick pay,
disability, severance, golden parachute or other plan, fund,
program, policy, contract or arrangement (including any contracts or
agreements with certain employees that relate to the transactions
contemplated by this Agreement) providing employee benefits (the
"Plans") maintained or contributed to by Company. Company has
delivered to Parent true, complete and correct copies of (i) each
Plan (or, in the case of any unwritten Plans, descriptions thereof),
(ii) the most recent annual report on Form 5500 filed with the IRS
with respect to each Plan (if any such report was required), (iii)
the most recent summary plan description for each Plan for which
such a summary plan description is required and (iv) each trust
agreement and group annuity contract relating to any Plan. Neither
Company nor any corporation or trade or business (whether or not
incorporated) which would be treated as a member of the controlled
group including Company under Section 4001(a)(14) of ERISA (as
defined below) (an "ERISA Affiliate") would be liable for any amount
pursuant to Section 4062, 4063 or 4064 of ERISA, if any Plan which
is subject to Title IV of ERISA were to terminate.
(b) Compliance with ERISA and the Code.
None of Company or any of the Plans or any trust created thereunder,
or any trustee or administrator thereof, has engaged in a
transaction in connection with which Company would be subject to
either a material liability or civil penalty assessed pursuant to
Sections 409, 502(i) or 502(1) of ERISA or a material Tax imposed
pursuant to Section 4971, 4972, 4974, 4975, 4976 or 4980B of the
Code. Each of the Plans has been operated and administered in all
material respects in accordance with applicable Laws, including the
Employee Retirement Income Security Act of 1974, as amended
("ERISA") and the Code. Each Plan intended to be a qualified plan
under Code Section 401 has received a favorable determination letter
to that effect and nothing has occurred since the issuance of such
letter that would adversely affect the Tax qualification of any such
Plan. There are no pending or, to the knowledge of Company,
threatened claims by or on behalf of any of the Plans, by any
employee or beneficiary covered under any such Plan, or otherwise
involving any such Plan (other than ordinary course claims for
benefits).
(c) Multiemployer Plan Liabilities. None
of Company or any ERISA Affiliate is, or has been within the last
six years, obligated to contribute, on behalf of any current or
former employee of Company, to a multiemployer plan (as defined in
Section 3(37) of ERISA) and no such ERISA Affiliate is liable or
reasonably expected to be liable for any withdrawal liability under
Section 4201 of ERISA.
(d) Accumulated Funding Deficiencies;
Liens. None of the Plans or any trust established thereunder has
incurred any accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, as
of the last day of the most recent fiscal year of each of the Plans.
No contribution failure has occurred with respect to any Plan
sufficient to give rise to a lien under Section 302(f) of ERISA.
(e) Employee Welfare Benefit Plans. With
respect to any Plan that is an employee welfare benefit plan, (i) no
such Plan is unfunded or funded through a welfare benefits fund, as
such term is defined in Section 419(e) of the Code and (ii) to the
knowledge of Company, each such Plan that is a group health plan, as
such term is defined in Section 5000(b)(1) of the Code, complies
with the applicable requirements of Section 4980B(f) of the Code.
SECTION 1.14 Compliance with Applicable Laws. To the knowledge of
Company:
(a) General. Company has not received
notice of any alleged violation of any applicable statutes, laws,
ordinances, rules, orders and regulations of any governmental
authority or instrumentality, domestic or foreign ("Laws"), except
for any such violations that would not have a Company Material
Adverse Effect. This SECTION 3.18 does not relate to matters with
respect to Taxes or any other taxes. This SECTION 3.18(a) does not
relate to environmental matters, which are the subject of SECTION
3.18(c)and (d).
(b) Lobbying Regulatory Matters. Company
is in compliance in all material respects with all substantive,
registration and reporting requirements of the Lobbying Disclosure
Act of 1995, as amended, the Foreign Agent Registration Act of 1938,
as amended, the Federal Election Campaign Act, federal bribery laws
and rules regarding the making of gifts to members of the United
States House of Representatives, members of the United States Senate
and members of the executive branch of the federal government of the
United States.
(c) Notices of Certain Environmental
Matters. Company has not received written notice of any alleged
violation of Environmental Law or liability for any release of any
Hazardous Material in connection with the present or past business
or properties of Company or any of the Subsidiaries, and there
exists no writ, injunction, decree, order or judgment outstanding,
nor any lawsuit, proceeding, citation, summons or government agency
investigation relating thereto, except for any such matters that
would not have a Company Material Adverse Effect.
(d) Definitions. For purposes of SECTION
3.18(c) and SECTION 4.18(c):
(i) "Hazardous Material" means any
chemical substance the presence of which requires investigation or
remediation under any federal, state or local statute, regulation,
ordinance, order, or common law; or which is defined as a "hazardous
waste" or "hazardous substance" under any federal, state or local
statute, regulation or ordinance, including the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et seq.) or the Resource Conservation and Recovery Act
(42 U.S.C. Section 6901 et seq.); or which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic, or otherwise hazardous and is regulated as such by any
governmental authority, agency, department, commission, board,
agency or instrumentality of the United States or state or any
political subdivision thereof.
(ii) "Environmental Law" means any
applicable statute, regulation, rule, ordinance, code, license or
order, of any governmental agency, department, commission, board,
bureau or instrumentality of the United States, states and political
subdivisions thereof and all applicable judicial and administrative
and regulatory decrees, judgments and orders relating to the
protection of human health or the environment with respect to
Hazardous Materials.
SECTION 1.15 Employee and Labor Relations. (a) There is no labor
strike, dispute, or work stoppage or lockout pending or, to the
knowledge of Company, threatened against or affecting Company; (b)
to the knowledge of Company, no union organizing campaign is in
progress with respect to the employees of Company; (c) there is no
unfair labor practice charge or complaint against Company pending
or, to the knowledge of Company, threatened before the National
Labor Relations Board; (d) there is no pending or, to the knowledge
of Company, threatened grievance that would have a Company Material
Adverse Effect; and (e) no charges with respect to or relating to
Company are pending before the Equal Employment Opportunity
Commission or any state agency responsible for the prevention of
unlawful employment practices as to which there is a reasonable
likelihood of adverse determination, other than those which, if so
determined, would not have a Company Material Adverse Effect.
SECTION 1.16 Affiliate Transactions. Except as covered by SECTION
3.16(a), Company has (i) not entered into any written agreement,
contract, subcontract, lease, understanding, instrument, note,
option, warranty, purchase order, license, insurance policy or other
legally binding commitment or undertaking of any nature with any of
its officers or directors, except pursuant to the provisions of the
Company Stock Option Plans or Company Purchase Plan, and (ii) has no
accounts or loans receivable from any officer, director or affiliate
of the Company involving, in any such case, obligations of the
Company in excess of $25,000.
SECTION 1.17 Board Approval; State Takeover Statutes. The board of
directors of the Company has (a) approved and adopted this Agreement
and declared it advisable, (b) determined that this Agreement is
advisable, fair to and in the best interests of the stockholders of
the Company, (c) resolved to recommend adoption of this Agreement to
the stockholders of the Company, and (d) resolved that the Company
take all action necessary to make inapplicable any restrictions on
the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement that
may result from the provisions of all applicable state Takeover
Laws. For purposes of this Agreement, "Takeover Laws" means (a) any
"moratorium," "control share acquisition," "fair price,"
"supermajority," "affiliate transactions," or "business combination
statute or regulation" or other similar state antitakeover laws and
regulations, and (b) Section 203 of the Delaware Law.
SECTION 1.18 Opinion of Financial Advisor. The Board of Directors
of Company has received from Company Financial Advisor a written
opinion, dated as of the date of this Agreement, satisfactory in
form and substance to the Board of Directors of Company, to the
effect that the Merger is fair to Company and to Company's
stockholders from a financial point of view. The Company will
provide a copy of such opinion to Parent subsequent to the execution
of this Agreement.
SECTION 1.19 Affiliates. In accordance with SECTION 6.15, the
Company has set forth in the Company Disclosure Schedule a list
identifying all persons who to the Company's knowledge are deemed to
be "affiliates" of the Company for purposes of Rule 145 under the
Securities Act ("Affiliates").
SECTION 1.20 Rights Plan. As of the date of this Agreement, the
Company has taken all action necessary to amend the Rights Plan to
provide that neither Parent nor any of its affiliates shall be
deemed to be an Acquiring Person (as such term is, defined in the
Rights Plan), that neither a Distribution Date nor Shares
Acquisition Date (as each such term is defined in the Rights Plan)
shall be deemed to occur and the Company Rights will not separate
from the shares of Company Common Stock, in each case as a result of
the execution, delivery or performance of this Agreement or the
public announcement or consummation of the Merger, or the other
transactions contemplated by this Agreement.
SECTION 1.21 Disclosure. The representations, warranties and
statements by the Company in this Agreement, the Company Disclosure
Schedule and the certificates delivered pursuant hereto do not
contain any untrue statement of a material fact and, when taken
together with each other, do not omit to state a material fact
necessary to make such representations, warranties and statements,
in light of the circumstances under which they are made, not
misleading.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to the Company
that the statements contained in this ARTICLE IV are true and
correct except as set forth in the disclosure schedule delivered by
Parent to the Company concurrently with the execution of this
Agreement (the "Parent Disclosure Schedule"). The Parent Disclosure
Schedule shall be arranged according to specific sections in this
ARTICLE IV and shall provide exceptions to, or otherwise qualify in
reasonable detail, only the corresponding section in this ARTICLE IV
and any other section in this ARTICLE IV in where it is reasonably
clear, upon a reading of such disclosure without any independent
knowledge on the part of the reader regarding the matter disclosed,
that the disclosure is intended to apply to such other section. For
purposes of this ARTICLE IV, where the context requires it, the term
"Parent" shall mean Parent and the Parent Subsidiaries.
SECTION 2.01 Organization and Qualification; Subsidiaries. The
Parent Disclosure Schedule sets forth the jurisdiction of
incorporation of Parent and each subsidiary of Parent (the "Parent
Subsidiaries"). Each of Parent and the Parent Subsidiaries is a
corporation duly organized, validly existing and in good standing
under the laws of such jurisdiction and has all requisite corporate
power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it
is now being conducted, except where the failure to obtain such
governmental approvals has not had, and could not reasonably be
expected to have, individually or in the aggregate, a Parent
Material Adverse Effect (as defined below). Each of Parent and the
Parent Subsidiaries is duly qualified or licensed as a foreign
corporation or organization to do business, and is in good standing,
in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that have not had, and
could not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect. Other than the Parent
Subsidiaries, there are no corporations, partnerships, joint
ventures, associations or other similar entities in which Parent
owns, of record or beneficially, any direct or indirect equity or
other similar interest or any right (contingent or otherwise) to
acquire the same. The term "Parent Material Adverse Effect" means
any changes in or effects on the business of Parent that is
materially adverse to the business, condition (financial or
otherwise), assets (tangible or intangible), liabilities (including
contingent liabilities), or results of operations or prospects of
Parent, except for any such changes or effects principally resulting
from or principally arising in connection with (i) any changes
affecting the wireless telecommunications equipment industry that do
not have a disproportionate impact on Parent, (ii) any changes in
general economic conditions that do not disproportionately impact
Parent, (iii) in and of itself, any change in the trading price of
the Parent Common Stock or (iv) the taking of any action expressly
required by the terms of this Agreement.
SECTION 2.02 Certificate of Incorporation and Bylaws. Parent has
heretofore made available to Company a complete and correct copy of
the Certificate of Incorporation and Bylaws, each as amended to date
of Parent and Merger Sub. Each such Certificate of Incorporation
and Bylaws are in full force and effect. Neither Parent nor Merger
Sub is in violation of any of the provisions of its Certificate of
Incorporation or Bylaws.
SECTION 2.03 Capitalization.
(a) The authorized capital stock of the
Parent consists of (i) 75,000,000 shares of Parent Common Stock, and
(ii) 2,000,000 shares of preferred stock, par value $.001 per share
("Parent Preferred Stock").
(b) As of October 5, 2002, (i) 25,198,270
shares of Parent Common Stock were issued and outstanding, all of
which are duly authorized, validly issued, fully paid and
non-assessable, (ii) no shares of Parent Common Stock were held in
the treasury of Parent, (iii) an aggregate of 3,643,405 shares of
Parent Common Stock were reserved for issuance pursuant to the
Parent's 1992 Stock Option Plan, 1992 Directors Stock Option Plan,
1998 Stock Option Plan and 1999 Stock Option Plan (collectively,
"Parent Stock Option Plans"), of which an aggregate of 3,192,511
shares were subject to outstanding, unexercised options, (iv) no
shares of Parent Preferred Stock were issued or outstanding, and (v)
an aggregate of 3,192,467 shares of Parent Common Stock were
reserved for issuance pursuant to outstanding warrants to acquire or
receive shares of Parent Common Stock.
(c) Except as disclosed in SECTION 4.03(b),
there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued
or unissued capital stock of the Parent, or conditionally or
absolutely obligating Parent to issue or sell any shares of capital
stock of, or other equity interests in, the Parent or any Parent
Subsidiary. All shares of Parent Common Stock subject to issuance
as aforesaid, upon issuance on the terms and conditions (whether
conditional or absolute) specified in the instruments pursuant to
which they are issuable, will be duly authorized, validly issued,
fully paid and non-assessable. There are no outstanding obligations
of Parent to repurchase, redeem or otherwise acquire any shares of
Parent Common Stock or any capital stock or other equity interest of
any Parent Subsidiary, and the Merger will not give rise to any such
obligations. Each outstanding share of capital stock or other
equity interest of each Parent Subsidiary is duly authorized,
validly issued, fully paid and non-assessable, and each such share
or other equity interest owned by the Parent is free and clear of
all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on Parent's voting rights,
charges and other encumbrances of any nature whatsoever. To the
knowledge of the Parent, there are no voting trusts, proxies or
other agreements or understandings with respect to the capital stock
of Parent.
