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EXHIBIT 2.1
MERGER AGREEMENT AND
PLAN OF REORGANIZATION
BY AND BETWEEN
BROADCOM CORPORATION
AND
INNOVENT SYSTEMS, INC.
Dated as of June 10, 2000
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TABLE OF CONTENTS
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ARTICLE 1 THE MERGER..............................................................2
1.1. The Merger..............................................................2
1.2. Effective Time..........................................................2
1.3. Effect of the Merger on Constituent Corporations........................2
1.4. Articles of Incorporation and By-Laws of Surviving Corporation..........3
1.5. Directors and Officers of Surviving Corporation.........................3
1.6. Maximum Number of Shares of Broadcom Common Stock to be Issued;
Effect on Outstanding Securities of the Company.........................3
(a) Conversion of Company Capital Stock..............................3
(b) Cancellation of Broadcom-Owned and Company-Owned Stock...........4
(c) Capital Stock of Broadcom........................................4
(d) Company Options and Company Stock Plans..........................4
1.7. Reservation of Shares...................................................5
1.8. Adjustments to Exchange Ratio...........................................5
1.9. Fractional Shares.......................................................5
1.10. Dissenting Shares.......................................................6
1.11. Exchange Procedures.....................................................6
(a) Broadcom Common Stock............................................6
(b) Exchange Procedures..............................................7
(c) Distributions With Respect to Unexchanged Shares of Company
Capital Stock....................................................7
(d) Transfers of Ownership...........................................8
1.12. No Further Ownership Rights in Company Capital Stock....................8
1.13. Lost, Stolen or Destroyed Certificates..................................8
1.14. Exemption From Registration; California Permit; Registration
Statement Alternative...................................................8
1.15. Taking of Necessary Action; Further Action..............................9
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................9
2.1. Organization and Qualification..........................................9
2.2. Authority Relative to this Agreement....................................9
2.3. Capital Stock..........................................................10
2.4. No Subsidiaries........................................................11
2.5. Directors and Officers.................................................12
2.6. No Conflicts...........................................................12
2.7. Books and Records; Organizational Documents............................12
2.8. Company Financial Statements...........................................13
2.9. Absence of Changes.....................................................13
2.10. No Undisclosed Liabilities.............................................17
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2.11. Taxes..................................................................17
2.12. Legal Proceedings......................................................19
2.13. Compliance with Laws and Orders........................................20
2.14. Plans; ERISA...........................................................20
(a) Existence of Plans..............................................20
(b) Present Value of Benefits.......................................21
(c) Penalties; Reportable Events....................................21
(d) Deficiencies; Qualification.....................................22
(e) Acceleration....................................................22
(f) COBRA...........................................................23
(g) Litigation......................................................23
2.15. Real Property..........................................................23
2.16. Tangible Personal Property.............................................24
2.17. Intellectual Property..................................................24
2.18. Contracts..............................................................28
2.19. Insurance..............................................................29
2.20. Affiliate Transactions.................................................29
2.21. Employees; Labor Relations.............................................30
2.22. Environmental Matters..................................................31
2.23. Substantial Customers and Suppliers....................................32
2.24. [Intentionally Omitted]................................................32
2.25. [Intentionally Omitted]................................................32
2.26. Other Negotiations; Brokers; Third Party Expenses......................32
2.27. Banks and Brokerage Accounts...........................................33
2.28. Warranty Obligations...................................................33
2.29. Foreign Corrupt Practices Act..........................................33
2.30. Tax-Free Reorganization................................................33
2.31. Financial Projections/Operating Plan...................................34
2.32. Approvals..............................................................34
2.33. [Intentionally Omitted]................................................35
2.34. Takeover Statutes......................................................35
2.35. Company Information for Permit Application, Information Statement
and Registration Statement.............................................35
2.36. Disclosure.............................................................36
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BROADCOM.............................36
3.1. Organization and Qualification.........................................36
