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Exhibit 2.3
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF
MERGER AND REORGANIZATION
This First Amendment to Agreement and Plan of Merger and Reorganization
("First Amendment") is entered into as of September 29, 2000, by and among
Terayon Communication Systems, Inc., a Delaware corporation ("Parent"), MN
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), Mainsail Networks, Inc., a Delaware corporation (the
"Company"), and the Designated Stockholders.
Recitals
A. Whereas, Parent, Merger Sub, the Company and the Designated
Stockholders have entered into that certain Agreement and Plan of Merger and
Reorganization dated August 1, 2000 (the "Agreement"); and
B. Whereas, Parent, Merger Sub, the Company and the Designated
Stockholders desire to amend the Agreement to provide for the indemnification of
Parent for potential liabilities arising from any allegation that the Company's
architecture for the transmission of voice and data over a single medium
infringes any patent.
Agreement
Pursuant to Section 10.15 of the Agreement, the parties to this First
Amendment agree as follows:
1. Definitions. Capitalized terms not defined herein shall have the
meanings ascribed to them in the Agreement
2. Amendments to Agreement.
a. Section 3.5 of the Agreement is hereby amended and restated in
full as follows:
3.5 No Knowledge of Claims for Indemnification. Neither Parent nor
the Merger Sub is aware of any information, situation or circumstance that is
reasonably likely to give rise to a claim for indemnification under the
provisions of Section 9 of this Agreement other than for claims for potential
liabilities arising from any allegation that the Company's architecture for the
transmission of voice and data over a single medium infringes any patent.
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b. Section 9.2 of the Agreement is hereby amended and restated in
full as follows:
9.2 Indemnification.
(a) From and after the Effective Time (but subject to Section
9.1(a)), the Indemnitees may seek indemnification to the fullest extent
permitted by law:
(i) from the Indemnification Escrow Fund, for any Damages
that are directly or indirectly suffered or incurred by any of the Indemnitees
or to which any of the Indemnitees may otherwise become subject (regardless of
whether or not such Damages relate to any third-party claim) and which arise
from or as a result of, or are directly or indirectly connected with: (i) any
inaccuracy in or breach of any representation or warranty set forth in Section 2
or in the Company's or the Designated Stockholders' Closing Certificates
(without giving effect to any "Material Adverse Effect" or other materiality
qualification or any similar qualification contained or incorporated directly or
indirectly in such representation or warranty with respect to the calculation of
Damages, but giving effect to any update to the Disclosure Schedule delivered by
the Company to Parent prior to the Closing); provided, however, that
notwithstanding any update to the Disclosure Schedule delivered by the Company
to Parent prior to the Closing, the Indemnitees may seek indemnification from
the Indemnification Escrow Fund for any Damages that are directly or indirectly
suffered or incurred or to which the Indemnitees may otherwise become subject
(but only to the extent such Damages relate to any third-party claim) and which
arise from or as a result of, or are directly or indirectly connected with any
claims for patent infringement made against the Company's current products,
platform or products which were under development as of the Closing Date; (ii)
any breach of any covenant or obligation of the Company or any of the Designated
Stockholders (including the covenants set forth in Sections 4 and 5); or (iii)
any Legal Proceeding relating to any inaccuracy or breach of the type referred
to in clause "(i)" or "(ii)" above (including any Legal Proceeding commenced by
any Indemnitee for the purpose of enforcing any of its rights under this Section
9); and
(ii) from the Designated Stockholders and the Venture
Capital Funds (as defined in Section 9.3), for any Damages not fully satisfied
first from the Indemnification Escrow Fund and subject to the limitations set
forth in Section 9.3(b) that are directly or indirectly suffered or incurred by
any of the Indemnitees or to which any of the Indemnitees may otherwise become
subject (regardless of whether or not such Damages relate to any third-party
claim) and which arise from or as a result of, or are directly or indirectly
connected with any inaccuracy in or breach of any representation or warranty set
forth in Section 2.6 (as such representation or warranty relates to title of
assets which are the subjection of Section 2.9) or 2.9 (collectively, the
"Identified Representations") (without giving effect to any "Material Adverse
Effect" or other materiality qualification or any similar qualification
contained or incorporated directly or indirectly in such representation or
warranty with respect to the calculation of Damages, but giving effect to any
update to the Disclosure Schedule delivered by the Company to Parent prior to
the Closing); provided, however, that notwithstanding any update to the
Disclosure Schedule delivered by the Company to Parent prior to the Closing,
subject to the limitations set forth in Section 9.3(b), the Indemnitees may seek
indemnification from the Designated Stockholders and the Venture Capital Funds
for any Damages not fully satisfied first from the Indemnification Escrow Fund
resulting from claims for patent
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infringement made against the Company's current products, platform or products
which were under development as of the Closing Date (but only to the extent such
Damages relate to any third-party claim).
(b) The Company and the Designated Stockholders acknowledge and
agree that, if the Surviving Corporation suffers, incurs or otherwise becomes
subject to any Damages as a result of or in connection with any inaccuracy in or
breach of any representation, warranty, covenant or obligation, then (without
limiting any of the rights of the Surviving Corporation as an Indemnitee) Parent
shall also be deemed, by virtue of its ownership of the stock of the Surviving
Corporation, to have incurred Damages as a result of and in connection with such
inaccuracy or breach.
3. Reaffirmation of Terms. This Amendment shall be construed in
connection with and as part of the Agreement and all terms, conditions,
representations, warranties, covenants and agreements set forth in the
Agreement, except as herein amended, are hereby ratified and confirmed and shall
remain in full force and effect.
4. Counterparts. This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
5. Governing Law. This Amendment shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
Remainder Of Page Intentionally Blank
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The parties hereto have caused this First Amendment to be executed and delivered
as of September 29, 2000.
Terayon Communications Systems, Inc.,
a Delaware corporation
By: /s/ Zaki Rakib
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MN Acquisition Corp.,
a Delaware corporation
By: /s/ Zaki Rakib
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Mainsail Networks, Inc.,
a Delaware corporation
By: /s/ Boris Zats
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Designated Stockholders
/s/ Vlad Cherednichenko
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Vlad Cherednichenko
/s/ Alex Lubivy
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Alex Lubivy
/s/ John Walsh
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John Walsh
/s/ Boris Zats
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Boris Zats
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/s/ Lucy Zats
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Lucy Zats
/s/ Yuri Zats
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Yuri Zats