(d) The authorized stock of Merger Sub
consists of 10,000 shares of common stock, par value $.001 per
share, all of which are duly authorized, validly issued, fully paid
and non-assessable and free of any preemptive rights in respect
thereof, and there are 1,000 shares of common stock outstanding, all
of which are owned by Parent. The shares of Parent Common Stock to
be issued pursuant to the Merger in accordance with SECTION 2.01 (i)
will be duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights created by
statute, Parent's Certificate of Incorporation or Bylaws or any
agreement to which Parent is a party or is bound and (ii) will, when
issued, be registered under the Securities Act and the Exchange Act
and registered or exempt from registration under applicable state
securities laws.
SECTION 2.04 Authority Relative to This Agreement. Parent has all
necessary corporate power and authority (a) to execute and deliver
this Agreement, and (b) assuming the approval of the Merger and
adoption of this Agreement by the requisite vote of Parent's
stockholders under the DGCL, Parent's Bylaws and applicable Nasdaq
rules, to perform its obligations hereunder and to consummate the
Merger and the other transactions contemplated hereby. The
execution and delivery of this Agreement by Parent and the
consummation by Parent of the Merger and the other transactions
contemplated hereby have been duly and validly authorized by the
unanimous vote of the board of directors of Parent, and no other
corporate proceedings on the part of Parent are necessary to
authorize this Agreement or to consummate the Merger and the other
transactions so contemplated (other than, with respect to the
Merger, the approval of the Merger and adoption of this Agreement by
the requisite vote of Parent's stockholders the DGCL, Parent's
Bylaws and applicable Nasdaq rules, and the filing and recordation
of appropriate merger documents as required by the DGCL). The
affirmative vote of the holders of a majority of the shares of
Parent Common Stock voting on the record date for Parent
Stockholder's Meeting is the only vote of the holders of any class
or series of Parent's capital stock necessary to approve the Merger
and adopt this Agreement. This Agreement has been duly and validly
executed and delivered by Parent and, assuming the due
authorization, execution and delivery by Parent, constitutes a
legal, valid and binding obligation of Parent, enforceable against
Parent in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
SECTION 2.05 No Conflict; Required Filings and Consents.
(a)a The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance of this Agreement by Parent
and Merger Sub will not, (i) conflict with or violate the
Certificate of Incorporation or Bylaws of Parent or Merger Sub,
(ii) assuming that all consents, approvals, authorizations and other
actions described in SECTION 4.05(a) have been obtained and all
filings and obligations described in SECTION 4.05(a) have been made
or complied with, conflict with or violate any Law applicable to
Parent or Merger Sub or (iii) conflict with, result in any breach of
or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or
require any payment under, or result in the creation of a lien,
claim, security interest or other charge or encumbrance on any
property or asset of Parent or Merger Sub pursuant to, any Parent
Contract or any contract of Merger Sub.
(a)b The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance of this Agreement by Parent
and Merger Sub will not, require any consent, approval, order,
authorization, registration or permit of, or filing with or
notification to, any governmental entity, except for applicable
requirements, if any, of the Exchange Act, the Securities Act,
Nasdaq, and the filing and recordation of appropriate merger
documents as required by the DGCL.
SECTION 1.02 SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports and
documents required to be filed by it with the SEC since January 1,
1998 (collectively, the "Parent SEC Reports"). As of the respective
dates 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), (i) Parent SEC Reports complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as
the case may be, and (ii) none of Parent SEC Reports contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under
which they were made, not misleading. No Parent Subsidiary is
required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial
statements (including, in each case, any notes thereto) contained in
Parent SEC Reports was prepared in accordance with GAAP applied on a
consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Regulation S-X) and each presents
fairly, in all material respects, the consolidated financial
position, results of operations and cash flows of the Parent and the
consolidated Parent Subsidiaries as at the respective dates thereof
and for the respective periods indicated therein, except as
otherwise noted therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which were
not, or are not expected to be, material in amount). The balance
sheet of the Parent contained in the Parent SEC Reports as of
December 31, 2001 is hereinafter referred to as the "Parent Balance
Sheet."
(c) Parent has heretofore furnished to the
Company a complete and correct copy of any amendments or
modifications, which have not yet been filed with the SEC but which
are required to be filed, to agreements, documents or other
instruments which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act.
SECTION 1.03 Tax Matters. To the knowledge of Parent, neither
Parent nor any of its affiliates has taken or agreed to take any
action that would prevent the Merger from qualifying as a
reorganization within the meaning of section 368(a) of the Code.
Parent is not aware of any agreement, plan or other circumstance
that would prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
SECTION 1.04 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the Merger or the other transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent.
SECTION 1.05 Undisclosed Liabilities. Parent has no liabilities
(absolute, accrued, contingent or otherwise and whether due or to
become due) other than liabilities or obligations: (a) fully
reflected or reserved against on Parent Balance Sheet; (b)
liabilities incurred since the date of Parent Balance Sheet in the
ordinary course of business consistent with past practice, which,
individually or in the aggregate, could not reasonably be expected
to have a Parent Material Adverse Effect.
SECTION 1.06 Absence of Certain Changes or Events. Since December
31, 2001, there has not been any Parent Material Adverse Effect and
the business of Parent has been conducted in the ordinary course.
SECTION 1.07 Absence of Litigation. Except as disclosed under the
heading "Legal Proceedings" in Parent's SEC Reports, there is no
other litigation, suit, claim, action, proceeding or investigation
pending or, to the knowledge of Parent, threatened against Parent,
or any property or asset of Parent, before any court, arbitrator or
governmental entity, domestic or foreign. Neither Parent nor any
material property or asset of Parent is subject to any continuing
order of, consent decree, settlement agreement or other similar
written agreement with, or, to the knowledge of Parent, continuing
investigation by, any governmental entity, or any order, writ,
judgment, injunction, decree, determination or award of any
governmental entity or arbitrator.
SECTION 1.08 Intellectual Property.
(a) Parent owns or is licensed to use, and
in any event possesses sufficient and legally enforceable rights
with respect to, all Parent Intellectual Property (as defined below)
necessary for the conduct of its business as currently conducted
without, to Parent's knowledge, and without having conducted any
special investigation or patent or trademark search, Infringement of
any other person's Intellectual Property, except for such items as
have yet to be conceived or developed. Parent Disclosure Schedule
sets forth any and all royalty obligations of Parent concerning the
Parent Intellectual Property. Parent has not developed jointly with
any other Person any Parent Intellectual Property that is material
to the business of Parent with respect to which such other person
has any material exclusive rights. There is no Parent contract
pursuant to which any person has any right (whether or not currently
exercisable) to use, license or otherwise exploit any material
Parent Intellectual Property.
(b) None of the material issued patents,
registered trademarks, registered service marks and registered
copyrights owned by Parent has been declared invalid or
unenforceable. To Parent's knowledge, no other person is
infringing, misappropriating or making any unlawful or unauthorized
use of any material Parent Intellectual Property. Parent has not
(i) licensed any of the material Parent Intellectual Property to any
person on an exclusive basis, or (ii) entered into any covenant not
to compete or contract limiting its ability to exploit fully any
material Parent Intellectual Property or to transact business in any
market or geographical area or with any person.
(c) Except as disclosed under the heading
"Legal Proceedings" in Parent's SEC Reports, to the knowledge of
Parent, Parent has not been or may not be engaged in, liable for or
contributing to any Infringement. Parent has not received any
written notice or, to its knowledge, other communication of any
actual, alleged, possible or potential Infringement, unlawful or
unauthorized use of, any Intellectual Property owned or used by any
other person.
(d) Parent has taken reasonable steps to
protect Parent's rights in its confidential information and trade
secrets. Each employee, consultant and contractor who has had access
to proprietary Intellectual Property which is necessary for the
conduct of Parent's business as currently conducted, has executed an
agreement to maintain the confidentiality of such Intellectual
Property and has executed appropriate agreements that are
substantially consistent with Parent's standard forms thereof.
Except under confidentiality obligations, there has been no material
disclosure of any of Parent's confidential information or trade
secrets to any third party.
(e) "Parent Intellectual Property" means
all Intellectual Property that is used in any business of Parent, or
that may be necessary to conduct any such businesses as conducted.
SECTION 1.09 Taxes.
(a) Tax Returns. All Tax returns,
statements, reports, declarations and other forms and documents
(including, without limitation, estimated Tax returns and reports
and material information returns and reports) required to be filed
with any Tax Authority with respect to any Taxable period ending on
or before the Closing, by or on behalf of Parent (collectively,
"Parent Tax Returns" and individually a "Parent Tax Return"), have
been or will be completed and filed when due (including any
extensions of such due date) and all amounts shown due on such
Parent Tax Returns on or before the Effective Time have been or will
be paid on or before such date, except where the failure to complete
and file such Parent Tax Returns or to pay such amounts shown would
not have a Parent Material Adverse Effect. Except as would not have
a Parent Material Adverse Effect, the consolidated financial
statements of Parent contained in Parent SEC Reports (i) fully
accrue in accordance with GAAP all actual and contingent liabilities
for Taxes (as defined below) with respect to all periods through the
date of Parent Balance Sheet. All information set forth in the
notes to the consolidated financial statements of Parent contained
in Parent SEC Reports relating to Tax matters is correct and
complete in all material respects. Parent has withheld and paid to
the applicable financial institution or Tax Authority all amounts
required to be withheld. As used in this SECTION 3.14, the term the
"Parent" means Parent and any entity included in, or required to be
included in, any consolidated, combined, or untaxed group with
Parent.
(b) Tax Claims. No material claim for
assessment or collection of Taxes is presently being asserted
against Parent, and Parent is not a party to any pending action,
proceeding, or investigation by any governmental taxing authority.
SECTION 1.10 Assets Other Than Real Property. Parent has good title
to all material assets reflected on Parent Balance Sheet or
thereafter acquired, except those sold or otherwise disposed of
since the date of Parent Balance Sheet in the ordinary course of
business consistent with past practice, free and clear of all
mortgages, liens, security interests or other encumbrances of any
nature whatsoever except Permitted Liens. This SECTION 4.14 does
not relate to real property or interests in real property, which are
the subject of SECTION 4.15, or to intellectual property, which is
the subject of SECTION 4.12.
SECTION 1.11 Real Property.
(a) Owned Property. Parent does not own in
fee any real property.
(b) Leased Property. The Parent Disclosure
Schedule sets forth a complete list of all real property and
interests in real property leased by Parent ("Parent Leased
Properties") and identifies any leases relating to the Parent Leased
Properties.
(c) Rights in Leased Property. The lease
for each of the Parent Leased Properties is in full force and
effect, and the interest of Parent in each of the Parent Leased
Properties is free and clear of all mortgages, liens, security
interests, easements, covenants, rights-of-way and other similar
restrictions of any nature whatsoever, except (A) Permitted Liens,
(B) easements, covenants, rights-of-way and other similar
restrictions of record and (C) (x) zoning, building and other
similar restrictions, (y) mortgages, liens, security interests or
encumbrances that have been placed by any developer, landlord or
other third party on property over which Parent has easement rights
or on any Parent Leased Property and subordination or similar
agreements relating thereto and (z) unrecorded easements, covenants,
rights-of-way or other similar restrictions, none of which items set
forth in clauses (x), (y) and (z) above materially impairs the
continued use in the business of Parent and the operation of the
property to which they relate.
SECTION 1.12 Contracts. Parent Disclosure Schedule sets forth a
true and complete list of each of the following types of contracts
to which Parent is a party (together with the leases related to the
Parent Leased Properties, "Parent Contracts"):
(a) Employment, Independent Contractor and
Consulting Agreements. (i) Any employment agreement, employment
contract or any agreement or contract providing for the payment of
any severance compensation to any Parent Person (as defined below)
or for the provision, vesting and/or acceleration of any employee
benefits following a change of ownership or control of Company and
(ii) any independent contractor or consulting agreement that has an
aggregate liability after the Effective Time in excess of $25,000
and is not terminable by notice of less than 60 calendar days for a
cost of less than $25,000;
(b) Collective Bargaining Agreements. Any
employee collective bargaining agreement or other contract with any
labor union;
(c) Non-Competition Agreements. Any
covenant or agreement that restricts the ability of Parent to
compete in any line of business in any place in the world;
(d) Agreements with Officers and Directors.
