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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made and
entered into as of November 27, 2000, between Juniper Networks, Inc., a Delaware
corporation (the "Company) and Micro Magic, Incorporated, a California
corporation ("Micro Magic").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement, Micro Magic
and the Company intend to enter into a transaction whereby Micro Magic will
merge with and into the Company.
B. The consideration will be in the form of the Company's common stock and cash
as provided herein.
C. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
AGREEMENTS
The parties hereby agree as follows:
1. TRANSACTION.
1.1 ACQUISITION. Micro Magic will merge with and into the Company (the
"Merger"). The shareholders of Micro Magic will receive shares of the common
stock of the Company, par value $.00001 per share (the "Shares"), and cash as
provided in Section 1.2 below.
1.2 CONSIDERATION. Each shareholder of Micro Magic shall elect, prior to
the Closing Date, the amount of the consideration to be paid in the form of the
Shares and the amount of the consideration to be paid in the form of cash. The
specific allocation of the consideration between cash and Shares shall be as set
forth on Schedule 1.2 attached hereto and incorporated herein by reference.
Schedule 1.2 will be completed before the Closing Date in accordance with
Section 6.3 of this Agreement. The parties agree that the amount of cash
consideration shall not exceed $44,500,000.
1.3 EXCHANGE RATIO. The number of Shares to be received by each Micro
Magic shareholder shall be determined by multiplying the number of Micro Magic
shares by the Exchange Ratio. The "Exchange Ratio" is defined as the quotient
obtained by dividing (i) the quotient obtained by dividing $300,000,000 by the
"Juniper Per Share Price" (as defined below) by (ii) the aggregate number of
"Micro Magic Securities" (as defined below). Each holder of Micro Magic issued
and outstanding common stock who elects to receive Shares only in the Merger
shall receive the number of Shares equal to the number of Shares determined by
applying the Exchange Ratio as defined in the preceding sentence. Each holder of
Micro Magic issued and outstanding common stock who elects to receive cash and
Shares in the Merger shall receive the number of Shares equal to the number of
Shares determined by applying the Exchange Ratio, reduced by a number of Shares
determined by dividing the amount of cash to be received by such holder by the
Juniper Per Share Price. In utilizing the Exchange Ratio to calculate the amount
of cash or stock consideration or the number or exercise price for option
shares, all share amounts will be rounded down to the nearest whole number and
all dollar amounts will be rounded up to the nearest cent.
1.3.1 "JUNIPER PER SHARE PRICE" shall mean the average of the
closing price of the common stock of the Company for the 30 trading days
immediately ending on December 8, 2000.
1.3.2 "MICRO MAGIC SECURITIES" shall mean all outstanding common
stock (whether restricted or not), options (whether vested or unvested), all
other shares that are reserved for issuance under any stock option plans,
including the Additional Employee Shares (as defined below) and the New Employee
Shares (as defined below) and all preferred stock on an as-converted to common
basis.
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(a) "ADDITIONAL EMPLOYEE SHARES" shall mean the
1,156,667 shares of Micro Magic common stock that, as of October 31,2000 were
unissued out of the Micro Magic common stock reserved for issuance under the
Micro Magic 1995 Stock Option Plan.
(b) "NEW EMPLOYEE SHARES" shall mean the 3,000,000
shares of Micro Magic common stock to be available for granting stock options to
new hires of Micro Magic prior the Closing Date pursuant to the terms of a new
stock option plan to be adopted by Micro Magic.
1.4 OPTIONS FOR MICRO MAGIC COMMON STOCK; ACCELERATION; JUNIPER OPTIONS.
1.4.1 ASSUMPTION OF OPTIONS BY THE COMPANY. Except as otherwise
provided in this Agreement, as a result of the Merger all of the options to
acquire Micro Magic common stock granted on or prior to the Closing Date shall
be converted into options to acquire common stock of the Company and shall be
assumed by the Company. The number of shares and the exercise price of such
Micro Magic options shall, except as otherwise provided herein, be adjusted in
accordance with the Exchange Ratio (the number of shares shall be multiplied by
the Exchange Ratio and the exercise price per share shall be divided by the
Exchange Ratio). Except as otherwise provided in this Agreement and except for
any acceleration of vesting rights, the original vesting schedules of the
converted and assumed options shall be retained and the original terms of the
options shall have the same terms upon conversion except, with respect to the
Major Shareholders, as more fully described in the form of Stock Restructuring
and Non-Compete Agreement attached hereto as Schedule 1.8.2(a). The Company
shall file for registration of the converted and assumed option shares on Form
S-8 within 30 days following the Closing Date but shall use its best efforts to
file such S-8 Registration Statement within 15 days following the Closing Date,
and the Company shall use best efforts to have such registration statement
declared effective as soon as practicable thereafter.
1.4.2 ACCELERATION. Except as otherwise agreed by the parties,
each Micro Magic employee shall waive his or her rights to acceleration of
vesting (if any) that may be applicable as a result of any transaction
contemplated by this Agreement or otherwise upon any change of control or sale
of all or any part of the assets or capital stock of Micro Magic.
1.4.3 ADDITIONAL EMPLOYEE SHARES. Micro Magic and the Company
have agreed upon the grant of options to purchase the Additional Employee Shares
to certain Micro Magic employees in the amounts agreed to by Micro Magic and the
Company. Except as otherwise agreed, the options granted for the Additional
Employee Shares shall vest over a four-year period beginning immediately as of
the Closing Date at a rate of 1/48th per month.
1.4.4 NEW EMPLOYEE SHARES. Micro Magic shall grant options to
purchase the New Employee Shares to those new employees hired by Micro Magic
prior to the Closing Date with the prior approval of the Company. The options
for the New Employee Shares shall vest as to 25% one year after the date of hire
with the remainder vesting monthly over the 36-month period thereafter. Micro
Magic shall adopt a new plan which will reserve 3,000,000 shares of the common
stock of Micro Magic for stock options hereunder.
1.4.5 COMPANY OPTIONS. The Company shall grant options to
purchase common stock under its 2000 Stock Option Plan to Lee Tavrow and Mark
Santoro (each, a "Major Shareholder" and collectively, the "Major Shareholders")
in the amounts set forth on Schedule 1.4.5 hereto. These options shall be
granted effective on the Closing Date, priced at the closing price as quoted on
the Nasdaq National Market on the Closing Date and shall vest over a four year
period, with 25% vesting one year from the Closing Date and the remainder
vesting monthly thereafter over 36 months. The terms of the Company's 2000 Stock
Option Plan shall govern the options granted pursuant to this Section 1.4.5.