3.2. Authority Relative to this Agreement...................................37
3.3. Issuance of Broadcom Common Stock......................................37
3.4. SEC Documents; Broadcom Financial Statements...........................37
3.5. No Conflicts...........................................................38
3.6. Information to be Supplied by Broadcom.................................38
3.7. Investment Advisors....................................................39
3.8. Tax-Free Reorganization................................................39
3.9. Absence of Changes.....................................................39
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3.10. Approvals..............................................................39
ARTICLE 4 CONDUCT PRIOR TO THE EFFECTIVE TIME....................................40
4.1. Conduct of Business of the Company.....................................40
(a) Charter Documents:..............................................40
(b) Dividends; Changes in Capital Stock:............................40
(c) Stock Option Plans:.............................................40
(d) Contracts:......................................................41
(e) Issuance of Securities:.........................................41
(f) Intellectual Property:..........................................41
(g) Exclusive Rights:...............................................41
(h) Dispositions:...................................................41
(i) Indebtedness:...................................................41
(j) Leases:.........................................................41
(k) Payment of Obligations:.........................................41
(l) Capital Expenditures:...........................................42
(m) Insurance:......................................................42
(n) Termination or Waiver:..........................................42
(o) Employee Benefit Plans; New Hires; Pay Increases:...............42
(p) Severance Arrangements:.........................................42
(q) Lawsuits........................................................42
(r) Acquisitions:...................................................42
(s) Taxes:..........................................................42
(t) Revaluation:....................................................42
(u) Other...........................................................42
4.2. No Solicitation........................................................42
ARTICLE 5 ADDITIONAL AGREEMENTS..................................................43
5.1. Information Statement; Permit Application; Registration Statement......43
5.2. Shareholder Approval...................................................45
5.3. Access to Information..................................................46
5.4. Confidentiality........................................................46
5.5. Expenses...............................................................46
5.6. Public Disclosure......................................................47
5.7. Approvals..............................................................47
5.8. FIRPTA Compliance......................................................47
5.9. Notification of Certain Matters........................................47
5.10. [Intentionally Omitted]................................................47
5.11. [Intentionally Omitted]................................................47
5.12. [Intentionally Omitted]................................................47
5.13. Additional Documents and Further Assurances; Cooperation...............47
5.14. Indemnification........................................................48
5.15. Form S-8...............................................................48
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5.16. NNM Listing of Additional Shares Application...........................48
5.17. Company's Auditors.....................................................49
5.18. Termination of 401(k) Plans............................................49
5.19. Takeover Statutes......................................................49
5.20. [Intentionally Omitted]................................................49
5.21. Treatment as Reorganization............................................49
5.22. Company Repurchases....................................................49
5.23. Information Technology Access..........................................49
5.24. Change of Merger Form..................................................50
5.25. Intellectual Property..................................................51
5.26. Delivery of Stock Ledger and Minute Book of the Company................51
5.27. Employee Benefit Plans; Employee Matters...............................51
5.28. Adjustment of Aggregate Share Number...................................52
5.29. Additional Loan........................................................52
ARTICLE 6 CONDITIONS TO THE MERGER...............................................52
6.1. Conditions to Obligations of Each Party to Effect the Merger...........52
(a) Governmental and Regulatory Approvals...........................52
(b) Securities Law Compliance.......................................53
(c) No Injunctions or Regulatory Restraints; Illegality.............53
(d) Tax Opinions....................................................53
(e) Shareholder Approval............................................53
6.2. Additional Conditions to Obligations of the Company....................53
(a) Representations and Warranties..................................53
(b) Performance.....................................................54
(c) Officers' Certificates..........................................54
(d) Legal Opinion...................................................54
(e) Tax Representation Letter.......................................54
(f) NNM Listing of Shares...........................................54
6.3. Additional Conditions to the Obligations of Broadcom...................54
(a) Representations and Warranties..................................54