Any material agreement or contract with any officer or director of
Parent (other than employment agreements covered by paragraph (a)
above);
(e) Subleases of Leased Property. Any
sublease or similar agreement under which Parent makes available for
use by any third party, all or any portion of any Parent Leased
Property;
(f) Personal Property Leases. Any lease or
similar agreement under which (i) Parent is lessee of, or holds or
uses, any machinery, equipment, vehicle or other tangible personal
property owned by a third party or (ii) Parent is a lessor or
sublessor of, or makes available for use by any third party, any
tangible personal property owned or leased by Parent, in any such
case which has an aggregate liability after the Effective Time in
excess of $25,000 and is not terminable by notice of less than 60
calendar days for a cost of less than $25,000;
(g) Supply and Service Agreements. (i) Any
continuing agreement or contract for the future purchase by Parent
of materials, supplies or equipment or (ii) any advertising
agreement or arrangement, in any such case which has an aggregate
liability after the Effective Time in excess of $25,000 and is not
terminable by notice of less than 60 calendar days for a cost of
less than $25,000;
(h) Indebtedness. Any agreement or
contract under which Parent has borrowed or loaned any money or
issued any note, bond, indenture or other evidence of indebtedness
or directly or indirectly guaranteed indebtedness, liabilities or
obligations of others (other than endorsements for the purpose of
collection in the ordinary course of business), or any other note,
bond, indenture or other evidence of indebtedness where the
principal amount borrowed, loaned or guaranteed is in excess of
$25,000;
(i) Guarantees. Any agreement or contract
under which any other person has directly or indirectly guaranteed
indebtedness, liabilities or obligations of Parent (other than
endorsements for the purpose of collection in the ordinary course of
business);
(j) Partnerships, Limited Liability
Companies and Joint Ventures. Any partnership agreement, limited
liability company agreement or other joint venture agreement to
which Parent is a party; and
(k) Other Agreements. Any other agreement,
contract, lease, license (including exclusive Intellectual Property
licenses), commitment or instrument to which Parent is a party or by
or to which the assets or business of Parent is bound or subject,
which in any case has an aggregate liability after the Effective
Time in excess of $25,000, and is not terminable by notice of less
than 60 calendar days for a cost of less than $25,000.
Except as disclosed in the Parent Disclosure Schedule, Parent has
performed all material obligations required to be performed by it to
date under the Parent Contracts to which it is a party and it is not
in breach or default in any material respect thereunder and, to the
knowledge of Parent, no other party to any of the Parent Contracts
is in breach or default in any material respect thereunder.
SECTION 1.13 Employee Benefit Plans; ERISA.
(a) Plans. The Parent Disclosure Schedule
sets forth each employee pension, retirement, profit sharing, stock
bonus, stock option, stock purchase, incentive, deferred
compensation, hospitalization, medical, dental, vision, life
insurance, accidental death and dismemberment insurance, business
travel insurance, cafeteria and flexible spending, sick pay,
disability, severance, golden parachute or other plan, fund,
program, policy, contract or arrangement (including any contracts or
agreements with certain employees that relate to the transactions
contemplated by this Agreement) providing employee benefits (as
defined in SECTION 3.17(a) above, "Plans") maintained or contributed
to by Parent. Parent has delivered to Company true, complete and
correct copies of (i) each Parent Plan (or, in the case of any
unwritten Parent Plans, descriptions thereof), (ii) the most recent
annual report on Form 5500 filed with the IRS with respect to each
Parent Plan (if any such report was required), (iii) the most recent
summary plan description for each Parent Plan for which such a
summary plan description is required and (iv) each trust agreement
and group annuity contract relating to any Parent Plan. Neither
Parent nor any ERISA Affiliate would be liable for any amount
pursuant to Section 4062, 4063 or 4064 of ERISA, if any Parent Plan
which is subject to Title IV of ERISA were to terminate.
(b) Compliance with ERISA and the Code.
None of Parent or any of its Plans or any trust created thereunder,
or any trustee or administrator thereof, has engaged in a
transaction in connection with which Parent would be subject to
either a material liability or civil penalty assessed pursuant to
Sections 409, 502(i) or 502(1) of ERISA or a material Tax imposed
pursuant to Section 4971, 4972, 4974, 4975, 4976 or 4980B of the
Code. Each of the Parent's Plans has been operated and administered
in all material respects in accordance with applicable Laws,
including ERISA and the Code. Each Parent Plan intended to be a
qualified plan under Code Section 401 has received a favorable
determination letter to that effect and nothing has occurred since
the issuance of such letter that would adversely affect the Tax
qualification of any such Plan. There are no pending or, to the
knowledge of Parent, threatened claims by or on behalf of any of the
Parent Plans, by any employee or beneficiary covered under any such
Plan, or otherwise involving any such Plan (other than ordinary
course claims for benefits).
(c) Multiemployer Plan Liabilities. None
of Parent or any ERISA Affiliate is, or has been within the last six
years, obligated to contribute, on behalf of any current or former
employee of Parent, to a multiemployer plan (as defined in Section
3(37) of ERISA) and no such ERISA Affiliate is liable or reasonably
expected to be liable for any withdrawal liability under Section
4201 of ERISA.
(d) Accumulated Funding Deficiencies;
Liens. None of the Parent Plans or any trust established thereunder
has incurred any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each of
the Plans. No contribution failure has occurred with respect to any
Parent Plan sufficient to give rise to a lien under Section 302(f)
of ERISA.
(e) Employee Welfare Benefit Plans. With
respect to any Parent Plan that is an employee welfare benefit plan,
(i) no such Plan is unfunded or funded through a welfare benefits
fund, as such term is defined in Section 419(e) of the Code and (ii)
to the knowledge of Parent, each such Plan that is a group health
plan, as such term is defined in Section 5000(b)(1) of the Code,
complies with the applicable requirements of Section 4980B(f) of
the Code.
SECTION 1.14 Compliance with Applicable Laws. To the knowledge of
Parent:
(a) General. Parent has not received
notice of any alleged violation of any applicable Laws, except for
any such violations that would not have a Parent Material Adverse
Effect. This SECTION 4.18(a) does not relate to matters with
respect to Taxes or any other taxes. This SECTION 4.18(a) does not
relate to environmental matters, which are the subject of SECTION
4.18(c).
(b) Lobbying Regulatory Matters. Parent is
in compliance in all material respects with all substantive,
registration and reporting requirements of the Lobbying Disclosure
Act of 1995, as amended, the Foreign Agent Registration Act of 1938,
as amended, the Federal Election Campaign Act, federal bribery laws
and rules regarding the making of gifts to members of the United
States House of Representatives, members of the United States Senate
and members of the executive branch of the federal government of the
United States.
(c) Notices of Certain Environmental
Matters. Parent has not received written notice of any alleged
violation of Environmental Law or liability for any release of any
Hazardous Material in connection with the present or past business
or properties of Parent or any of the Subsidiaries, and there exists
no writ, injunction, decree, order or judgment outstanding, nor any
lawsuit, proceeding, citation, summons or government agency
investigation relating thereto, except for any such matters that
would not have a Parent Material Adverse Effect.
SECTION 1.15 Employee and Labor Relations. (a) There is no labor
strike, dispute, or work stoppage or lockout pending or, to the
knowledge of Parent, threatened against or affecting Parent; (b) to
the knowledge of Parent, no union organizing campaign is in progress
with respect to the employees of Parent; (c) there is no unfair
labor practice charge or complaint against Parent pending or, to
the knowledge of Parent, threatened before the National Labor
Relations Board; (d) there is no pending or, to the knowledge of
Parent, threatened grievance that would have a Parent Material
Adverse Effect; and (e) no charges with respect to or relating to
Parent are pending before the Equal Employment Opportunity
Commission or any state agency responsible for the prevention of
unlawful employment practices as to which there is a reasonable
likelihood of adverse determination, other than those which, if so
determined, would not have a Parent Material Adverse Effect.
SECTION 1.16 Opinion of Financial Advisor. The Board of Directors
of Parent has have received from Standard & Poor's ("Parent
Financial Advisor") a written opinion, dated as of the date of this
Agreement, satisfactory in form and substance to the Board of
Directors of Parent, to the effect that the Merger is fair to Parent
and to Parent's stockholders from a financial point of view. Parent
will provide a copy of such opinion to Company subsequent to the
execution of this Agreement.
SECTION 1.17 Disclosure. The representations, warranties and
statements by Parent in this Agreement, Parent Disclosure Schedule
and the certificates delivered pursuant hereto do not contain any
untrue statement of a material fact and, when taken together with
each other, do not omit to state a material fact necessary to make
such representations, warranties and statements, in light of the
circumstances under which they are made, not misleading.
ARTICLE II
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 2.01 Conduct of Business by Company Pending the Merger. The
Company agrees that, between the date of this Agreement and the
Effective Time, except as set forth in SECTION 5.01 of the Company
Disclosure Schedule or as specifically contemplated by any other
provision of this Agreement, unless Parent shall otherwise consent
in writing:
(a) the businesses of the Company shall be
conducted only in, and the Company shall not take any action except
in, the ordinary course of business and in a manner consistent with
past practice; and
(b) the Company shall use its reasonable
best efforts to preserve substantially intact the business
organization of the Company, to keep available the services of the
current officers, employees and consultants of the Company and to
preserve the current relationships of the Company with customers,
suppliers, licensors, licensees, alliance partners and other persons
with which the Company has business relations.
By way of amplification and not limitation, except as contemplated
by this Agreement or as set forth in SECTION 5.01 of the Company
Disclosure Schedule, the Company shall not, between the date of this
Agreement and the Effective Time, directly or indirectly, do, or
propose to do, any of the following without the prior written
consent of Parent:
(i) Capital Stock. Issue, deliver or
sell, or authorize or propose the issuance, delivery or sale of, any
shares of capital stock of any class or any securities convertible
into, or any right, warrants, calls, subscriptions or options to
acquire, any such shares or convertible securities, or any other
ownership interest other than (a) the issuance of shares of Company
Common Stock upon the exercise of Company Stock Options outstanding
on the date of this Agreement, (b) the issuance of shares of Company
Common Stock under the Company Purchase Plan pursuant to purchase
rights outstanding on the date of this Agreement, or (c) the
issuance of shares of Company Common Stock upon the exercise of
Warrants outstanding on the date of this Agreement.
(ii) Qualification. Intentionally
take any action that could reasonably be expected to cause the
Merger to fail to qualify as a "reorganization" under Section 368(a)
of the Code, whether or not otherwise permitted by the provisions of
this Article V or fail to take any action reasonably necessary to
cause the Merger to so qualify;
(iii) Dividends. Declare, set aside or
pay any dividends on or make any other distributions in cash in
respect of any capital stock;
(iv) Charter and Bylaws. Cause,
permit or propose any amendments to its Certificate of Incorporation
or Bylaws (or similar governing instruments of any of its
subsidiaries), except as contemplated by this Agreement,
(v) Representations and Warranties.
Take any action (or fail to take any action) to cause the Company's
representations and warranties set forth in ARTICLE III to be untrue
in any respect;
(vi) Redemption. Redeem or otherwise
acquire any shares of its capital stock;
(vii) Employee Matters. Adopt or amend
in any material respect any Plan or collective bargaining agreement,
except as required by applicable Law or as contemplated by this
Agreement;
(viii) Compensation. (a) Grant to any
executive officer or employee any increase in compensation or
benefits or any rights to receive severance payments or other
benefits upon a termination of employment or a change of ownership
or control of the employer, except (I) as may be required under
existing agreements or (II) in the ordinary course of business
consistent with past practice or (b) terminate any executive officer
or employee other than for cause or in the ordinary course of
business, consistent with past practice;
(ix) Indebtedness. Incur or assume
any liabilities, obligations or indebtedness for borrowed money or
guarantee any such liabilities, obligations or indebtedness, other
than any liabilities, obligations or indebtedness owing to any
person incurred in the ordinary course of business consistent with
past practice provided that in no event shall Company incur, assume
or guarantee any indebtedness for borrowed money in excess of $25,000;
(x) Encumbrances. Other than in the
ordinary course of business consistent with past practice, permit,
allow or suffer any of its assets to be subjected to any mortgage,
pledge, lien, encumbrance, restriction or charge of any kind, other
than Permitted Liens;
(xi) Cancellation of Indebtedness.
Cancel any indebtedness owing to Company, or waive any claims or
rights thereto where such indebtedness exceeds individually or in
the aggregate $25,000;
(xii) Related-Party Transactions. Pay,
loan or advance any amount to, or sell, transfer or lease any of its
assets to, or enter into any agreement or arrangement with any
affiliate other than the payment of salary and the provision of
benefits consistent with current salary and benefits;
(xiii) Accounting Policies. Make any
material change in any method of accounting or accounting practice
or policy other than those required by GAAP;
(xiv) Reorganizations. Acquire or
agree to acquire by merging or consolidating with, or by purchasing
the stock of, or a substantial 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 acquire any assets except in the
ordinary course or business;
(xv) Asset Dispositions. Sell, lease
or otherwise dispose of assets, except in the ordinary course or
business; or
(xvi) Agreements to Take Actions. Agree
in writing or otherwise to take any of the actions described in
SECTION 5.01(b)(i) through (xv) above.
SECTION 2.02 Conduct of Business by Parent Pending the Merger.
Parent agrees that, between the date of this Agreement and the
Effective Time, except as set forth in SECTION 5.02 of the Parent
Disclosure Schedule or as specifically contemplated by any other
provision of this Agreement unless Company shall otherwise consent
in writing:
(a) the businesses of Parent shall be
conducted only in, and Parent shall not take any action except in,
the ordinary course of business and in a manner consistent with past
practice; and
(b) Parent shall use its reasonable best
efforts to preserve substantially intact the business organization
of Parent, to keep available the services of the current officers,
employees and consultants of Parent and to preserve the current
relationships of Parent with customers, suppliers, licensors,
licensees, alliance partners and other persons with which Parent has
business relations.