1.5 REGISTRATION OF SHARES. The Company shall file for registration for
the Shares on Form S-3 within 30 days following the Closing Date but shall use
its best efforts to file such S-3
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Registration Statement within 15 days following the Closing Date, and the
Company shall use best efforts to have such registration declared effective.
1.5.1 ISSUANCE OF SHARES. The Shares to be issued under this
Agreement shall be issued pursuant to Section 4(2) under the Securities Act of
1933 (the "Securities Act") and pursuant to the national market system exemption
under the California Corporations Code. Each Micro Magic shareholder will
execute and deliver to the Company the "Investment Representation Statement" in
the form attached hereto as Schedule 1.5.1 at the Closing.
1.5.2 FURTHER ACTIONS. Each of the shareholders of Micro Magic
shall execute such documents as necessary to implement the exemptions from
registration outlined above.
1.5.3 NASDAQ NATIONAL MARKET LISTING. The Company shall cause
the Shares and the shares of Company common stock to be reserved for issuance
upon exercise of options assumed in the Merger to be authorized for listing on
the Nasdaq National Market.
1.5.4 REGISTRATION OBLIGATIONS OF THE COMPANY.
(a) Expenses of Registration. All expenses of
registration incurred in connection with any registration, qualification or
compliance pursuant to this Agreement shall be borne by the Company, and all
expenses of selling shares registered shall be borne by the shareholders of the
securities so registered pro rata on the basis of the number of their shares so
registered.
(b) Registration Procedures. The Company will keep each
shareholder advised as to the initiation of the registration and as to the
completion thereof. At its expense, the Company will (i) keep the registration
statement filed continuously effective until the earlier of (A) two years after
the Effective Time, or (B) such time as all of the Shares registered have been
sold thereunder; (ii) prepare and file with the Securities and Exchange
Commission (the "SEC") as promptly as practicable such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Securities
Act; (iii) furnish to each shareholder such number of copies of any prospectus
in conformity with the requirements of the Securities Act, and such other
documents, as each shareholder may reasonably request in order to effect the
offering and sale of the Shares; and (iv) take such steps as may be reasonably
necessary to register or qualify the Shares under the securities or blue sky
laws of such jurisdictions as each shareholder shall reasonably request.
c) Other Requirements. The Company shall notify each
shareholder (i) of any request by the SEC or any other federal or state
governmental authority during the period of effectiveness of the registration
statement for amendments or supplements to the registration statement or related
prospectus or for additional information relating to the registration statement;
(ii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of such registration
statement or the initiation of any proceedings for that purpose; (iii) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; or (iv) of the happening of any event which makes any statement made in
such registration statement or related prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material respect
or which requires the making of any changes in such registration statement or
prospectus. In such event, the Company may suspend use of such prospectus on
written notice to each shareholder, in which case each shareholder shall not
dispose of Shares covered by such registration statement or prospectus until
copies of a supplemented or amended prospectus are distributed to the
shareholders or until the shareholders are advised in writing by the Company
that the use of the applicable prospectus may be resumed. The Company shall use
best efforts to ensure that the use of the prospectus may be resumed as soon as
practicable. The Company shall use best efforts to obtain the withdrawal of any
order suspending the effectiveness of such registration statement, or the
lifting of any suspension of the qualification (or exemption from qualification)
of any of the securities for sale in any jurisdiction, at the earliest
practicable moment. The Company
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shall, upon the occurrence of any event contemplated by clause (iv), prepare a
supplement or post-effective amendment to such registration statement or a
supplement to the related prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Shares being sold thereunder, such prospectus will not
contain an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(d) Indemnification. The Company will indemnify each
shareholder against all claims, losses, damages and liabilities arising out of
or based on any untrue statement of a material fact contained in any prospectus,
offering circular or other document (including any related registration
statement) incident to any registration, qualification or compliance required or
effected pursuant hereto, or based on any omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading, or any
violation by the Company of the Securities Act including any rule or regulation
thereunder applicable to the Company relating to action or inaction required of
the Company in connection with any such registration, qualification or
compliance, and will reimburse each such holder for any legal and any other
expenses reasonably incurred in connection with investigating and defending any
such claim, loss, damage, liability or action, provided that the Company will
not be liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement (or
alleged untrue statement) or omission (or alleged omission) based upon written
information furnished to the Company by such shareholder for use therein.
Each shareholder (the "Indemnifying Holder") will
indemnify the Company, each of its directors, officers, partners and agents and
each person who controls the Company within the meaning of the Securities Act
and the rules and regulations thereunder, each other such shareholder against
all claims, losses, damages and liabilities arising out of or based on any
untrue statement of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, and will reimburse the Company and such shareholders, directors,
officers, agents, partners or control persons for any legal or any other
expenses reasonably incurred in connection with investigating of defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with information furnished to the Company by the Indemnifying Holder
for use therein.
Each party entitled to indemnification hereunder (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, except to the extent
that the Indemnified Party is prejudiced by such failure to provide notice. No
Indemnifying Party in the defense of any such claim or litigation shall, except
with the consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request and as shall be
reasonably required in connection with defense of such claim and litigation
resulting therefrom. An Indemnified Party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between such Indemnified Party and any other party represented by such
counsel in such proceeding, provided that in no event shall the
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Indemnifying Party be required to pay the fees and expenses of more than one
such separate counsel for all Indemnified Parties.
The obligations of the Company and holders hereunder
shall survive the completion of any offering of the Shares in a registration
statement and the termination of this Agreement.
(e) AVAILABILITY OF FORM S-3 AND REPORTS UNDER THE EXCHANGE ACT. The Company
represents that it is currently eligible to utilize Form S-3. Further, the
Company agrees to use best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act.
1.6 TAX TREATMENT. The parties intend that the Merger shall constitute a
reorganization within the meaning of Section 368 of the Code. The parties hereto
adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax Regulations.
1.7 ACCOUNTING TREATMENT. The parties intend to treat the Merger as a
purchase for accounting purposes.