(b) Performance.....................................................55
(c) Officers' Certificates..........................................55
(d) Third Party Consents............................................55
(e) Threatened Governmental Proceedings.............................55
(f) Legal Opinion...................................................55
(g) Tax Representation Letter.......................................55
(h) Non-Competition Agreements......................................55
(i) Support Agreements..............................................55
(j) Employees.......................................................55
(k) Limitation on Dissent...........................................56
(l) No Material Adverse Change......................................56
(m) [Intentionally Omitted].........................................56
(n) Company Intellectual Property...................................56
(o) Termination of 401(k) Plan......................................56
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(p) Conversion of Company Indebtedness..............................56
(q) Conversion of Company Series A Preferred Stock..................57
(r) Repurchase Agreements...........................................57
ARTICLE 7 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS;
ESCROW PROVISIONS......................................................57
7.1. Survival of Representations, Warranties, Covenants and Agreements......57
7.2. Escrow Provisions......................................................57
(a) Establishment of the Escrow Fund................................57
(b) Recourse to the Escrow Fund.....................................57
(c) Escrow Period; Distribution of Escrow Fund upon Termination
of Escrow Period................................................58
(d) Protection of Escrow Fund.......................................59
(e) Claims Upon Escrow Fund.........................................59
(f) Objections to Claims............................................60
(g) Resolution of Conflicts; Mediation..............................60
(h) Shareholder Agent of the Shareholders; Power of Attorney........61
(i) Actions of the Shareholder Agent................................61
(j) Third-Party Claims..............................................62
(k) Indemnification for Shareholder Agent...........................62
(l) Depositary Agent's Duties.......................................62
(m) Fees............................................................64
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER......................................64
8.1. Termination............................................................64
8.2. Effect of Termination..................................................65
8.3. Amendment..............................................................66
8.4. Extension; Waiver......................................................66
8.5. Additional Remedy......................................................66
ARTICLE 9 MISCELLANEOUS PROVISIONS...............................................66
9.1. Notices................................................................66
9.2. Entire Agreement.......................................................67
9.3. Further Assurances; Post-Closing Cooperation...........................67
9.4. Waiver.................................................................68
9.5. Third Party Beneficiaries..............................................68
9.6. No Assignment; Binding Effect..........................................68
9.7. Headings...............................................................68
9.8. Invalid Provisions.....................................................68
9.9. Governing Law; Jurisdiction............................................68
9.10. Mediation..............................................................69
9.11. WAIVER OF TRIAL BY JURY................................................69
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9.12. Construction...........................................................69
9.13. Counterparts...........................................................69
9.14. Specific Performance...................................................69
ARTICLE 10 DEFINITIONS............................................................69
10.1. Definitions............................................................70
10.2. Construction...........................................................81
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MERGER AGREEMENT AND
PLAN OF REORGANIZATION
This MERGER AGREEMENT AND PLAN OF REORGANIZATION is made and entered
into as of June 10, 2000, by and among Broadcom Corporation, a California
corporation ("Broadcom"), and Innovent Systems, Inc., a California corporation
(the "Company"), and, with respect to Section 7.2 only, David Mandel, as
Shareholder Agent, and U.S. Stock Transfer Corporation, as Depositary Agent.
Capitalized terms used and not otherwise defined herein have the meanings set
forth in Article 10.
RECITALS
A. The Boards of Directors of each of Broadcom and the Company believe
it is in the best interests of Broadcom and the Company (as applicable) and
their respective shareholders that Broadcom acquire the Company through the
merger of the Company with and into Broadcom (the "Merger") and, in furtherance
thereof, have approved the Merger, this Agreement and the transactions
contemplated hereby.
B. Pursuant to the Merger, among other things, and subject to the terms
and conditions of this Agreement, (i) all of the shares of capital stock of the
Company which are issued and outstanding immediately prior to the Effective Time
of the Merger shall be converted into the right to receive shares of Class A
common stock, par value $0.0001 per share, of Broadcom ("Broadcom Common Stock")
and (ii) any Company Options, Company Warrants and Company Stock Purchase Rights
then outstanding (whether vested or unvested) will become exercisable for
Broadcom Common Stock, on the terms and subject to the conditions set forth
herein.