By way of amplification and not limitation, except as contemplated
by this Agreement or as set forth in SECTION 5.02 of the Parent
Disclosure Schedule, Parent shall not, between the date of this
Agreement and the Effective Time, directly or indirectly, do, or
propose to do, any of the following without the prior written
consent of Company:
(i) Capital Stock. Issue, deliver or
sell, or authorize or propose the issuance, delivery or sale of, any
shares of capital stock of any class or any securities convertible
into, or any right, warrants, calls, subscriptions or options to
acquire, any such shares or convertible securities, or any other
ownership interest other than (a) the issuance of shares of Parent
Common Stock upon the exercise of Parent Stock Options outstanding
on the date of this Agreement under the Parent Stock Option Plans,
(b) the issuance of shares of Parent Common Stock upon the exercise
of Warrants outstanding on the date of this Agreement, (c) the grant
of options to purchase shares of Parent Common Stock in the ordinary
course of business consistent with past practice, in each case at an
exercise price no less than the fair market value of share of Parent
Common Stock on the date of grant, or (d) the issuance to a bank or
other lender of warrants to purchase shares of Parent Common Stock
in connection with the creation, renewal or extension of a credit
facility for the benefit of Parent;
(ii) Qualification. Intentionally
take any action that could reasonably be expected to cause the
Merger to fail to qualify as a "reorganization" under Section 368(a)
of the Code, whether or not otherwise permitted by the provisions of
this Article V or fail to take any action reasonably necessary to
cause the Merger to so qualify;
(iii) Dividends. Declare, set aside or
pay any dividends on or make any other distributions in cash in
respect of any capital stock;
(iv) Charter and Bylaws. Cause,
permit or propose any amendments to its Certificate of Incorporation
or Bylaws (or similar governing instruments of any of its
subsidiaries), except as contemplated by this Agreement,
(v) Representations and Warranties.
Take any action (or fail to take any action) to cause Parent's
representations and warranties set forth in ARTICLE IV to be untrue
in any respect;
(vi) Redemption. Redeem or otherwise
acquire any shares of its capital stock;
(vii) Cancellation of Indebtedness.
Cancel any indebtedness owing to Parent, or waive any claims or
rights thereto where such indebtedness exceeds individually or in
the aggregate $25,000;
(viii) Related-Party Transactions. Pay,
loan or advance any amount to, or sell, transfer or lease any of its
assets to, or enter into any agreement or arrangement with any
affiliate other than the payment of salary and the provision of
benefits consistent with current salary and benefits;
(ix) Accounting Policies. Make any
material change in any method of accounting or accounting practice
or policy other than those required by GAAP;
(x) Reorganizations. Acquire or
agree to acquire by merging or consolidating with, or by purchasing
the stock of, or a substantial 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 acquire any assets except in the
ordinary course or business;
(xi) Asset Dispositions. Sell, lease
or otherwise dispose of assets, except in the ordinary course or
business; or
(xii) Agreements to Take Actions.
Agree in writing or otherwise to take any of the actions described
in SECTION 5.02(b)(i) through (xi) above.
SECTION 2.03 Notification of Certain Matters. Parent shall give
notice to the Company, and the Company shall give prompt notice to
Parent, of (a) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause (i)
any representation or warranty contained in this Agreement to be
untrue or inaccurate, or (ii) any covenant, condition or agreement
contained in this Agreement not to be complied with or satisfied and
(b) any failure or inability of Parent or the Company, as the case
may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this
SECTION 5.03 shall not limit or otherwise affect the
representations, warranties, covenants or agreements of the Parent
or the Company, as the case may be, the conditions to the
obligations of the parties hereto to consummate the Merger or the
remedies available hereunder to Parent or the Company, as the case
may be.
ARTICLE III
ADDITIONAL AGREEMENTS
SECTION 3.01 Registration Statement; Proxy Statement.
(a) As promptly as practicable after the
execution of this Agreement, (Parent and the Company shall prepare
and file with the SEC proxy statements (together with any amendments
thereof or supplements thereto, the "Proxy Statements") relating to
the meetings of the Company's stockholders and Parent's stockholders
(the "Stockholders' Meetings") to be held to consider approval of
the Merger and adoption of this Agreement and (ii) a registration
statement on Form S-4 (together with all amendments thereto, the
"Registration Statement") in connection with the registration under
the Securities Act of the shares of Parent Common Stock to be issued
to the stockholders of the Company pursuant to the Merger. Each of
Parent and the Company shall use its reasonable best efforts to
cause the Registration Statement to become effective as promptly as
practicable, and prior to the effective date of the Registration
Statement, Parent shall take all or any action required under any
applicable federal or state securities laws in connection with the
issuance of shares of Parent Common Stock pursuant to the Merger.
The Company shall furnish all information concerning the Company as
Parent may reasonably request in connection with such actions and
the preparation of the Registration Statement and Proxy Statement.
As promptly as practicable after the Registration Statement shall
have become effective, the Company and Parent shall mail the Proxy
Statements to their respective stockholders.
(b) Subject to SECTION 6.01(c), each of the
Proxy Statements shall include the unanimous recommendation of the
Board of Directors of the Company or the Parent, as applicable, to
stockholders to vote in favor of approving the Merger and adoption
of this Agreement and neither the Board of Directors of either the
Company or Parent nor any committee thereof shall withhold,
withdraw, amend, modify or change, or propose or resolve to
withhold, withdraw, amend, modify or change, in each case in a
manner adverse to the other party, the unanimous recommendation of
the Board of Directors that the vote in favor of and adopt and
approve this Agreement and approve the Merger. For purposes of this
Agreement, such recommendation of the Board of Directors shall be
deemed to have been modified in a manner adverse to the other party
if such recommendation shall no longer be unanimous.
(c) Prior to the adoption and approval of
this Agreement and the approval of the Merger by the requisite vote
of the stockholders of the Company, nothing in this Agreement shall
prevent the Company's Board of Directors from withholding,
withdrawing, amending, modifying or changing its unanimous
recommendation in favor of the Merger or from accepting a Superior
Proposal (as defined in SECTION 6.05(c) below) if (i) a Superior
Proposal is made to the Company and is not withdrawn, (ii) the
Company shall have immediately provided written notice to Parent
advising Parent that the Company has received a Superior Proposal,
identifying the person or entity making such Superior Proposal (a
"Notice of Superior Proposal"), (iii) Parent shall not have, within
five business days of Parent's receipt of the Notice of Superior
Proposal, made an offer that the Company's Board of Directors by a
majority vote determines in its good faith judgment (based on the
written advice of its financial advisor) to be more favorable to the
Company and its stockholders as such Superior Proposal (it being
agreed that the Company's Board of Directors shall convene a meeting
to consider any such offer by Parent promptly following the receipt
thereof), (iv) the Board of Directors of the Company concludes in
good faith, after consultation with its outside legal counsel, that,
in light of such Superior Proposal, the withholding, withdrawal,
amendment, modification or change of such recommendation is required
in order for the Board of Directors of the Company to comply with
its fiduciary obligations to the Company and its stockholders under
applicable Law and (v) the Company shall not have violated any of
the restrictions set forth in SECTION 6.05 or this SECTION 6.01(c).
The Company shall provide Parent with at least three business days'
notice of any meeting of the Company's Board of Directors at which
the Company's Board of Directors is reasonably expected to consider
any Competing Transaction (as defined in SECTION 6.05(b) below).
Subject to applicable Law, nothing contained in this SECTION 6.01(c)
shall limit the Company's obligation to convene and hold the Company
Stockholders' Meeting (regardless of whether the unanimous
recommendation of the Board of Directors of the Company shall have
been withheld, withdrawn, amended, modified or changed).
(d) Subject to SECTION 6.01(c), no
amendment or supplement to either Proxy Statement or the
Registration Statement will be made by Parent or the Company without
the approval of the other party (such approval not to be
unreasonably withheld or delayed). Each of Parent and the Company
will advise the other, promptly after it receives notice thereof, of
the time at which the Registration Statement has become effective or
any supplement or amendment has been filed, of the issuance of any
stop order, of the suspension of the qualification of the shares of
Parent Common Stock issuable in connection with the Merger for
offering or sale in any jurisdiction, or of any request by the SEC
for amendment of either Proxy Statement or the Registration
Statement or comments thereon and responses thereto or requests by
the SEC for additional information.
(e) The information supplied by Parent for
inclusion in the Registration Statement or either Proxy Statement
shall not, at (i) the time the Registration Statement is declared
effective, (ii) the time either Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to the stockholders
of the Company or Parent, as applicable, (iii) the time of either
Stockholders' Meeting and (iv) the Effective Time, contain any
untrue statement of a material fact or fail 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
were made, not misleading. If, at any time prior to the Effective
Time, any event or circumstance relating to Parent or any Parent
Subsidiary, or their respective officers or directors, that should
be set forth in an amendment or a supplement to the Registration
Statement or the Company's Proxy Statement should be discovered by
Parent, Parent shall promptly inform the Company. All documents
that Parent is responsible for filing with the SEC in connection
with the Merger or the other transactions contemplated by this
Agreement will comply as to form and substance in all material
respects with the applicable requirements of the Securities Act and
the Exchange Act.
(f) The information supplied by the Company
for inclusion in the Registration Statement or either Proxy
Statement shall not, at (i) the time the Registration Statement is
declared effective, (ii) the time either Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to the
stockholders of the Company or Parent, as applicable, (iii) the time
of either Stockholders' Meeting and (iv) the Effective Time, contain
any untrue statement of a material fact or fail 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 were made, not misleading. If, at any time prior to the
Effective Time, any event or circumstance relating to the Company or
its officers or directors, that should be set forth in an amendment
or a supplement to the Registration Statement or Proxy Statement
should be discovered by the Company, the Company shall promptly
inform Parent. All documents that the Company is responsible for
filing with the SEC in connection with the Merger or the other
transactions contemplated by this Agreement will comply as to form
and substance in all material respects with the applicable
requirements of the Securities Act and the Exchange Act.
SECTION 3.02 Parent Stockholders' Meeting. Parent shall (i) call
and hold its Stockholders' Meeting as promptly as practicable for
the purpose of voting upon the approval of the Merger and adoption
of this Agreement, (ii) use its reasonable best efforts to hold its
Stockholders' Meeting as soon as practicable after the date on which
the Registration Statement becomes effective and (iii) shall in any
event hold its Stockholders' Meeting within 45 days after the date
on which the Registration Statement becomes effective. Parent shall
use its reasonable best efforts to solicit from its stockholders
proxies in favor of the approval of the Merger and adoption of this
Agreement, and shall take all other action necessary or advisable to
secure the vote or consent of stockholders required by the rules of
Nasdaq or the DGCL to obtain such approvals.
SECTION 3.03 Company Stockholders' Meeting. The Company shall (i)
call and hold its Stockholders' Meeting as promptly as practicable
for the purpose of voting upon the approval of the Merger and
adoption of this Agreement, (ii) use its reasonable best efforts to
hold its Stockholders' Meeting as soon as practicable after the date
on which the Registration Statement becomes effective and (iii)
shall in any event hold its Stockholders' Meeting within 45 days
after the date on which the Registration Statement becomes
effective. The Company shall use its reasonable best efforts to
solicit from its stockholders proxies in favor of the approval of
the Merger and adoption of this Agreement, and shall take all other
action necessary or advisable to secure the vote or consent of
stockholders required by the rules of Nasdaq or the DGCL, to obtain
such approvals.
SECTION 3.04 Access to Information; Confidentiality.
(a) Except as required pursuant to any
confidentiality agreement or similar agreement or arrangement to
which Parent or the Company or any of their subsidiaries is a party
or pursuant to applicable Law, from the date of this Agreement to
the Effective Time, Parent and the Company shall (and shall cause
their respective subsidiaries to): (i) provide to the other (and
its officers, directors, employees, subsidiaries, accountants,
consultants, legal counsel, investment bankers, advisors, agents and
other representatives, collectively, "Representatives") access at
reasonable times upon prior notice to the officers, employees,
agents, properties, offices and other facilities of it and its
subsidiaries and to the books and records thereof and (ii) furnish
promptly such information concerning the business, properties,
contracts, assets, liabilities, personnel and other aspects of it
and its subsidiaries as the other party or its Representatives may
reasonably request.
(b) The parties shall comply with, and
shall cause their respective Representatives to comply with, all of
their obligations under the Mutual Non-Disclosure Agreement dated
July 11, 2002, as supplemented by a letter agreement dated August
14, 2002 (the "Non-Disclosure Agreement"), between the Company and
Parent. All information obtained by the parties pursuant to
paragraph (a) above shall be subject to the Non-Disclosure Agreement.
(c) No investigation pursuant to this
SECTION 6.04 shall affect any representation or warranty in this
Agreement or any condition to the obligations of the parties hereto
to consummate the Merger.
SECTION 3.05 No Solicitation of Transactions.
(a) The Company will not, directly or
indirectly, and will instruct its Representatives not to, directly
or indirectly, solicit or initiate any proposal or offer (including,
without limitation, any proposal or offer to its stockholders) that
constitutes, or may reasonably be expected to lead to, any Competing
Transaction (as defined below), or enter into or maintain or
continue discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain a Competing Transaction,
or agree to or endorse any Competing Transaction, or authorize or
permit any of its Representatives to take any such action. The
Company shall immediately notify Parent if any proposal or offer, or
any inquiry or contact with any person with respect thereto,
regarding a Competing Transaction is made, and the Company shall
immediately inform Parent as to the material details of any such
proposal, offer, inquiry or contact, including, without limitation,
the identity of the party making any such proposal, offer, inquiry
or contact, and, if in writing, promptly deliver or cause to be
delivered to Parent a copy of such proposal, offer, inquiry or
contact and any other written material relating thereto. The
Company immediately shall cease and cause to be terminated all
existing discussions or negotiations with any parties conducted
heretofore with respect to a Competing Transaction. The Company
shall not release any third party from, or waive any provision of,
any confidentiality or standstill agreement to which it is a party.