1.8 EMPLOYMENT; STOCK VESTING/OWNERSHIP RESTRUCTURING; NON-COMPETE.
1.8.1 COMPENSATION. All employees of Micro Magic agreed to by
the Company and Micro Magic shall be employed as at-will employees of the
Company (except to the extent they wish to terminate their employment), in any
event, at the compensation levels consistent with Company's current compensation
structure and as agreed to by Micro Magic and the Company, and shall be eligible
for employee benefits in accordance with the Company's current policies and
practices. For purposes of the Company's benefit programs and each Micro Magic
employee's employment with the Company, the Company will treat such Micro Magic
employees the same way the Company would treat similarly situated employees of
the Company, and the Company will give such employees credit for such employees'
prior service with Micro Magic. The Company's current policies and practices
with respect to its various benefits programs provide that there are no waiting
periods for participation except that the Company's employee stock purchase plan
does not accept new enrollees otherwise than during enrollment for a new
offering period (which occurs twice a year during January and July for
participation which begins in February and August, respectively).
1.8.2 STOCK OWNERSHIP/RESTRUCTURING. The Micro Magic stock
ownership of the Major Shareholders shall be restructured such that each will be
unvested as to a number of shares equal to 45% of such Major Shareholder's total
stock holdings as of October 31, 2000. Such shares will vest in equal monthly
increments over a 36-month period following the Closing Date, subject to
continued employment and such other conditions as set forth in the Stock
Restructuring and Non-Compete Agreement substantially in the form attached
hereto as Schedule 1.8.2(a). The unvested, restructured shares shall be held in
book entry on the records of the Company's transfer agent and shall be released
monthly in arrears as the shares shall vest, in accordance with the procedures
in effect currently at that Company.
1.8.3 STOCK OPTION RESTRUCTURING. The Micro Magic stock option
holdings of the Major Shareholders shall be restructured such that the options
shall be deemed vested as to 55% and the remaining 45% shall vest in equal
monthly increments over a 36-month period commencing on the Closing Date,
subject to continued employment and such other conditions as set forth in the
Stock Restructuring and Non-Compete Agreement substantially in the form attached
hereto as Schedule 1.8.2(a). The Major Shareholders shall execute an amendment
to their respective stock option agreements to reflect the restructuring of the
vesting schedule and the vesting acceleration provisions provided in the Stock
Restructuring and Non-Compete Agreement.
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1.8.4 NON-COMPETE. Subject to the terms of the Stock
Restructuring and Non-Compete Agreement, the Major Shareholders shall agree to a
non-compete provision pursuant to which each agrees not to compete for a period
of two years from the date of termination of employment; provided however, that
such period shall not be longer than three years from the Closing Date. The
scope of the non-compete shall be worldwide and shall be limited to the design,
development and implementation of integrated circuits, associated software and
methodologies to be utilized by companies in the development of IP packet
processing products; provided however, that companies engaged in the design,
development and implementation of SRAMs, DRAMs and general purpose
microprocessors shall be excluded from the scope of the non-compete.
1.8.5 CONFLICT. If there is any conflict between the Stock
Restructuring and Non-Compete Agreement and Section 1.8, the terms of the Stock
Restructuring and Non-Compete Agreement will govern.
1.9 CONTINUED SUPPORT OF THE MICRO MAGIC SOFTWARE TOOLS. The Company
acknowledges and agrees that it will make reasonable commercial efforts to
continue to sell and support the Micro Magic software tools. Further, the
Company agrees that if it determines, in its sole discretion, not to continue
such efforts, it will make the Micro Magic software tools and related
intellectual property available in the public domain in such a manner as is
reasonably expected and intended to disseminate such software tools and related
intellectual property broadly.
2. THE MERGER. At the Effective Time (as defined below) and subject to and upon
the terms and conditions of this Agreement, the Agreement of Merger in a form
agreed to by the parties and the applicable provisions of the laws of the State
of California ("California Law") and the laws of the State of Delaware
("Delaware Law"), Micro Magic shall be merged with and into the Company, the
separate corporate existence of Micro Magic shall cease and the Company shall
continue as the Surviving Corporation (the "Surviving Corporation").
2.1 EFFECTIVE TIME; CLOSING. Subject to the provisions of this
Agreement, the parties shall cause the Merger to be consummated by filing an
Agreement of Merger with the Secretary of State of the State of California in
accordance with the relevant provisions of California Law and with the Secretary
of State of the State of Delaware in accordance with the relevant provisions of
the Delaware Law on the Closing Date. The time of such filings (or such later
time as may be agreed in writing by the parties and specified in the Agreement
of Merger) shall be the "Effective Time". Unless the context otherwise requires,
the term "Agreement" as used in this Section 2 refers collectively to this
Agreement and Plan of Reorganization and the Agreement of Merger. The Closing of
the Merger shall take place at the offices of Wilson Sonsini Goodrich & Rosati,
650 Page Mill Road, Palo Alto, California 94304 at a time and date to be
specified by the parties (described herein as the "Closing" or the "Closing
Date").
2.2 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Agreement of Merger and the
applicable provisions of California Law and Delaware Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of Micro Magic shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Micro Magic
shall become the debts, liabilities and duties of the Surviving Corporation.
2.3 ARTICLES OF INCORPORATION; BYLAWS.
2.3.1 At the Effective Time, the Certificate of Incorporation of
the Company, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation of the
Surviving Corporation.
2.3.2 The Bylaws of the Company, as in effect immediately prior
to the Effective Time, shall be, at the Effective Time, the Bylaws of the
Surviving Corporation until thereafter amended.
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2.4 DIRECTORS AND OFFICERS. The directors of the Surviving Corporation
shall be the directors of the Company immediately prior to the Effective Time,
until their respective successors are duly elected or appointed and qualified.
The officers of the Surviving Corporation shall be the officers of the Company
immediately prior to the Effective Time, until their respective successors are
duly appointed.
2.5 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of Micro Magic, the Company or the
holders of any of the following securities:
2.5.1 CONVERSION OF MICRO MAGIC COMMON STOCK. Each share of the
Micro Magic common stock issued and outstanding immediately prior to the
Effective Time, other than any Dissenting Shares (as defined below) will be
canceled and extinguished and automatically converted into the right to receive
the number of Shares and cash to be set forth on Schedule 1.2 hereto, upon
surrender of the certificates representing the shares of Micro Magic common
stock in the manner provided in Section 2.7 (or in the case of a lost, stolen or
destroyed certificate, upon delivery of an affidavit and bond, if required by
the Transfer Agent (as defined in Section 2.7)).