C. As a condition and an inducement to the willingness of Broadcom to
enter into this Agreement, certain shareholders of the Company have concurrently
herewith entered into (i) Support Agreements with Broadcom in substantially the
form attached hereto as Exhibit A ("Support Agreements") pursuant to which,
among other things, such shareholders have agreed to vote the shares of Company
Capital Stock owned by them in favor of the Merger and (ii) Repurchase
Agreements with Broadcom in substantially the form attached hereto as Exhibit K
("Repurchase Agreements") pursuant to which such shareholders have agreed that
certain of the shares of Broadcom Common Stock that such shareholders will
receive in connection with the Merger will be subject to a repurchase right in
favor of Broadcom.
D. As a condition and a further inducement to Broadcom to enter into
this Agreement, certain employees of the Company have concurrently herewith
entered into or will enter into Non-Competition Agreements substantially in the
form attached hereto as Exhibit B (the "Non-Competition Agreements"), each of
which shall become effective at the Effective Time.
E. Broadcom and the Company intend that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, and in
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furtherance thereof intend that this Agreement shall be a "Plan of
Reorganization" within the meaning of Sections 354(a) and 361(a) of the Internal
Revenue Code.
F. The Company and Broadcom desire to make certain representations,
warranties, covenants and agreements in connection with the Merger.
G. A portion of the shares of Broadcom Common Stock otherwise issuable
or reserved for issuance by Broadcom in connection with the Merger shall be
placed in escrow by Broadcom, the release of which amount shall be contingent
upon certain events and conditions, all as set forth in Article 7 herein.
NOW, THEREFORE, in consideration of the covenants, promises,
representations and warranties set forth herein, and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
the parties), intending to be legally bound hereby, the parties agree as
follows:
ARTICLE 1
THE MERGER
1.1. The Merger. At the Effective Time and upon the terms and subject to
the conditions of this Agreement and the applicable provisions of the California
Code, the Company shall be merged with and into Broadcom, the separate corporate
existence of the Company shall cease, and Broadcom shall continue as the
surviving corporation. Broadcom is sometimes referred to herein as the
"Surviving Corporation."
1.2. Effective Time. Unless this Agreement is earlier terminated
pursuant to Section 8.1, the closing of the Merger (the "Closing") will take
place on July 3, 2000 (or such other later date as Broadcom and the Company may
mutually agree) following satisfaction or waiver of the conditions set forth in
Article 6 at the offices of Irell & Manella LLP, 1800 Avenue of the Stars, Suite
900, Los Angeles, California, unless another place or time is agreed to by
Broadcom and the Company. The date upon which the Closing actually occurs is
herein referred to as the "Closing Date." On the Closing Date, the parties
hereto shall cause the Merger to be consummated by filing a California Agreement
of Merger (or like instrument), in substantially the form attached hereto as
Exhibit C (the "California Agreement of Merger"), with the Secretary of State of
the State of California in accordance with the relevant provisions of applicable
law (the time of acceptance by the Secretary of State of the State of California
of such filing or such later time as may be agreed to by the parties and set
forth in the Agreement of Merger being referred to herein as the "Effective
Time").
1.3. Effect of the Merger on Constituent Corporations. At the Effective
Time, the effect of the Merger shall be as provided in the applicable provisions
of the California Code. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the property, rights, privileges,
powers and franchises of Broadcom and the Company shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of Broadcom and the Company shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving Corporation.
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1.4. Articles of Incorporation and By-Laws of Surviving Corporation.
(a) At the Effective Time, the articles of incorporation of
Broadcom, as in effect immediately prior to the Effective Time, shall be the
articles of incorporation of the Surviving Corporation until thereafter amended
as provided by law and such articles of incorporation and by-laws of the
Surviving Corporation.
(b) The by-laws of Broadcom, as in effect immediately prior to the
Effective Time, shall be the by-laws of the Surviving Corporation until
thereafter amended as provided by such by-laws, the articles of incorporation
and applicable law.
1.5. Directors and Officers of Surviving Corporation. The directors of
Broadcom immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, each to hold office in accordance with the articles of
incorporation and by-laws of the Surviving Corporation. The officers of Broadcom
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, each to hold office in accordance with the by-laws of the Surviving
Corporation.