Notwithstanding anything to the contrary in this SECTION 6.05, the
Company's Board of Directors may furnish information to, and enter
into discussions with, a person who has made an unsolicited,
written, bona fide proposal or offer regarding a Competing
Transaction if the Company's Board of Directors has (i) reasonably
concluded after consultation with the Company Financial Advisor or
other financial advisor of nationally recognized reputation that
such proposal or offer constitutes a Superior Proposal (as defined
below), (ii) reasonably concluded, after consultation with its
outside legal counsel, that, in light of such Superior Proposal, the
furnishing of such information or entering into discussions is
required to comply with its fiduciary obligations to the Company and
its stockholders under applicable Law, (iii) provided written notice
to Parent of its intent to furnish information or enter into
discussions with such person at least three business days prior to
taking any such action and (iv) obtained from such person an
executed confidentiality agreement on terms substantially similar to
those contained in the Non-Disclosure Agreement; provided, however,
that no information may be furnished and no discussions may be
entered into in the event that the Company has taken any actions
inconsistent with this SECTION 6.05(a); provided further, however,
that the Company's Board of Directors shall furnish to Parent all
information provided to the person who has made the Superior
Proposal to the extent that such information has not been previously
provided to Parent and shall keep Parent promptly and reasonably
informed as to the status of any discussions regarding such Superior
Proposal.
(b) A "Competing Transaction" means any of
the following involving the Company (other than the Merger and the
other transactions contemplated by this Agreement): (i) a merger,
consolidation, share exchange, business combination or other similar
transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 25% or more of the assets of the
Company and the Company Subsidiaries, taken as a whole; (iii) a
tender offer or exchange offer for, or any offer to purchase
directly from the Company, 20% or more of the outstanding voting
securities of the Company; (iv) any solicitation in opposition to
adoption by the Company's stockholders of this Agreement; or (v) any
liquidation, dissolution, recapitalization or other significant
corporate reorganization of the Company.
(c) A "Superior Proposal" means an
unsolicited written bona fide offer made by a third party to
consummate an Acquisition Transaction (as defined below) (i) that is
not attributable to a material breach by the Company of SECTION
6.05(a) hereof and (ii) on terms (including conditions to
consummation of the contemplated transaction) that the Board of
Directors of the Company determines, in its good faith reasonable
judgment (based on the written advice of the Company Financial
Advisor or another financial advisor of nationally recognized
reputation), to be more favorable to the Company stockholders from a
financial point of view than the terms of the Merger and with any
financing required to consummate the transaction contemplated by
such offer committed or likely, in the reasonable good faith
judgment of the Company's Board of Directors (based on the written
advice of a financial adviser of nationally recognized reputation),
to be obtained by such third party on a timely basis. For purposes
of this Agreement, an "Acquisition Transaction" shall mean a merger,
consolidation, business combination, recapitalization, liquidation,
dissolution, sale or disposition or similar transaction involving
the Company pursuant to which a person (or its stockholders) would
own, if consummated, all or substantially all of the outstanding
capital stock of the Company (or of the surviving entity in a merger
or the direct or indirect parent of the surviving entity in a
merger) or all or substantially all the assets of the Company and
the Company Subsidiaries taken as a whole.
(d) Nothing contained in this Agreement
shall prohibit the Company or its Board of Directors from taking and
disclosing to its stockholders a position contemplated by Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act.
SECTION 3.06 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation and
Bylaws of the Surviving Corporation shall contain the same
provisions with respect to indemnification, advancement and director
exculpation as are set forth in the Certificate of Incorporation and
Bylaws of the Company on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for
a period of six years from the Effective Time in any manner that
would affect adversely the rights thereunder of persons who at any
time prior to the Effective Time were entitled to indemnification,
advancement or exculpation under the Certificate of Incorporation or
Bylaws of the Company in respect of actions or omissions occurring
at or prior to the Effective Time (including, without limitation,
the transactions contemplated by this Agreement), unless such
modification is required by Law.
(b) The Company shall, to the fullest
extent permitted under applicable Law and regardless of whether the
Merger becomes effective, indemnify and hold harmless, and, after
the Effective Time, Parent and the Surviving Corporation shall, to
the fullest extent permitted under applicable Law, indemnify and
hold harmless, each present and former director or officer of the
Company and each Company Subsidiary and each such person that served
at the request of the Company or any Company Subsidiary as a
director, officer, trustee, partner, fiduciary, employee or agent of
another corporation, partnership, joint venture, trust, pension or
other employee benefit plan or enterprise (collectively, the
"Indemnified Parties") against all costs and expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with
any claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), whether civil,
administrative or investigative, arising out of or pertaining to any
action or omission in their capacities as officers or directors, in
each case occurring before the Effective Time (including the
transactions contemplated by this Agreement). The Company (or from
and after the Effective Time, Parent and Surviving Corporation) will
be entitled to participate in and, to the extent that may desire,
assume the defense of any action, with counsel reasonably
satisfactory to the Indemnified Party; provided, however, if any
Indemnified Party reasonably believes that, by reason of an actual
or potential conflict of interest, it is advisable for such
Indemnified Party to be represented by separate counsel, or if the
Company (or from and after the Effective Time, Parent and Surviving
Corporation) shall fail to assume responsibility for such defense,
such Indemnified Party may retain counsel reasonably satisfactory to
Company (or from and after the Effective Time, Parent and Surviving
Corporation) who will represent such Indemnified Party and the
Company (or from and after the Effective Time, Parent and Surviving
Corporation) shall pay all reasonable legal fees and expenses of
such counsel promptly as statements therefore are received to the
fullest extent permitted by applicable Law upon receipt of any
undertaking contemplated by Section 145(e) of the DGCL. The
Indemnified Parties and the Company (or from and after the Effective
Time, Parent and Surviving Corporation) shall cooperate in the
defense of any such matter; provided, however, that neither the
Company, Parent nor the Surviving Corporation shall be liable for
any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld or delayed).
(c) For a period of six years after the
Effective Time, Parent shall cause to be maintained in effect the
current directors' and officers' liability insurance policies
maintained by the Company and shall pay the aggregate cost of
maintaining such policies for such six (6) year period up to a
maximum of $700,000 plus the amount of any refund or credit
resulting from the termination of the Company's directors' and
officers' liability insurance policies (the "Maximum Insurance
Premium"); provided, however, that the Company agrees to cooperate
in good faith with Parent in order to obtain the lowest premium for
the above-referenced coverage. In the event that such maximum
insurance Premium is insufficient for the above-referenced coverage,
the Company may spend up to the Maximum Insurance Premium to
purchase such lesser coverage that may be obtained for the Maximum
Insurance Premium.
(d) This SECTION 6.06 is intended to be for
the benefit of, and shall be enforceable by, the Indemnified Parties
and their heirs and personal representatives and shall be binding on
the Surviving Corporation and its successors and assigns. In the
event the 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 in such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to
any person, then, and in each case, proper provision shall be made
so that the successors and assigns of the Company or the Surviving
Corporation, as the case may be, honor the indemnification
obligations set forth in this SECTION 6.06.
SECTION 3.07 Obligations of Merger Sub. . Parent shall take all
action necessary to cause Merger Sub to perform its obligations
under this Agreement and to consummate the Merger on the terms and
subject to the conditions set forth in this Agreement.
SECTION 3.08 Further Action; Consents; Filings.
(a) Upon the terms and subject to the
conditions hereof, each of the parties hereto shall use its
reasonable best efforts to (i) take, or cause to be taken, all
appropriate action and do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the Merger and the other transactions
contemplated by this Agreement, (ii) obtain from Governmental
Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by Parent
or the Company or any of their subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the
consummation of the Merger and the other transactions contemplated
by this Agreement and (iii) make all necessary filings, and
thereafter make any other reasonably required submissions, with
respect to this Agreement, the Merger and the other transactions
contemplated by this Agreement that are required under (A) the
Exchange Act and the Securities Act and any other applicable federal
or state securities laws, (B) the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and foreign
antitrust regulations, if any, applicable to the Merger and the
other transactions contemplated hereunder and (C) any other
applicable Law. The parties hereto shall cooperate with each other
in connection with the making of all such filings, including by
providing copies of all such documents to the nonfiling party and
its advisors prior to filing and, if requested, by accepting all
reasonable additions, deletions or changes suggested in connection
therewith.
(b) If required or agreed by Parent and the
Company to be advisable, Parent and the Company shall file as soon
as practicable after the date of this Agreement notifications under
the HSR Act and shall respond as promptly as practicable to all
reasonable inquiries or reasonable requests received from the
Federal Trade Commission or the Antitrust Division of the Department
of Justice for additional information or documentation and shall
respond as promptly as practicable to all reasonable inquiries and
reasonable requests received from any State Attorney General or
other governmental entity in connection with antitrust matters. The
parties shall cooperate with each other in connection with the
making of all such filings or responses. Notwithstanding anything
to the contrary in this SECTION 6.08, Parent shall not be required
to agree to (i) the divestiture (including, without limitation,
through a licensing arrangement) by Parent or the Company or any of
their respective businesses, product lines or assets, or (ii) the
imposition of any material or the ability of any of them to conduct
their business or to own or exercise control of such assets,
properties and stock.
SECTION 3.09 Plan of Reorganization.
(a) This Agreement is intended to
constitute a "plan of reorganization" within the meaning of Section
1.368-2(g) of the income tax regulations promulgated under the Code.
From and after the date of this Agreement and until the Effective
Time, each party hereto shall use its reasonable best efforts to
cause the Merger to qualify, and will not knowingly take any action,
cause any action to be taken, fail to take any action or cause any
action to fail to be taken which action or failure to act could
prevent the Merger from qualifying as a reorganization under the
provisions of Section 368(a) of the Code. Following the Effective
Time, neither the Surviving Corporation, Parent nor any of their
affiliates shall knowingly take any action, cause any action to be
taken, fail to take any action or cause any action to fail to be
taken, which action or failure to act could cause the Merger to fail
to qualify as a reorganization under Section 368(a) of the Code.
The parties hereto agree to report the Merger as a reorganization
under the provisions of Section 368(a) of the Code
(b) As of the date of this Agreement, the
Company does not know of any reason why it would not be able to
deliver to Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, at the date of the
legal opinions referred to below, certificates substantially in
compliance with IRS published advance ruling guidelines, with
customary exceptions and modifications thereto, to enable such firms
to deliver the legal opinions contemplated by SECTION 7.02(d) and
SECTION 7.03(c), and the Company hereby agrees to deliver such
certificates effective as of the date of such opinions and the
certifications and representations contained in such certificate
will be true at the Effective Time.
(c) As of the date of this Agreement,
Parent and Merger Sub do not know of any reason why they would not
be able to deliver to Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, at the
date of the legal opinions referred to below, certificates
substantially in compliance with IRS published advance ruling
guidelines, with customary exceptions and modifications thereto, to
enable such firms to deliver the legal opinions contemplated by
SECTION 7.02(d) and SECTION 7.03(c), and Parent hereby agrees to
deliver such certificates effective as of the date of such opinions
and the certifications and representations contained in such
certificate will be true at the Effective Time.
SECTION 3.10 Public Announcements. . The initial press release
relating to this Agreement shall be a joint press release the text
of which has been agreed to by each of Parent and the Company.
Thereafter, unless otherwise required by applicable Law or the
requirements of Nasdaq, each of Parent and the Company shall use its
reasonable best efforts to consult with the other before issuing any
press release or otherwise making any public statements with respect
to this Agreement, the Merger or any of the other transactions
contemplated by this Agreement.
SECTION 3.11 Listing. Prior to the Effective Time, to the extent
required under the applicable listing agreement, Parent shall file
with Nasdaq a Notification Form for Listing of Additional Shares
with respect to the shares of Parent Common Stock referred to in
SECTION 2.01.
SECTION 3.12 Reasonable Best Efforts and Further Assurances.
Subject to the terms and conditions hereof, each of the parties to
this Agreement shall use reasonable best efforts to effect the
transactions contemplated hereby and to fulfill and cause to be
fulfilled the conditions to the Merger under this Agreement.
Subject to the terms and conditions hereof, each party hereto, at
the reasonable request of another party hereto, shall execute and
deliver such other instruments and do and perform such other acts
and things as may be necessary or desirable for effecting completely
the consummation of this Agreement and the transactions contemplated
hereby.
SECTION 3.13 Employee Benefits. All Company employees shall
continue on their existing benefit plans until such time as, in
Parent's sole discretion, an orderly transition can be accomplished
and such employees may be transferred to employee benefit plans and
programs maintained by Parent for its and its affiliates' employees
in the United States. Parent shall take such reasonable actions, to
the extent permitted by Parent's benefit programs, as are necessary
to allow eligible employees of the Company to participate in the
health, welfare and other employee benefits (it being understood
that equity incentive plans are not considered employee benefits)
programs of Parent or alternative benefits programs in the aggregate
substantially equivalent to those applicable to employees of Parent
in similar functions and positions on similar terms. Pending such
action, Parent shall maintain the effectiveness of the Company's
benefit plans. Each continuing employee shall be given credit, for
purposes of any service requirements for participation or vesting,
for his or her period of service with the Company credited under a
similar benefit plan or program prior to the Closing Date.
SECTION 3.14 Parent's Board of Directors. Prior to the Effective
Time, Parent shall take all steps necessary to enlarge it Board of
Directors, as of the Effective Time, to eleven (11) members and fill
the newly created vacancies with the following three (3) individuals
from the current directors of Company: Xxxxxx X. Xxxxxx, Xxxxx X.