2.5.2 MICRO MAGIC STOCK OPTIONS. At the Effective Time, all
options to purchase Micro Magic common stock then outstanding under Micro
Magic's 1995 Stock Option Plan and any other stock option plan contemplated by
this Agreement, whether vested or unvested, shall be assumed by the Company in
accordance with Section 1.4 hereof.
2.5.3 FRACTIONAL SHARES. No fraction of a share of the Company
common stock will be issued by virtue of the Merger. To the extent there are
fractional shares, such amounts shall be paid as part of the cash consideration
to be set forth on Schedule 1.2 hereto.
2.5.4 ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, stock dividend,
reorganization, recapitalization, reclassification or other like change with
respect to Micro Magic common stock or Company common stock occurring on or
after the date hereof and prior to the Effective Time.
2.6 DISSENTING SHARES. Notwithstanding any provision of this Agreement
to the contrary, the shares of any holder of Micro Magic common stock who has
demanded and perfected dissenters' rights for such shares in accordance with
California Law and who, as of the Effective Time, has not effectively withdrawn
or lost such dissenters' rights (the "Dissenting Shares"), shall not be
converted into or represent a right to receive the Company's common stock and
cash pursuant hereto, but the holder thereof shall only be entitled to such
rights as are granted by California Law. Notwithstanding the foregoing, if any
holder of shares of Micro Magic common stock who demands appraisal of such
shares under California Law shall effectively withdraw or lose (through failure
to perfect or otherwise) the right to appraisal, then, as of the later of the
Effective Time or the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to the
consideration to be set forth on Schedule 1.2 hereto, without interest thereon,
upon surrender of the certificate representing such shares of Micro Magic common
stock.
Micro Magic shall give the Company (i) prompt notice of any written
demands for appraisal of any shares of Micro Magic common stock, withdrawals of
such demands, and any other instruments served pursuant to California law and
received by Micro Magic which relate to any such demand for appraisal and (ii)
the opportunity to participate in all negotiations and proceedings which take
place prior to the Effective Time with respect to demands for appraisal under
California Law. Micro Magic shall not, except with the prior written consent of
the Company or as may be required by applicable law, voluntarily make any
payment with respect to any demands for appraisal of Micro Magic common stock or
offer to settle or settle any such demands. Any payments made in respect of
Dissenting Shares shall be made by Micro Magic or the Surviving Corporation as
the case may be.
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2.7 SURRENDER OF CERTIFICATES; ISSUANCE OF NEW CERTIFICATES. The holders
of the Micro Magic share certificates shall surrender such certificates at the
Closing. The Company shall issue, through its transfer agent, Wells Fargo
Shareowner Services (the "Transfer Agent"), shares of the Company's common stock
and shall deliver certificates reflecting such shares within 10 days after the
Closing. To the extent the Shares have not vested, such Shares will remain as
book entries on the records of the Transfer Agent until such Shares have vested
in accordance with the applicable vesting agreement in effect on the Closing
Date. The Company will prepare and deliver instructions to the Transfer Agent in
appropriate form regarding such issuance and delivery. At the end of each month
thereafter the Company shall cause such shares as have vested during the month
to be issued in accordance with the policy that the Company uses for all
employees of the Company who have early exercised stock options or otherwise own
shares that are subject to repurchase by the Company. If required by applicable
securities laws, the unvested Shares will be restricted and, if required by
applicable securities laws, all Shares will bear an appropriate legend.
3. REPRESENTATIONS AND WARRANTIES OF MICRO MAGIC. Micro Magic represents and
warrants to the Company that the statements contained in this Article 3 are true
and correct, subject to the exceptions specifically disclosed in writing in the
disclosure letter supplied by Micro Magic to the Company dated as of the date
hereof and certified by a duly authorized officer of Micro Magic (the "Micro
Magic Schedules"). Disclosure in any paragraph of the Micro Magic Schedules
shall constitute disclosure for purposes of all sections of this Agreement.
3.1 ORGANIZATION.
3.1.1 DUE ORGANIZATION; SUBSIDIARIES. Micro Magic is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation; has the corporate power and authority
to own, lease and operate its assets and property and to carry on its business
as now being conducted and is duly qualified or licensed to do business and is
in good standing in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified would not have a material adverse effect on Micro Magic. Micro Magic
does not have and has never had any subsidiaries and does not otherwise own, and
has not otherwise owned, any share in the capital of or any interest in or
control of, directly or indirectly, any corporation, partnership, association,
joint venture or other business entity.
3.1.2 ARTICLES; BYLAWS. Micro Magic has delivered or made
available to the Company a true and correct copy of its Articles of
Incorporation and Bylaws, as amended to date, and each such instrument is in
full force and effect. Micro Magic is not in violation of any of the provisions
of its Articles of Incorporation or Bylaws.
3.1.3 CAPITAL STRUCTURE. The authorized capital stock of Micro
Magic consists of 10,000,000 shares of common stock, no par value, of which
there were 6,338,501 shares issued and outstanding as of the date hereof and no
shares of preferred stock. All outstanding shares of Micro Magic common stock
are duly authorized, validly issued, fully paid and nonassessable and are not
subject to preemptive rights created by statute, the Articles of Incorporation
or Bylaws of Micro Magic or any agreement or document to which Micro Magic is a
party or by which it is bound. There are no declared or accrued but unpaid
dividends with respect to any capital stock of Micro Magic. As of the date
hereof, Micro Magic had reserved an aggregate of 3,200,000 shares common stock
for issuance to employees, consultants and non-employee directors pursuant to
its 1995 Stock Option Plan. As of October 31, 2000, 3,122,000 of such options
had been granted and 1,156,667 were reserved for future issuance.