1.6. Maximum Number of Shares of Broadcom Common Stock to be Issued;
Effect on Outstanding Securities of the Company. The maximum number of shares of
Broadcom Common Stock to be issued (including Broadcom Common Stock to be
reserved for issuance upon exercise of any of the Company Options, Company
Warrants or Company Stock Purchase Rights to be assumed by Broadcom as provided
herein) in exchange for the acquisition by Broadcom of all shares of Company
Capital Stock which are issued and outstanding immediately prior to the
Effective Time and all vested and unvested Company Options, Company Warrants and
Company Stock Purchase Rights which are then outstanding (other than any Company
Warrants which by their terms expire without payment, conversion, adjustment or
other consideration at the Effective Time) shall be the Aggregate Share Number.
No adjustment shall be made in the number of shares of Broadcom Common Stock
issued in the Merger as a result of any consideration (in any form whatsoever)
received by the Company from the date hereof to the Effective Time as a result
of any exercise, conversion or exchange of Company Options, Company Warrants or
Company Stock Purchase Rights. On the terms and subject to the conditions of
this Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Broadcom, the Company or the holder of any shares of the
Company Capital Stock or Company Options, Company Warrants or Company Stock
Purchase Rights, the following shall occur:
(a) Conversion of Company Capital Stock. Each share of Company
Capital Stock issued and outstanding immediately prior to the Effective Time
(other than any shares of Company Capital Stock to be cancelled pursuant to
Section 1.6(b) and any Dissenting Shares (as provided in Section 1.10)) will be
cancelled and extinguished and each share of Company Common Stock which is
issued and outstanding immediately prior to the Effective Time shall be
converted automatically into the right to receive, following the expiration or
early termination of any waiting period under the HSR Act which is applicable to
the holder of such share, that number of shares of Broadcom Common Stock equal
to the Exchange Ratio, subject to Section 1.9.
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(b) Cancellation of Broadcom-Owned and Company-Owned Stock. Each
share of Company Capital Stock owned by Broadcom or the Company or any
Subsidiary of Broadcom or the Company immediately prior to the Effective Time
shall be automatically canceled and extinguished without any conversion thereof
and without any further action on the part of Broadcom or the Company.
(c) Capital Stock of Broadcom. Each share of Broadcom Common Stock
and share of Class B Common Stock, par value $0.0001 per share, of Broadcom
which is issued and outstanding immediately prior to the Effective Time shall
remain outstanding as one validly issued, fully paid and nonassessable share of
the same class of common stock of the Surviving Corporation, with identical
rights and privileges. From and after the Effective Time, each share certificate
of Broadcom theretofore evidencing ownership of any such shares shall continue
to evidence ownership of such shares of capital stock of the Surviving
Corporation.
(d) Company Options and Company Stock Plans. All unexpired and
unexercised Company Options, Company Warrants and Company Stock Purchase Rights,
then outstanding, whether vested or unvested, together with the Company Stock
Plans, shall be assumed by Broadcom in accordance with provisions described
below.