Short and Xxxxxxx X. Xxxxxxx. Effective as of the closing of the
private equity financing described in Section SECTION 7.02(j),
Parent shall take steps necessary to enlarge its Board of Directors
to add one (1) individual (the "Special Situations Nominee")
acceptable to the current directors of parent designated jointly by
Special Situations Fund III, L.P., Special Situations Fund Cayman,
L.P., Special Situations Private Equity Fund, L.P. and Special
Situations Technology Fund, L.P. Effective as of the date of the
next annual stockholder meeting, Parent shall take all steps
necessary to reduce the size of its Board of Directors to ten (10)
members, consisting of (a) six (6) individuals chosen by the current
directors of Parent from among the current directors of Parent, (b)
two (2) individuals chosen by the current directors of Parent from
among the current directors of Company (who shall be Messrs. Xxxxxx
and Short), (c) Xx. Xxxx Xxxxx (or another person designated by
Alloy Ventures Fund 2000, LLC acceptable to the current directors of
Parent) and (d) the Special Situations Nominee.
SECTION 3.15 Company Affiliate Agreements. Pursuant to SECTION
3.23, the Company Disclosure Schedule lists the names of all persons
who may be deemed to be "affiliates" of the Company at for purposes
of Rule 145 under the Securities Act. The Company shall use its
commercially reasonable efforts to deliver a written agreement in
substantially the form of Exhibit A hereto (a "Company Affiliate
Agreement") executed by each person identified as an Affiliate
within ten (10) days after the execution of this Agreement.
(a) Financial and Other Statements. During
the term of this Agreement, the Company shall furnish to Parent such
current financial and other data as Parent may reasonably request
from time to time.
ARTICLE IV
CONDITIONS TO THE MERGER
SECTION 4.01 Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the
Merger are subject to the satisfaction or waiver (where permissible)
of the following conditions:
(a) Registration Statement Effective. The
Registration Statement shall have been declared effective by the SEC
under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued
by the SEC and no proceeding for that purpose shall have been
initiated by the SEC.
(b) Stockholder Approval. The Merger, this
Agreement and the transactions contemplated hereby shall have been
approved and adopted by the requisite affirmative vote of the
stockholders of the Company and of the Parent in accordance with the
DGCL and the applicable corporate charter and Bylaws and the rules
of Nasdaq.
(c) No Order. No governmental entity or
court of competent jurisdiction shall have enacted, threatened,
issued, promulgated, enforced or entered any law, rule, regulation,
judgment, decree, injunction, executive order or award, whether
temporary, preliminary or permanent (an "Order"), that is then in
effect, pending or threatened and has, or would have, the effect of
making the Merger illegal or otherwise prohibiting consummation of
the Merger.
(d) Antitrust Waiting Periods. Any waiting
period (and any extension thereof) applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated
and any waiting period (and any extension thereof) applicable to the
consummation of the Merger under any foreign antitrust Law (or any
approval thereunder) shall have expired or been terminated or
obtained.
(e) Listing of Additional Shares. The
filing with Nasdaq of a Notification Form for Listing of Additional
Shares with respect to the shares of Parent Common Stock issuable
(i) upon conversion of the Company Common Stock in the Merger, (ii)
upon exercise of the options under the Company Stock Option Plan
assumed by Parent, and (iii) upon exercise of the Warrants assumed
by Parent shall have been made.
SECTION 4.02 Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate the Merger
are subject to the satisfaction or waiver (where permissible) of the
following additional conditions:
(a) Representations and Warranties. The
representations and warranties of Company contained in this
Agreement shall (i) as of the date of this Agreement and (ii) as of
the Effective Time (except for those representations and warranties
that address matters only as of a particular date) be true and
correct except to the extent that any breach of the representations
and warranties could not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect,
and Parent shall have received a certificate of the Chief Executive
Officer and Chief Financial Officer of Company to that effect.
(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 on or prior to the Effective Time, and Parent
shall have received a certificate of the Chief Executive Officer or
Chief Financial Officer of the Company to that effect.
(c) Consents. All consents, approvals and
authorizations legally required to be obtained to consummate the
Merger shall have been obtained from and made with all Governmental
Entities and all consents for all material agreements, contracts,
licenses, leases or other instruments (as listed on the Company
Disclosure Schedule) to which the Company is a party or is bound
which is required as a result of the transactions contemplated by
this Agreement or the Merger shall have been obtained.
(d) Tax Opinion. Parent shall have
received the opinion of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, based
upon representations of Parent, Merger Sub and the Company and
normal assumptions, to the effect that the Merger will be treated
for federal income tax purposes as a reorganization qualifying under
the provisions of section 368(a) of the Code and that each of
Parent, Merger Sub and the Company will be a party to the
reorganization within the meaning of section 368(b) of the Code,
which opinion shall not have been withdrawn or modified in any
material respect. The issuance of such opinion shall be conditioned
on receipt by Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP of representation
letters from each of Parent and Company as contemplated in SECTION
6.09 of this Agreement. Each such representation letter shall be
dated on or before the date of such opinion and shall not have been
withdrawn or modified in any material respect as of the Effective Time.
(e) Resignation. All members of the Board
of Directors and all officers of the Company and each Company
Subsidiary shall have executed written resignations effective as of
the Effective Time.
(f) Fairness Opinion. Parent Financial
Advisor shall not have withdrawn the opinion referenced in SECTION
4.20.
(g) Material Adverse Effect. No Company
Material Adverse Effect shall have occurred since the date of this
Agreement.
(h) Rights Plan. All actions necessary to
extinguish and cancel all outstanding Rights (as defined in the
Rights Plan) under the Rights Plan at the Effective Time and to
render such rights inapplicable to the Merger and the other
transactions contemplated by this Agreement shall have been taken.
(i) Dissenting Stockholders. Either (a)
the Appraisal Rights Provisions of DGCL and the CGCL are not
applicable to holders of Company Common Stock in connection with the
Merger or (b), if applicable, the number of shares for which holders
of Company Common Stock have perfected their rights thereunder shall
not exceed five percent (5.0%) of the number of shares of
outstanding Company Common Stock as of the record date of the
meeting of the Company's stockholders.
(j) Private Equity Financing. Parent shall
have closed, or concurrently with the Merger shall close, the
transactions contemplated by that certain Securities Purchase
Agreement dated on or about October 10, 2002, by and between Parent
and the investors named therein, or another private placement equity
financing on other terms satisfactory to both Parent and the
Company, resulting in either case in receipt by the Parent of gross
proceeds of not less than $15.0 million.
(k) Affiliate Agreements. The Parent shall
have received an executed copy of an Affiliate Agreement from each
Affiliate of the Company.
SECTION 4.03 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to
the satisfaction or waiver (where permissible) of the following
additional conditions:
(a) Representations and Warranties. The
representations and warranties of Parent contained in this Agreement
shall (i) as of the date of this Agreement and (ii) as of the
Effective Time (except for those representations and warranties that
address matters only as of a particular date) be true and correct
except to the extent that any breach of the representations and
warranties could not, individually or in the aggregate, reasonably
be expected to have a Parent Material Adverse Effect, and the
Company shall have received a certificate of the Chief Executive
Officer and Chief Financial Officer of Parent to that effect.
(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 it on or prior to the Effective Time,
and the Company shall have received a certificate of the Chief
Executive Officer or Chief Financial Officer of Parent to that
effect with respect to the foregoing.
(c) Tax Opinion. The Company shall have
received the opinion of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, counsel
to the Company, based upon representations of Parent, Merger Sub and
the Company, and normal assumptions, to the effect that the Merger
will be treated for federal income tax purposes as a reorganization
qualifying under the provisions of section 368(a) of the Code and
that each of Parent, Merger Sub and the Company will be a party to
the reorganization within the meaning of section 368(b) of the Code,
which opinion shall not have been withdrawn or modified in any
material respect. The issuance of such opinion shall be conditioned
on receipt by Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP of representation
letters from each of Parent and Company as contemplated in SECTION
6.10 of this Agreement. Each such representation letter shall be
dated on or before the date of such opinion and shall not have been
withdrawn or modified in any material respect as of the Effective
Time.
(d) Fairness Opinion. Company Financial
Advisor shall not have withdrawn the opinion referenced in SECTION
3.22.
(e) Board of Directors. The obligations of
Parent under SECTION 6.14 shall have been performed and satisfied.
(f) Material Adverse Effect. No Parent
Material Adverse Effect shall have occurred since the date of this
Agreement.
ARTICLE V
TERMINATION, AMENDMENT AND WAIVER
SECTION 5.01 Termination. This Agreement may be terminated and the
Merger and the other transactions contemplated by this Agreement may
be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated by this Agreement, as
follows:
(a) by mutual written consent duly
authorized by the Boards of Directors of each of Parent and the
Company;
(b) by either Parent or the Company if the
Effective Time shall not have occurred on or before February 15,
2003; provided however, however that the right to terminate this
Agreement under this SECTION 8.01(b) shall not be available to any
party whose action or failure to act has caused the failure of the
Merger to occur on or before such date;
(c) by either Parent or the Company if
there shall be any Order which is final and nonappealable preventing
the consummation of the Merger;
(d) by Parent if (i) the Board of Directors
of the Company withholds, withdraws, amends, modifies or changes its
unanimous recommendation of the adoption of this Agreement or the
approval of the Merger or the other transactions contemplated hereby
in a manner adverse to Parent or shall have resolved to do so, (ii)
the Board of Directors of the Company shall have recommended to the
stockholders of the Company a Competing Transaction or shall have
resolved to do so or shall have entered into any letter of intent or
similar document or any agreement, contract or commitment accepting
any Competing Transaction, (iii) the Board of Directors of the
Company fails to reject a Competing Transaction within 10 days
following receipt by the Company of the proposal for such Competing
Transaction, (iv) the Company shall have failed to include in the
Proxy Statement the unanimous recommendation of the Company's Board
of Directors in favor of the approval of the Merger or this
Agreement, (v) the Company's Board of Directors fails to reaffirm
its unanimous recommendation in favor of the approval of the Merger
and this Agreement within five business days after Parent requests
in writing that such recommendation be reaffirmed, (vi) the Company
shall have breached its obligations under SECTION 6.04 or (vii) a
tender offer or exchange offer for 20% or more of the outstanding
shares of stock of the Company is commenced, and the Board of
Directors of the Company fails to recommend against acceptance of
such tender offer or exchange offer by its stockholders (including
by taking no position with respect to the acceptance of such tender
offer or exchange offer by its stockholders);
(e) by the Company if (i) the Board of
Directors of Parent withholds, withdraws, amends, modifies or
changes its unanimous recommendation of the adoption of this
Agreement or the approval of the Merger or the other transactions
contemplated hereby in a manner adverse to the Company or shall have
resolved to do so, (ii) Parent shall have failed to include in the
Proxy Statement the unanimous recommendation of Parent's Board of
Directors in favor of the approval of the Merger or this Agreement,
(iii) Parent's Board of Directors fails to reaffirm its unanimous
recommendation in favor of the approval of the Merger and this
Agreement within five business days after Parent requests in writing
that such recommendation be reaffirmed, (iv) a tender offer or
exchange offer for 20% or more of the outstanding shares of stock of
Parent is commenced, and the Board of Directors of Parent fails to
recommend against acceptance of such tender offer or exchange offer
by its stockholders (including by taking no position with respect to
the acceptance of such tender offer or exchange offer by its
stockholders), of (v) if the Company accepts a Superior Proposal and
has satisfied the conditions set forth in SECTION 6.01(c) with
respect thereto;
(f) by either Parent or the Company if this
Agreement shall fail to receive the requisite vote for approval and
adoption at the applicable Stockholders' Meeting;
(g) by Parent upon a breach of any
representation, warranty, covenant or agreement on the part of the
Company set forth in this Agreement, or if any representation or
warranty of the Company shall have become untrue, in either case
such that the conditions set forth either in SECTION 7.02(a) or
SECTION 7.01(b) would not be satisfied ("Terminating Company
Breach"); provided, however, that if such Terminating Company Breach
is curable by the Company within 30 days of the occurrence of such
Terminating Company Breach through the exercise of its best efforts
and for as long as the Company continues to exercise such best
efforts, Parent may not terminate this Agreement under this SECTION
8.01(f) until the expiration of such 30-day period;
(h) by Company upon a breach of any
representation, warranty, covenant or agreement on the part of
Parent and Merger Sub set forth in this Agreement, or if any
representation or warranty of Parent and Merger Sub shall have
become untrue, in either case such that the conditions set forth
either in SECTION 7.03(a) or SECTION 7.03(b) would not be satisfied
("Terminating Parent Breach"); provided, however, that if such
Terminating Parent Breach is curable by Parent and Merger Sub within
30 days of the occurrence of such Terminating Parent Breach through
the exercise of their respective best efforts and for as long as
Parent and Merger Sub continue to exercise such best efforts,
Company may not terminate this Agreement under this SECTION 8.01(h)
until the expiration of such 30-day period; or
(i) by Company if the stockholders of
Parent affiliated with The Xxxxxxx Company have not executed and
delivered to Company within ten (10) days of the date of this
Agreement a Voting Agreement in substantially the form attached
hereto as Exhibit A.
SECTION 5.02 Effect of Termination. Except as provided in SECTION
8.05 and SECTION 9.01, in the event of termination of this Agreement
pursuant to SECTION 8.01, this Agreement shall forthwith become
void, there shall be no liability under this Agreement on the part
of Parent, Merger Sub or the Company or any of their respective
officers or directors, and all rights and obligations of each party
hereto shall cease; provided, however, that nothing herein shall
relieve any party from liability for the willful breach of any of
its representations and warranties, or breach of its covenants or
agreements set forth in this Agreement.