3.1.4 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set
forth in Section 3.1.3, there are no equity securities, partnership interests or
similar ownership interests of any class of Micro Magic security, or any
securities exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except as set forth in Section 3.1.3,
there are no options, warrants, equity securities,
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partnership interests or similar ownership interests, calls, rights (including
preemptive rights), commitments or agreements of any character to which Micro
Magic is a party or by which it is bound obligating Micro Magic to issue,
deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem
or otherwise acquire, or cause the repurchase, redemption or acquisition, of any
shares of capital stock, partnership interests or similar ownership interests of
Micro Magic or obligating Micro Magic to grant, extend, accelerate the vesting
of or enter into any such option, warrant, equity security, call, right,
commitment or agreement. There are no registration rights and, to the knowledge
of Micro Magic, as of the date of this Agreement, there are no voting trusts,
proxies or other agreements or understandings with respect to any equity
security of any class of Micro Magic.
3.2 AUTHORITY. Micro Magic has all requisite power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action on the part of Micro Magic, subject only to the filing and
recordation of the Agreement of Merger, approval of the Merger by the
shareholders of Micro Magic pursuant to California Law and the Articles of
Incorporation of Micro Magic. This Agreement has been duly executed and
delivered by Micro Magic and, assuming the due authorization, execution and
delivery by the Company, constitutes the valid and binding obligation of Micro
Magic, enforceable in accordance with its terms, except as such enforceability
may be limited by principles of public policy and subject to the laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
3.3 NO CONFLICT. The execution and delivery of this Agreement by Micro
Magic and the execution and delivery of the Stock Restructuring and Non-Compete
Agreement by the Major Shareholders does not, and the performance of this
Agreement by Micro Magic and the performance of the Stock Restructuring and
Non-Compete Agreement by each Major Shareholder will not, (i) conflict with or
violate the Articles of Incorporation or Bylaws of Micro Magic, (ii) conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to Micro Magic or the Major Shareholder or by which their properties are bound
or affected, or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or impair Micro Magic's rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of Micro Magic pursuant to, any
material note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation (each a "Contract" and
collectively the "Contracts") to which Micro Magic is a party or by which Micro
Magic or its properties are bound or affected. The Micro Magic Schedules list
all material consents, waivers and approvals under any of Micro Magic's
agreements, contracts, licenses, leases or other contractual obligation required
to be obtained in connection with the consummation of the Merger. Micro Magic is
in compliance with and has not breached, violated or defaulted under, or
received notice that it has breached, violated or defaulted under, any of the
terms or conditions of any Contract, nor is Micro Magic or any Major Shareholder
aware of any event that would constitute such a breach, violation or default
with the lapse of time, giving of notice or both. Each Contract is in full force
and effect (except as such enforceability may be limited by principles of public
policy and subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies) and Micro Magic is
not subject to any default thereunder, nor is any party obligated to Micro Magic
pursuant to any such Contract subject to any default thereunder. Micro Magic has
obtained, or will obtain prior to the Closing Date, all necessary consents,
waivers and approvals of parties to any Contract as are required thereunder in
connection with the Merger, or except as contemplated herein, for any such
Contract to remain in full force and effect without limitation, modification or
alteration after the Effective Time. Following the Effective Time, the Company
will be permitted to exercise all of Micro Magic's rights under the Contracts
without the payment of any additional amounts or consideration other than
ongoing fees, royalties or payments which the Company would otherwise be
required to pay pursuant to the terms of such Contracts had the transactions
contemplated by this Agreement not occurred.
3.4 CONSENTS. No material consent, approval, order or authorization of,
or registration, declaration or filing with any court, administrative agency or
commission or other governmental authority
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or instrumentality, foreign or domestic, is required by or with respect to Micro
Magic in connection with the execution and delivery of this Agreement except for
(i) the filing of the Agreement of Merger with the Secretaries of State of the
States of California and Delaware, (ii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws, and (iii) such other consents,
authorizations, declarations, orders, filings, approvals and registrations which
if not obtained or made would not be material to Micro Magic or the Company or
have a material adverse effect on the ability of the parties to consummate the
Merger and (iv) the filing of appropriate notices under the California
Corporations Code with respect to the new stock plan referenced in Section
1.4.4.
3.4 TAXES; TAX RETURNS. Micro Magic has timely filed all federal, state,
local and foreign returns, estimates, information statements and other returns
relating to taxes required to be filed by Micro Magic, except such returns which
are not material, and has paid all taxes shown to be due on such returns. Micro
Magic, as of the Effective Time, will have withheld with respect to its
employees all federal and state income taxes, FICA, FUTA and other taxes
required to be withheld. No audit or other examination of any return of Micro
Magic is presently in progress, nor has Micro Magic been notified of any request
for such an audit or other examination. No power of attorney that is currently
in force has been granted with respect to any matter relating to taxes payable
by Micro Magic. Micro Magic is not a party to or affected by any tax-sharing or
allocation agreement or arrangement.
3.5 INTELLECTUAL PROPERTY.
3.5.1 OWNERSHIP. To the knowledge of Micro Magic, Micro Magic
owns or has the right to use, sell or license all intellectual property
necessary or required for the conduct of its business as presently conducted
(such intellectual property and the rights thereto are collectively referred to
herein as the "IP Rights").
3.5.2 NO CONFLICT. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby will
not constitute a material breach of any instrument or agreement governing any IP
Rights, will not cause the forfeiture or termination or give rise to a right of
forfeiture or termination of any IP Rights or materially impair the right of
Micro Magic or the Company to use, sell or license any IP Rights or portion
thereof.
3.5.3 NO VIOLATION. To the knowledge of Micro Magic, neither the
manufacture, marketing, license, sale or intended use of any product or
technology currently licensed or sold or under development by Micro Magic
violates in any material respect any license or agreement between Micro Magic
and any third party or infringes in any material respect any intellectual
property right of any other party; and there is no pending or, to the knowledge
of Micro Magic, threatened claim or litigation contesting the validity,
ownership or right to use, sell, license or dispose of any IP Rights, nor has
Micro Magic received any written notice asserting that any IP Rights or the
proposed use, sale, license or disposition thereof conflicts or will conflict
with the rights of any other party.
3.5.4 SAFEGUARD OF IP RIGHTS. Micro Magic has taken reasonable
and practicable steps designed to safeguard and maintain the secrecy and
confidentiality of all IP Rights, and has entered into non-disclosure
agreements, where appropriate.
3.6 LITIGATION. There is no action, suit, proceeding, claim, arbitration
or investigation pending, or as to which Micro Magic has received any notice of
assertion nor, to Micro Magic's knowledge, is there a threatened action, suit,
proceeding, claim, arbitration or investigation against Micro Magic or any Major
Shareholder which reasonably would be likely to be material to Micro Magic or
the Company, or which in any manner challenges or seeks to prevent, enjoin,
alter or delay any of the transactions contemplated by this Agreement.