SECTION 5.03 Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective
Boards of Directors at any time prior to the Effective Time;
provided, however, that, after the approval of the Merger and
adoption of this Agreement by the stockholders of the Company, no
amendment may be made that would reduce the amount or change the
type of consideration into which each Share shall be converted upon
consummation of the Merger. This Agreement may not be amended,
except by an instrument in writing signed by each of the parties
hereto.
SECTION 5.04 Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any
obligation or other act of any other party hereto, (b) waive any
inaccuracy in the representations and warranties contained herein or
in any document delivered pursuant hereto and (c) waive compliance
with any agreement or condition contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
SECTION 5.05 Expenses.
(a) All expenses incurred in connection
with this Agreement, the Merger and the other transactions
contemplated by this Agreement shall be paid by the party incurring
such expenses, whether or not the Merger or any other transaction is
consummated, except that the Company and Parent each shall pay
one-half of all Compliance Expenses (as defined below) relating to
printing, filing and mailing the Registration Statement and the
Proxy Statements and all SEC and other regulatory filing fees
incurred in connection with the Merger, the Registration Statement
or the Proxy Statements. "Compliance Expenses" as used above shall
include all reasonable out-of-pocket expenses incurred by a party or
on its behalf in connection with or related to the printing, filing
and mailing of the Registration Statement and the Proxy Statements,
the solicitation of stockholder approval, the filing of any required
notices under the HSR Act or other similar regulations and any other
out-of-pocket expenses associated with any regulatory filing or
other regulatory action associated with the Merger; provided,
however, in no event shall Compliance Expenses include any fees or
expenses of counsel, accountants, financial advisors, experts or
consultants to a party hereto, except to the extent that any of such
parties may advance an expense (such as a filing fee) that otherwise
would be considered a Compliance Expense if incurred directly by a
party hereto.
(b) If the Company terminates this
Agreement pursuant to SECTION 8.01(e)(v) and the transaction
contemplated by the Superior Proposal closes, then the Company (or
its successor) shall pay to Parent, in cash, not later than three
business days after such closing, an amount equal to three percent
(3%) of the aggregate value of such Superior Proposal, measured by
the gross consideration received by the Company's stockholders as
part of such Competing Transaction. If such gross consideration is
payable other than in cash, the amount thereof will be considered to
be the fair market value thereof, determined either by reference to
an applicable market price or otherwise in good faith by the Board
of Directors of the Company (or its successor).
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this
Agreement and in any certificate delivered pursuant hereto shall
terminate at the Effective Time or upon the termination of this
Agreement pursuant to SECTION 8.01, as the case may be, except that
the agreements set forth in Articles I and II and SECTION 6.04(b),
SECTION 6.06, SECTION 6.07, SECTION 6.08, SECTION 6.09 SECTION 6.10,
SECTION 6.13, SECTION 6.14 and this ARTICLE IX shall survive the
Effective Time and those set forth in SECTION 6.04(b), SECTION 8.02,
SECTION 8.03 and SECTION 8.05 and this ARTICLE IX shall survive
termination of this Agreement.
SECTION 6.02 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given upon receipt) by
delivery in person, by cable, telecopy, facsimile, telegram or telex
or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or
at such other address for a party as shall be specified in a notice
given in accordance with this SECTION 9.02):
if to Parent or Merger Sub:
Superconductor
Technologies Inc.
000 Xxxx Xxxxx
Xxxxx Xxxxxxx, XX
00000
Facsimile No.:
(000) 000-0000
Attention: M.
Xxxxx Xxxxxx
with a copy to:
Xxxx|Xxxxxxxxxxx LLP
00000 Xxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Facsimile: (310)
470-8354
Attention: Xxxxxx
X. Xxxxxxxxxxx.
if to the Company:
Conductus, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000]
Facsimile No.:
(000) 000-0000
Attention:
Xxxxxxx X. Xxxxxxx
with a copy to:
Xxxxxx, Xxxxxxxxxx
& Sutcliffe LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX
00000
Facsimile No.:
000-000-0000
Attention:
Xxxxxxx X. Grey
SECTION 6.03 Certain Definitions. For purposes of
this Agreement, the term:
(a) "affiliate" of a
specified person means a person who directly or
indirectly through one or more intermediaries
controls, is controlled by, or is under common control
with such specified person;
(b) "beneficial owner" with
respect to any shares means a person who shall be
deemed to be the beneficial owner of such shares (i)
that such person or any of its affiliates or
associates (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) beneficially owns,
directly or indirectly, (ii) that such person or any
of its affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such
right is exercisable immediately or subject only to
the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of
consideration rights, exchange rights, warrants or
options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or
understanding, or (iii) that are beneficially owned,
directly or indirectly, by any other persons with whom
such person or any of its affiliates or associates or
person with whom such person or any of its affiliates
or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting or disposing of any Shares;
(c) "business day" means any
day on which the principal offices of the SEC in
Washington, D.C. are open to accept filings, or, in
the case of determining a date when any payment is
due, any day on which banks are not required or
authorized to close in the City of San Francisco;
(d) "control" (including the
terms "controlled by" and "under common control with")
means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause
the direction of the management and policies of a
person, whether through the ownership of voting
securities, as trustee or executor, by contract or
credit arrangement or otherwise;
(e) "knowledge" or "known"
means, with respect to any matter in question, if any
of the executive officers of the Company or Parent, as
the case may be, has actual knowledge of such matter,
or would have had such actual knowledge upon
reasonable inquiry of appropriate employees of Company
or Parent, as applicable;
(f) "person" means an
individual, corporation, partnership, limited
partnership, syndicate, person (including, without
limitation, a "person" as defined in section 13(d)(3)
of the Exchange Act), trust, association or entity or
government, political subdivision, agency or
instrumentality of a government; and
(g) "subsidiary" or
"subsidiaries" of any person means any corporation,
partnership, joint venture or other legal entity of
which such person (either alone or through or together
with any other subsidiary) owns, directly or
indirectly, more than 50% of the stock or other equity
interests, the holders of which are generally entitled
to vote for the election of the board of directors or
other governing body of such corporation or other
legal entity.
SECTION 6.04 Severability. If any term or other
provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of Law or
public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force
and effect as long as the economic or legal substance
of the transactions contemplated by this Agreement is
not affected in any manner materially adverse to any
party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible
in a mutually acceptable manner in order that the
transactions contemplated by this Agreement be
consummated as originally contemplated to the fullest
extent possible.
SECTION 6.05 Assignment; Binding Effect; Benefit.
Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned
by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent 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 assigns. Nothing in this
Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto or their
respective successors and assigns any rights,
remedies, obligations or liabilities under or by
reason of this Agreement, other than as provided in
SECTION 6.06.
SECTION 6.06 Specific Performance. The parties hereto
agree that irreparable damage would occur in the event
any provision of this Agreement was not performed in
accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or in
equity.
SECTION 6.07 Governing Law; Forum.
(a) This Agreement shall be
governed by, and construed in accordance with, the
laws of the State of Delaware, without giving effect
to the principles of conflicts of law thereof.
(b) Each party hereby
irrevocably submits to the exclusive jurisdiction of
the Federal courts located in the State of Delaware
and the state courts of the State of Delaware in any
action, suit or proceeding arising in connection with
this Agreement, and agrees that any such action, suit
or proceeding shall be brought only in such court (and
waives any objection based on forum non conveniens or
any other objection to venue therein); provided,
however, that such consent to jurisdiction is solely
for the purpose referred to in this SECTION 9.07(b)
and shall not be deemed to be a general submission to
the jurisdiction of such court or in the State of
Delaware other than for such purposes.
SECTION 6.08 Headings. The descriptive headings
contained in this Agreement are included for
convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 6.09 Counterparts. This Agreement may be
executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts,
each of which when executed and delivered shall be
deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 6.10 Attorney's Fees. In any dispute between
the parties hereto or their representatives concerning
any provision of this Agreement or the rights and
duties of any Person hereunder, the party or parties
prevailing in such dispute will be entitled, in
addition to such other relief as may be granted, to
the attorneys' fees and court costs incurred by reason
of such dispute.
SECTION 6.11 Mutual Drafting. Each party hereto has
participated in the drafting of this Agreement, which
each party acknowledges is the result of extensive
negotiations between the parties.
SECTION 6.12 Entire Agreement. This Agreement
(including the Exhibits, the Company Disclosure
Schedule and the Parent Disclosure Schedule) and the
Non-Disclosure Agreement constitute the entire
agreement among the parties with respect to the
subject matter hereof and supersede all prior
agreements and understandings among the parties with
respect thereto. No addition to or modification of
any provision of this Agreement shall be binding upon
any party hereto unless made in writing and signed by
all parties hereto.
*** [NEXT PAGE IS SIGNATURE PAGE] ***
IN WITNESS WHEREOF, the Company, Parent, and Merger
Sub have caused this Agreement to be executed as of
the date first written above by their respective
officers thereunto duly authorized.
SUPERCONDUCTOR TECHNOLOGIES INC.
By:
Name: M. Xxxxx Thomas____ __
Title: President and Chief Executive Officer
STI ACQUISITION, INC.
By: __
Name: M. Xxxxx Xxxxxx
Title: President
CONDUCTUS, INC.
By:
Name: Xxxxxxx X. Shalvov
Title: President and Chief Executive Officer
EXHIBIT A
FORM OF VOTING AGREEMENT FOR
CERTAIN STOCKHOLDERS OF PARENT
This VOTING AGREEMENT (the "Voting
Agreement") is entered into as of October __, 2002, by
and between Conductus, Inc., a Delaware corporation
("Company"), __________________, _____________ and
_____________ ("Stockholders").
Recitals
A. Company and Superconductor
Technologies Inc., a Delaware corporation (the
"Parent"), are entering into an Agreement and Plan of
Merger dated as of October ___, 2002 (the "Merger
Agreement") which provides (subject to the conditions
set forth therein) for the merger of a wholly owned
subsidiary of Parent with and into the Company (the
"Merger"). Capitalized terms not otherwise defined in
this Voting Agreement shall have the meanings given to
them in the Merger Agreement.
B. In order to induce Company to
enter into the Merger Agreement, Stockholder, solely
in his, her or its capacity as a stockholder of
Parent, is entering into this Voting Agreement.
Agreement
Each stockholder, intending to be legally
bound, severally agrees on behalf of itself as
follows:
1. Voting Of Shares. Stockholder agrees that,
during the period from the date of this Voting
Agreement through the Expiration Date (as defined in
Section 6), at any meeting of stockholders of Parent,
however called, and in any action by written consent
of the stockholders of Parent, Stockholder shall vote
the Subject Securities (as defined in Section 6) or
cause the Subject Securities to be voted (to the
extent such securities are entitled to be voted):
1.1 in favor of the approval of the Merger and
adoption of the Merger Agreement and any matter that
could reasonably be expected to facilitate the Merger;
1.2 against any action or agreement that would
result in a breach of any representation, warranty,
covenant or other obligation or agreement of Parent
under the Merger Agreement; and
1.3 against any action or agreement that would
cause any provision contained in Article VII of the
Merger Agreement to not be satisfied.
2. Transfer of Subject Securities.
2.1 Transfer of Subject Securities.
Stockholder agrees that, during the period from the
date of this Voting Agreement through the Expiration
Date, Stockholder shall not (a) cause or permit any
Transfer of any of the Subject Securities to be
effected; (b) tender any of the Subject Securities to
any Person or (c) create or permit to exist any
Encumbrance with respect to any Subject Securities
(other than Encumbrances which do not affect, directly
or indirectly, the right of Buyer to vote the Subject
Securities as provided in this Voting Agreement).
2.2 Transfer of Voting Rights. Stockholder
agrees that, during the period from the date of this
Voting Agreement through the Expiration Date,
Stockholder shall ensure that: (a) none of the Subject
Securities are deposited into a voting trust; and (b)
no proxy is granted, and no voting agreement or
similar agreement is entered into, with respect to any
of the Subject Securities, other than proxies
solicited by Parent in connection with the Merger,
which are not inconsistent with Sections 1.1 through
1.3 above.
3. Representations and Warranties of
Stockholder. Each Stockholder hereby represents and
warrants severally (and not jointly) to Company as
follows:
3.1 Authorization, etc. Stockholder has the
absolute and unrestricted right, power, authority and
capacity to execute and deliver this Voting Agreement
and to perform its obligations under this Voting
Agreement. This Voting Agreement has been duly
executed and delivered by Stockholder and constitute
legal, valid and binding obligations of Stockholder,
enforceable against Stockholder in accordance with
their terms, except to the extent that enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally or by
general equitable principles.
3.2 Conflicts or Consents.
(a) The execution and delivery of this Voting
Agreement by Stockholder does not, and the performance
of this Voting Agreement by Stockholder will not: (i)
conflict with or violate any law, rule, regulation,
order, decree or judgment applicable to Stockholder or
by which it or any of its properties is or may be
bound or affected; or (ii) result in or constitute
(with or without notice or lapse of time) any breach
of or default under, or give to any other Person (with
or without notice or lapse of time) any right of
termination, amendment, acceleration or cancellation
of, or result (with or without notice or lapse of
time) in the creation of any Encumbrance or
restriction on any of the Subject Securities pursuant
to, any contract to which Stockholder is a party or by
which Stockholder or any of his affiliates or
properties is or may be bound or affected.
(b) The execution and delivery of this Voting
Agreement by Stockholder does not, and the performance
of this Voting Agreement by Stockholder will not,
require any consent or approval of any Person.
3.3 Title to Securities. As of the date of
this Voting Agreement: (a) Stockholder holds of record
(free and clear of any Encumbrances or restrictions
except as specifically disclosed on the signature page
of this Voting Agreement) the number of outstanding
shares of Parent Common Stock set forth under the
heading "Shares Held of Record" on the signature page
of this Voting Agreement; (b) Stockholder holds (free
and clear of any Encumbrances or restrictions except
as specifically disclosed on the signature page of
this Voting Agreement) the options, warrants and other
rights to acquire shares of Parent Common Stock set
forth under the heading "Options, Warrants and Other
Rights" on the signature page of this Voting
Agreement; (c) Stockholder Owns the additional
securities of Parent set forth under the heading
"Additional Securities Beneficially Owned" on the
signature page of this Voting Agreement; and (d)
Stockholder does not directly or indirectly Own any
shares of Parent Common Stock or other securities of
Parent, or any option, warrant or other right to
acquire (by purchase, conversion or otherwise) any
shares of Parent Common Stock or other securities of
Parent, other than the shares and options, warrants
and other rights set forth on the signature page of
this Voting Agreement and other than as contemplated
by the Securities Purchase Agreement.
4. Representations and Warranties of Company.
Company hereby represents and warrants to each
Stockholder as follows:
4.1 Authorization, etc. Company has the
absolute and unrestricted right, power, authority and
capacity to execute and deliver this Voting Agreement.
This Voting Agreement has been duly executed and
delivered by Company, enforceable against Company in
accordance with its terms, except to the extent that
enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors'
rights generally or by general equitable principles.
4.2 No Conflicts or Consents.
(a) The execution and delivery of this Voting
Agreement by Company does not: (i) conflict with or
violate any law, rule, regulation, order, decree or
judgment applicable to Company or by which it or any
of its properties is or may be bound or affected; or
(ii) result in or constitute (with or without notice
or lapse of time) any breach of or default under, or
give to any other Person (with or without notice or
lapse of time) any right of termination, amendment,
acceleration or cancellation of any contract to which
Company is a party or by which Company or any of its
affiliates or properties is or may be bound or
affected.
(b) The execution and delivery of this Voting
Agreement by Company does not require any consent or
approval of any Person.
5. Miscellaneous.
5.1 Survival of Representations, Warranties and
Agreements. All representations, warranties,
covenants and agreements made by Stockholder in this
Voting Agreement shall survive until the Expiration
Date.
5.2 Expenses. All costs and expenses incurred
in connection with the transactions contemplated by
this Voting Agreement shall be paid solely by the
party incurring such costs and expenses.
5.3 Notices. All notices and other
communications hereunder shall be in writing and shall
be deemed to have been duly given if delivered
personally or if sent by overnight courier or similar
means or sent by facsimile with confirmation of
receipt of transmission, to the parties as follows:
if to Company:
__________, Inc.
___________________
Facsimile No.: (___) __________
Attention: General Counsel
with a copy to:
___________________
_____________ CA 94104
Facsimile No.: (000) 000-0000
if to the Stockholder:
at the address set forth below Stockholder's signature
on the
signature page of this Voting Agreement
with a copy to:
Parent at the address set forth in the Merger Agreement.
Any such notice shall be effective (a) if
delivered personally, when received, (b) if sent by
overnight courier, when receipted for, and (d) if sent
by facsimile, when confirmation of receipt upon
receipt of transmission.
5.4 Severability. In case any one or more of
the provisions contained in this Voting Agreement
should be finally determined to be invalid, illegal or
unenforceable in any respect against a party to this
Voting Agreement, it shall be adjusted if possible to
effect the intent of the parties. In any event, the
validity, legality and enforceability of the remaining
provisions contained in this Voting Agreement shall
not in any way be affected or impaired thereby, and
such invalidity, illegality or unenforceability shall
only apply as to such party in the specific
jurisdiction where such final determination shall have
been made.
5.5 Agreement. This Voting Agreement and the
documents and instruments referred to in this Voting
Agreement embody the entire agreement and
understanding of the parties hereto in respect of the
subject matter contained in this Voting Agreement.
There are no representations, promises, warranties,
covenants, or undertakings, other than those expressly
set forth or referred to in this Voting Agreement
including the exhibits and the documents and
instruments referred to in this Voting Agreement.
5.6 Assignment; Binding Effect. Neither this
Voting Agreement nor any right, interest or obligation
hereunder shall be assigned by any of the parties
without the prior written consent of the other
parties. This Voting Agreement shall be binding upon
and inure to the benefit of the parties and their
respective successors and permitted assigns. This
Voting Agreement is not intended to confer any rights
or remedies upon any Person other than the parties.
5.7 Specific Performance. The parties agree
that irreparable damage would occur in the event that
any provision of this Voting Agreement was, or is, not
performed in accordance with its specific terms or
was, or is, otherwise breached. Stockholder agrees
that, in the event of any breach or threatened breach
by Stockholder of any covenant or obligation contained
in this Voting Agreement, Buyer shall be entitled (in
addition to any other remedy that may be available to
it, including monetary damages) to (a) a decree or
order of specific performance to enforce the
observance and performance of such covenant or
obligation, and (b) an injunction restraining such
breach or threatened breach. Stockholder further
agrees that neither Buyer nor any other Person shall
be required to obtain, furnish or post any bond or
similar instrument in connection with or as a
condition to obtaining any remedy referred to in this
Section 0, and Stockholder irrevocably waives any
right he may have to require the obtaining, furnishing
or posting of any such bond or similar instrument.
5.8 Counterparts. This Voting Agreement may be
executed by the parties in separate counterparts, each
of which when so executed and delivered shall be an
original, but all such counterparts shall together
constitute one and the same instrument.
5.9 Consent and Waiver. Stockholder hereby
gives any consents or waivers that are required for
the consummation of the Merger or the entering into of
the Merger Agreement under the terms of any agreement
to which Stockholder is a party or pursuant to any
other rights Stockholder may have to consent to or
approve the consummation of the Merger or the entering
into of the Merger Agreement.
6. Definitions. For purposes of this Voting
Agreement:
6.1 "Expiration Date" shall mean the earlier of
(i) the date upon which the Merger Agreement is
terminated, or (ii) the Effective Time.
6.2 Stockholder shall be deemed to "Own" or to
have acquired "Ownership" of a security if Stockholder
is the: (i) record owner of such security; or (ii)
"beneficial owner" (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended)
of such security; provided, however, that Stockholder
shall not be deemed to Own a security solely because
of Stockholder's status as an executive officer,
director, partner or member of a Person that owns such
security.
6.3 "Subject Securities" shall mean: (i) all
securities of Parent (including all shares of Parent
Common Stock and all options, warrants and other
rights to acquire shares of Parent 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 Parent Common
Stock and all additional options, warrants and other
rights to acquire shares of Parent Common Stock) of
which Stockholder acquires Ownership during the period
from the date of this Agreement through the Expiration
Date.
6.4 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; (ii) enters
into an agreement or commitment contemplating the
possible sale of, pledge of, encumbrance of, grant of
an option with respect to, transfer of or disposition
of such security or any interest therein; or (iii)
reduces such Person's beneficial ownership interest in
or risk relating to any such security.
[Signature Page Follows]
IN WITNESS WHEREOF, Company and Stockholder
have caused this Voting Agreement to be executed as of
the date first written above.
COMPANY STOCKHOLDER
_______________________ _________________________
Signature Signature
_______________________ __________________________
Name Name
_______________________ __________________________
Title Title
ADDRESS FOR STOCKHOLDER
__________________________
___________________________________________
SECTION 6.13
EXHIBIT B
FORM OF AFFILIATE LETTER FOR
AFFILIATES OF COMPANY
[DATE]
[PARENT, Inc.]
[PARENT ADDRESS]
Ladies and Gentlemen:
The undersigned has been advised that, as
of the date of this letter, the undersigned may be
deemed to be an "affiliate" of Conductus, Inc., a
Delaware corporation (the "Company"), as the term
"affiliate" is defined for purposes of paragraph (c)
of Rule 145 ("Rule 145") of the Rules and Regulations
(the "Rules and Regulations") promulgated under the
Securities Act of 1933, as amended (the "Securities
Act"), by the Securities Exchange Commission (the
"SEC"). Pursuant to the terms of the Agreement and
Plan of Merger dated as of October __, 2002 between
Superconductor Technologies Inc. ("Parent"), STI
Acquisition, Inc., a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and the
Company (the "Merger Agreement"), at the Effective
Time, Merger Sub will be merged with and into the
Company, or under certain circumstances described in
the Merger Agreement, the Company will be merged with
and into Parent. Capitalized terms not otherwise
defined in this letter shall have the meanings given
to them in the Merger Agreement.
As a result of the Merger, the undersigned
will receive shares of Parent Common Stock in exchange
for shares of Company Common Stock owned by the
undersigned.
The undersigned hereby represents and warrants to, and
covenants with, the Parent that, in the event the
undersigned receives any Parent Common Stock in the
Merger:
(a) The undersigned shall not make any sale,
transfer or other disposition of Parent Common Stock
in violation of the Securities Act or the Rules and
Regulations.
(b) The undersigned has carefully read this
letter and discussed its requirements and other
applicable limitations upon the undersigned's ability
to sell, transfer or otherwise dispose of Parent
Common Stock, to the extent the undersigned has felt
it necessary, with the undersigned's counsel. The
undersigned acknowledges that the receipt by Parent of
this letter is an inducement to Parent's obligations
to consummate the Merger.
(c) The undersigned has been advised that the
issuance of shares of Parent Common Stock to the
undersigned in the Merger is expected to be registered
under the Securities Act by a Registration Statement
on Form S-4. However, the undersigned has also been
advised that because (i) at the time of the Merger's
submission for a vote of the stockholders of the
Company the undersigned may be deemed an affiliate of
the Company, and (ii) the distribution by the
undersigned of Parent Common Stock has not been
registered under the Securities Act, the undersigned
may not sell, transfer or otherwise dispose of Parent
Common Stock issued to the undersigned in the Merger
unless (A) such sale, transfer or other disposition
has been registered under the Securities Act, (B) such
sale, transfer or other disposition is made in
conformity with the volume and other applicable
limitations imposed by Rule 145 under the Securities
Act, or (C) in the opinion of counsel reasonably
acceptable to Parent, such sale, transfer or other
disposition is otherwise exempt from registration
under the Securities Act.
(d) The undersigned understands that Parent
will be under no obligation to register the sale,
transfer or other disposition of Parent Common Stock
by the undersigned or on the undersigned's behalf
under the Securities Act or to take any other action
necessary in order to make compliance with an
exemption from such registration available.
(e) The undersigned understands that stop
transfer instructions will be given to Parent's
transfer agent with respect to Parent Common Stock
owned by the undersigned and that there may be placed
on the certificates for the Parent Common Stock issued
to the undersigned, or any substitutions therefor, a
legend stating in substance:
"THE SHARES
REPRESENTED BY THIS
CERTIFICATE WERE
ISSUED IN A
TRANSACTION TO WHICH
RULE 145 UNDER THE
SECURITIES ACT OF
1933, AS AMENDED,
APPLIES. THE SHARES
REPRESENTED BY THIS
CERTIFICATE MAY ONLY
BE TRANSFERRED IN
ACCORDANCE WITH THE
TERMS OF A LETTER
AGREEMENT DATED
________, 2002, A COPY
OF WHICH IS ON FILE AT
THE PRINCIPAL OFFICES
OF [PARENT NAME]"
(f) The undersigned also understands
that unless the transfer by the undersigned
of the undersigned's Parent Common Stock has
been registered under the Securities Act or
is a sale made in conformity with the
provisions of this letter, Parent reserves
the right, in its sole discretion, to place
the following legend on the certificates
issued to any transferee of shares from the
undersigned:
"THE SHARES
REPRESENTED BY THIS
CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER
THE SECURITIES ACT OF
1933, AS AMENDED, AND
WERE ACQUIRED FROM A
PERSON WHO RECEIVED
SUCH SHARES IN A
TRANSACTION TO WHICH
RULE 145 UNDER THE
SECURITIES ACT OF
1933, AS AMENDED,
APPLIES. THE SHARES
HAVE BEEN ACQUIRED BY
THE HOLDER NOT WITH A
VIEW TO, OR FOR RESALE
IN CONNECTION WITH,
ANY DISTRIBUTION
THEREOF WITHIN THE
MEANING OF THE
SECURITIES ACT OF
1933, AS AMENDED, AND
MAY NOT BE OFFERED,
SOLD, PLEDGED OR
OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE
WITH AN EXEMPTION FROM
THE REGISTRATION
REQUIREMENTS OF THE
SECURITIES ACT OF
1933, AS AMENDED."
It is understood and agreed that the legend
set forth in paragraph (e) or (f) above
shall be removed by delivery of substitute
certificates without such legend if the
undersigned shall have delivered to Parent
(i) a copy of a letter from the staff of the
SEC, or an opinion of counsel, in form and
substance reasonably satisfactory to Parent
to the effect that such legend is not
required for purposes of the Securities Act
or (ii) reasonably satisfactory evidence or
representations that the shares represented
by such certificates are being or have been
transferred in a transaction made in
conformity with the provisions of Rule 145.
Very truly yours,
________________________________
Signature
________________________________
Print Name
Acknowledged this day of
, 2002.
[PARENT, INC.]
By:
Name:
Title: _________________________