3.7 NO UNDISCLOSED LIABILITIES. Except as set forth in the Micro Magic
Schedules, as of the date of the Agreement, Micro Magic does not have any
liability, indebtedness, obligation, or guaranty, whether accrued, absolute,
contingent, matured, unmatured or other (whether or not required to be
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reflected in financial statements in accordance with generally accepted
accounting principles), which individually or in the aggregate has not been
reflected in the financial statements delivered to the Company.
3.8 BROKERS' FEES. Micro Magic has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with the Agreement or any
transaction contemplated hereby.
3.9 REPRESENTATIONS OF THE MICRO MAGIC SHAREHOLDERS. The representations
made by the Micro Magic shareholders in the Investment Representation Statements
as of the Closing Date will be, to the best of Micro Magic's knowledge, true and
correct in all respects. Further, Micro Magic acknowledges and agrees that the
Shares to be issued under this Agreement are being issued in reliance on the
Investment Representation Statements.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to Micro Magic as follows:
4.1 ORGANIZATION, STANDING AND POWER. The Company is a corporation duly
organized, validly existing and in good standing under the Delaware Law . The
Company has the corporate power to own its properties and to carry on its
business as now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all of its obligations under its
contractual obligations. The Company is duly qualified or licensed to do
business and is in good standing as a foreign corporation in each jurisdiction
in which it conducts business except where the failure to be so qualified would
not have a material adverse effect on the Company.
4.2 AUTHORITY. The Company has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, and no further
action is required on the part of either to authorize the Agreement and the
transactions contemplated hereby. The Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Micro Magic, constitutes the valid and binding obligation of the
Company, enforceable in accordance with its terms, except as such enforceability
may be limited by principles of public policy and subject to the laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
4.3 CONSENTS. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, any governmental entity, or any
third party is required by or with respect to the Company in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable securities laws, and (ii) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings which, if not obtained
or made, would not have a material adverse effect on the Company or the ability
of the parties to consummate the Merger.
4.4 BROKERS' AND FINDERS' FEES. The Company has not incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby.
4.5 SEC FILINGS. All statements, reports, schedules, forms and other
documents required to have been filed with the SEC by the Company (the "Company
SEC Documents") have been so filed. As of the time it was filed with the SEC
(or, if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing): (x) each of the Company SEC Documents complied
in all material respects with the applicable requirements of the Securities Act
or the Securities Exchange Act of
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1934 (as the case may be); and (y) none of the Company SEC Documents 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
therein, in the light of the circumstances under which they were made, not
misleading.
4.6 VALID ISSUANCE. The Shares will, when issued in accordance with the
provisions of this Agreement, be duly authorized, validly issued, fully paid and
nonassessable and, assuming the representations of the Micro Magic shareholders
in the Investment Representation Statements are true and correct in all material
respects, will be issued in compliance with all applicable federal or state
securities laws.
5. CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 Conduct of Business of Micro Magic. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Micro Magic agrees to use its best efforts to
cause Micro Magic, except to the extent that the Company shall otherwise consent
in writing, to carry on Micro Magic's business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted, to pay
the debts of Micro Magic when due, to pay or perform other obligations when due,
and, to the extent consistent with such business, use its commercially
reasonable efforts consistent with past practice and policies to preserve intact
Micro Magic's present business organizations, keep available the services of
Micro Magic's present officers and key employees and preserve Micro Magic's
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, all with the goal of preserving
unimpaired Micro Magic's goodwill and ongoing businesses at the Effective Time.
Micro Magic shall promptly notify the Company of any event or occurrence or
emergency not in the ordinary course of business of Micro Magic and any material
event involving Micro Magic. Except as expressly contemplated by this Agreement,
Micro Magic shall not, without the prior written consent of the Company:
5.1.1 make any capital expenditures or enter into any capital
expenditure commitment or transaction exceeding $10,000
individually or $25,000 in the aggregate;
5.1.2 (i) except in the ordinary course of business, sell,
license or transfer to any person or entity any rights
to any Micro Magic intellectual property or enter into
any agreement with respect to any intellectual property
with any person or entity or with respect to any
intellectual property of any person or entity, (ii) buy
or license any intellectual property or enter into any
agreement with respect to the intellectual property of
any person or entity, or (iii) enter into any agreement
with respect to the development of any intellectual
property with a third party;
5.1.3 amend or otherwise modify (or agree to do so), or
violate the terms of, any of the Contracts;
5.1.4 commence or settle any litigation;
5.1.5 declare, set aside or pay any dividends on or make any
other distributions (whether in cash, stock or property)
in respect of any Micro Magic common stock, or split,
combine or reclassify any Micro magic common stock or
issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for shares
of Micro Magic common stock, or repurchase, redeem or
otherwise acquire, directly or indirectly, any shares of
Micro Magic common stock (or options, warrants or other
rights exercisable therefor;
5.1.6 issue, grant, deliver or sell or authorize or propose
the issuance, grant, delivery or sale of, or purchase or
propose the purchase of, any shares of capital stock of
Micro Magic or securities convertible into, or
subscriptions, rights, warrants or
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options to acquire, or other agreements or commitments
of any character obligating it to issue or purchase any
such shares or other convertible securities;
5.1.7 cause or permit any amendments to its articles of
incorporation, bylaws or other organizational documents
of Micro Magic;
5.1.8 acquire or agree to acquire by merging or consolidating
with, or by purchasing any assets or equity securities
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 which are material;
5.1.9 sell, lease, license or otherwise dispose of any of its
properties or assets;
5.1.10 incur any indebtedness or guarantee any indebtedness or
issue or sell any debt securities or guarantee any debt
securities of others;
5.1.11 grant any loans to others (other than advances of travel
or other work-related expenses in the ordinary course of
business) or purchase debt securities of others or amend
the terms of any outstanding loan agreement;
5.1.12 grant any severance or termination pay (i) to any
director or officer, or (ii) to any employee;
5.1.13 adopt or amend any employee benefit plan or enter into
any employment contract, pay or agree to pay any special
bonus or special remuneration to any director or
employee, or increase the salaries, wage rates or other
compensation of its employees;
5.1.14 revalue any of its assets;
5.1.15 pay, discharge or satisfy, in an amount in excess of
$10,000 in any one case, or $50,000 in the aggregate,
any claim, liability or obligation (absolute, accrued,
asserted or unasserted, contingent or otherwise;
5.1.16 make or change any election in respect of taxes, adopt
or change any accounting method in respect of taxes,
enter into any closing agreement, settle any claim or
assessment in respect of taxes, or consent to any
extension or waiver of the limitation period applicable
to any claim or assessment in respect of taxes;
5.1.17 enter into any strategic alliance or joint marketing
arrangement or agreement;
5.1.18 take any action to accelerate the vesting schedule of
any of the outstanding Micro Magic options or common
stock;
5.1.19 without the prior written consent of the Company, hire
or terminate any employees, or encourage any employees
to resign from Micro Magic; or
5.1.20 take, or agree in writing or otherwise to take, any of
the actions described in Sections 5.1.1 through 5.1.19
hereof.
6. ADDITIONAL AGREEMENTS
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6.1 SATISFACTION OF CONDITIONS PRECEDENT. Each party shall use its best
efforts to satisfy or cause to be satisfied all the conditions precedent which
are set forth herein, and each party will use its best efforts to cause the
transactions contemplated by this Agreement to be consummated.
6.2 FURTHER ASSURANCES. Prior to and following the Closing, each party
agrees to cooperate fully with the other parties and to execute such further
instruments, documents and agreements and to give such further written
assurances, as may be reasonably requested by any other party to better evidence
and reflect the transactions described herein and contemplated hereby and to
carry into effect the intents and purposes of this Agreement.
6.3 UPDATE TO SCHEDULE 1.2. Schedule 1.2 shall be updated as of the
Closing Date pursuant to Section 1.2.
6.4 OPTION PLAN. In connection with the New Employee Shares and prior to
signing this Agreement, Micro Magic shall either adopt a new stock option plan
in a form approved in advance by the Company or shall amend its 1995 Stock
Option Plan to increase the number of available shares as required.
6.5 401(k). Any 401(k) plan operated by Micro Magic shall terminate as
of the Closing Date and Micro Magic shall provide a certified resolution of its
board of directors indicating that such plan has been terminated effective as of
the Closing Date. Employees of Micro Magic shall be eligible to participate in
the Company's 401(k) plan immediately in accordance with its terms and the
Company will act in accordance with Company practices and procedures with
respect to informing and helping new enrollees enroll in and understand the
Company's 401(k) plan and the associated rollover provisions.
7. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The respective
obligations of each party to this Agreement to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
7.1 SHAREHOLDER APPROVAL. This Agreement shall have been approved and
adopted, and the Merger shall have been duly approved, by the requisite vote
under applicable law, by the shareholders of Micro Magic.
7.2 TAX OPINIONS. Each of the Company and Micro Magic shall each have
received written opinions from their respective advisors, Ernst and Young LLP
and Wilson Sonsini Goodrich & Rosati, respectively, to the effect that the
Merger will constitute a reorganization within the meaning of Section 368(a) of
the Code; provided, however, that if the counsel to either party does not render
such opinion, this condition shall nonetheless be deemed to be satisfied with
respect to such party if counsel to the other party renders such opinion to such
party. The parties to this Agreement agree to make reasonable representations as
requested by such counsel for the purpose of rendering such opinions.
7.3 NO ORDER. No order, administrative agency or commission or other
governmental authority or instrumentality shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
that is in effect and that has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger.
8. ADDITIONAL CONDITIONS TO OBLIGATIONS OF MICRO MAGIC. The obligation of Micro
Magic to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Effective Time of each of the following conditions, any of
which may be waived, in writing, exclusively by Micro Magic:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in this Agreement shall have been true and correct in
all material respects as of the date of this Agreement and as of the Effective
Time except for changes contemplated by this Agreement and except
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for those representations and warranties, if any, which address matters only as
of a particular date. Micro Magic shall have received a certificate signed by an
authorized officer on behalf of the Company, as applicable, to such effect.
8.2 AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by them on or prior to the
Effective Time.
8.3 ADDITIONAL CLOSING DOCUMENTS. The Company shall have delivered to
Micro Magic certified resolutions of the Board of Directors of the Company and
of the Board of Directors, in each case approving the Merger in accordance with
the terms of this Agreement. Micro Magic and the shareholders of Micro Magic
shall have received an opinion of the Company's General Counsel, in form and
substance reasonably satisfactory to Micro Magic.
8.4 MATERIAL ADVERSE EFFECT. No material adverse effect with respect to
the Company shall have occurred since the date of this Agreement.
9. ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of
the Company to consummate and effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, exclusively by the Company:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Micro Magic and contained in this Agreement shall have been true and correct
in all material respects as of the date of this Agreement and as of the
Effective Time except for changes contemplated by this Agreement and except for
those representations and warranties, if any, which address matters only as of a
particular date. The Company shall have received certificates signed on behalf
of Micro Magic by the president and the chief financial officer of Micro Magic
to such effect.
9.2 AGREEMENTS AND COVENANTS. Micro Magic 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.
9.3 MATERIAL ADVERSE EFFECT. No material adverse effect with respect to
Micro Magic shall have occurred since the date of this Agreement.
9.4 ADDITIONAL CLOSING DOCUMENTS. Micro Magic shall have delivered to
the Company certified resolutions of the Board of Directors and the shareholders
of Micro Magic. The Company shall have received an opinion from Wilson Sonsini
Goodrich & Rosati, in form and substance reasonably satisfactory to the Company.
Each of the Major Shareholder shall have executed and delivered the Stock
Restructuring and Non-Compete Agreement to the Company. Each Micro Magic
shareholder shall have executed and delivered an Investment Representation
Statement to the Company.
10. TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time of the Merger:
(a) by mutual written consent duly authorized by the boards of directors
of each of the parties hereto;
(b) by either the Company or Micro Magic, by giving written notice to
the other party, if a court of competent jurisdiction or other governmental
entity shall have issued a nonappealable final order, decree or ruling or taken
any other action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger, except, if such party relying on
such order, decree or ruling or other action shall not have complied with its
respective obligations under Section 6.1 of this Agreement;
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(c) by the Company or Micro Magic, by giving written notice to the other
party, if the other party is in material breach of any representation, warranty,
or covenant of such other party contained in this Agreement, which breach shall
not have been cured, if subject to cure, within 10 business days following
receipt by the breaching party of written notice of such breach by the other
party;
(d) by the Company giving written notice to Micro Magic, if the Closing
shall not have occurred on or before December 18, 2000 (unless extended by
agreement of the parties) by reason of the failure of any condition precedent
hereunder (unless the failure results primarily from a breach by the Company of
any representation, warranty, or covenant of the Company contained in this
Agreement or the Company's failure to fulfill a condition precedent to closing
or other default); or
(e) by Micro Magic, by giving written notice to the Company, if the
Closing shall not have occurred on or before December 18, 2000 (unless extended
by agreement of the parties) by reason of the failure of any condition precedent
hereunder (unless the failure results primarily from a breach by Micro Magic of
any representation, warranty, or covenant of Micro Magic contained in this
Agreement or Micro Magic's failure to fulfill a condition precedent to closing
or other default).
No termination of this Agreement shall affect the obligations of the parties
contained in the Confidential Disclosure Agreement dated October 8, 2000 between
the Company and Micro Magic all of which shall survive termination of this
Agreement.
11. TERMINATION FEE; OTHER FEES AND EXPENSES.
11.1 TERMINATION FEE.
(a) Termination Fee Payable by Micro Magic. If the Merger is not
consummated on or before December 18, 2000 (unless extended by agreement of the
parties) and (i) the Company is ready and willing to close the Merger in
accordance with the terms of this Agreement, (ii) the Company is not in material
breach of any representation, warranty or covenant of this Agreement, (iii) all
of the conditions set forth in Sections 7 and 8 have been satisfied in all
material respects (or any failure of such conditions to be satisfied results
from Micro Magic's failure to comply with Section 6.1) and (iv) Micro Magic
refuses to consummate the Merger (or the Merger does not close as a result of
the failure of Micro Magic to take a material action required by this Agreement)
then if within 90 days after the date of such refusal or failure Micro Magic
consummates a Micro Magic Acquisition (as defined below), Micro Magic shall
immediately pay the Company $5,000,000 by wire transfer to an account designated
by the Company. For purposes of this Agreement, a "Micro Magic Acquisition"
shall mean any merger or consolidation involving Micro Magic or any sale or
other disposition of all or substantially all of Micro Magic's assets.
(b) Termination Fee Payable by the Company. If the Merger is not
consummated on or before December 18, 2000 (unless extended by agreement of the
parties and (i) Micro Magic is ready and willing to close the Merger in
accordance with the terms of this Agreement, (ii) Micro Magic is not in material
breach of any representation, warranty or covenant in this Agreement, (iii) all
of the conditions set forth in Sections 7 and 9 have been satisfied in all
material respects (or any failure of such conditions to be satisfied results
from the Company's failure to comply with Section 6.1) and (iv) the Company
refuses to consummate the Merger (or the Merger does not close as a result of
the failure of the Company to take a material action required by this Agreement)
then immediately upon such refusal or failure the Company shall pay Micro Magic
$5,000,000 by wire transfer to an account designated by Micro Magic.
11.2 OTHER FEES AND EXPENSES. All fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses whether or not the Merger is
consummated; except that, if the Merger is not consummated, the Company will pay
the fees and expenses of Micro Magic's auditors associated with the audit of
Micro Magic's 1998 financial statements.
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2. MISCELLANEOUS.
12.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via facsimile (receipt confirmed) to the parties at
the following addresses or facsimile numbers (or at such other address or
facsimile numbers for a party as shall be specified by like notice):
If to Company: Juniper Networks, Inc.
1194 North Mathilda Avenue
Sunnyvale, CA 94089
Attention: General Counsel
Telephone No.: (408)745-2384
Facsimile No.: (408) 745-8910
If to Micro Magic: Micro Magic, Incorporated
333 West El Camino Real
Sunnyvale, CA 94087
Attention: Mark Santoro
Telephone No.: (408) 735 9200
Facsimile No.: (408) 735-9300
With a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Jeffrey Saper/J. Robert Suffoletta
Telephone No.: (650) 493-9300
Facsimile No.: (650) 493-6811
12.2 INTERPRETATION. When a reference is made in this Agreement to
schedules, such reference shall be to a schedule to this Agreement unless
otherwise indicated. When a reference is made in this Agreement to Sections,
such reference shall be to a Section of this Agreement. Unless otherwise
indicated the words "include," "includes" and "including" when used herein shall
be deemed in each case to be followed by the words "without limitation." The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
12.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
12.4 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and all
schedules hereto constitute the entire agreement among the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, including the Term Sheet between the Company and Micro
Magic dated October 30, 2000 (but excluding the Non-Disclosure Agreement); and
are not intended to confer upon any other person any rights or remedies
hereunder, except as specifically provided herein. The shareholders of Micro
Magic shall be able to rely on this Agreement and are third party beneficiaries
hereunder.
12.5 SEVERABILITY. If any provision of this Agreement or the application
thereof, becomes or is declared by a court of competent jurisdiction to be
illegal, void or unenforceable, the remainder of this Agreement will continue in
full force and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.
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12.6 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
12.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, United States, regardless
of its conflicts of law rules. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement may only be
brought against any of the parties by means of non-binding arbitration held in
Santa Clara County, California under the rules then in effect of the American
Arbitration Association, and each of the parties consents to the jurisdiction of
the American Arbitration Association in any such action or proceeding. Process
in any action or proceeding referred to in the preceding sentence may be served
on any party anywhere in the world. Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction.
12.8 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
12.9 ASSIGNMENT. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties which approval will not be unreasonably withheld. Subject
to the preceding sentence, this Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
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JUNIPER NETWORKS, INC. MICRO MAGIC INCORPORATED
BY: /s/ Lisa C. Berry BY: /s/ Mark Santoro
-------------------------------- -------------------------------------
NAME: Lisa C. Berry NAME: Mark Santoro
------------------------------ -----------------------------------
Vice President, General President and
TITLE: Counsel and Secretary TITLE: Chief Executive Officer
----------------------------- ----------------------------------
DATE: 11/27/2000 DATE: 11/27/2000
------------------------------ -----------------------------------
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