(i) Each unexpired and unexercised Company Option, Company
Warrant and Company Stock Purchase Right then outstanding, whether vested or
unvested, shall be, in connection with the Merger, assumed by Broadcom, together
with the Company Stock Plans. Each Company Option, Company Warrant and Company
Stock Purchase Right so assumed by Broadcom under this Agreement shall continue
to have, and be subject to, the same terms and conditions as were applicable to
such Company Option, Company Warrant or Company Stock Purchase Right immediately
prior to the Effective Time (including, but not limited to, any repurchase
rights or vesting provisions), provided that (A) such Company Option, Company
Warrant or Company Stock Purchase Right, as the case may be, shall be
exercisable for that number of whole shares of Broadcom Common Stock equal to
the product of the number of shares of Company Capital Stock that were issuable
upon exercise of such Company Option, Company Warrant or Company Stock Purchase
Right immediately prior to the Effective Time (assuming such Company Option,
Company Warrant or Company Stock Purchase Right were then exercisable in full)
multiplied by the Exchange Ratio applicable to the series of Company Capital
Stock subject to such Company Option, Company Warrant, or Company Stock Purchase
Right (rounded down to the nearest whole number of shares of Broadcom Common
Stock) and (B) the per share exercise price for the shares of Broadcom Common
Stock issuable upon exercise of such assumed Company Option, Company Warrant or
Company Stock Purchase Right, as the case may be, shall be equal to the quotient
determined by dividing the exercise price per share of Company Capital Stock at
which such Company Option, Company Warrant or Company Stock Purchase Right was
exercisable immediately prior to the Effective Time by the Exchange Ratio
applicable to the series of Company Capital Stock subject to such Company
Option, Company Warrant, or Company Stock Purchase Right (rounded up to the
nearest whole cent). It is the intention of the parties that the Company Options
assumed by Broadcom shall qualify following the Effective Time as incentive
stock options as defined in Section 422 of the Internal Revenue Code to the same
extent the Company Options qualified
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as incentive stock options immediately prior to the Effective Time and the
provisions of this Section 1.6(d) shall be applied consistent with this intent.
(ii) Broadcom shall assume the Company's obligations, and
shall be assigned the Company's repurchase rights and purchase options, under
any Restricted Stock Purchase Agreements entered into pursuant to the Company's
1999 Stock Option Plan and the Company 2000 Stock Plan (the "Company Stock
Plans") and the other restricted stock purchase agreements listed on Schedule
1.6(d)(ii) of the Company Disclosure Schedule, true and correct copies of which
have been made available by the Company to Broadcom. Any and all restrictions on
the Company Restricted Stock issued pursuant to the Company Stock Plans or such
other agreements which do not lapse in accordance with their terms (as in effect
on May 31, 2000) shall continue in full force and effect until such restrictions
lapse pursuant to the terms of such agreements, and any repurchase rights or
repurchase options which the Company has with respect to the Company Restricted
Stock shall also continue in full force and effect; provided, however, the per
share repurchase price for the shares of Broadcom Common Stock subject to any
such repurchase right or repurchase option shall be equal to the quotient
determined by dividing the per share repurchase price of such Company Restricted
Stock immediately prior to the Effective Time by the Exchange Ratio (rounded to
the nearest whole cent).
(iii) From and after the Effective Time, Broadcom shall use
commercially reasonable efforts not to take any action that would jeopardize the
treatment as incentive stock options of any such Company Options that qualified
as incentive stock options immediately prior to the Effective Time.
(iv) The Company agrees to take all actions necessary or
advisable under the Company Stock Plans to cause all Company Options, Company
Warrants, Company Stock Purchase Rights and Company Restricted Stock to be
assumed by Broadcom without amendment or modification of the terms thereof by
the Company, including any acceleration of vesting, lapse of restriction or
other alteration of the terms thereof, except as expressly provided in this
Section 1.6(d) with respect to the conversion of such Company Option, Company
Warrant, Company Stock Purchase Right or Company Restricted Stock into an
option, warrant or stock purchase right with respect to Broadcom Common Stock or
shares of Broadcom Common Stock, as applicable.
1.7. Reservation of Shares. Broadcom will reserve sufficient shares of
Broadcom Common Stock for issuance pursuant to Section 1.6.
1.8. Adjustments to Exchange Ratio. The Exchange Ratio shall be
equitably adjusted to reflect fully the effect of any stock split, reverse
split, stock combination, stock dividend (including any dividend or distribution
of securities convertible into Broadcom Common Stock or Company Capital Stock),
reorganization, reclassification, recapitalization or other like change with
respect to Broadcom Common Stock or Company Capital Stock the effective date of
which occurs on or after the date hereof and prior to the Effective Time.
1.9. Fractional Shares. No fraction of a share of Broadcom Common Stock
will be issued in the Merger, but in lieu thereof, each holder of shares of
Company Capital Stock who would otherwise be entitled to a fraction of a share
of Broadcom Common Stock (after
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aggregating all fractional shares of Broadcom Common Stock to be received by
such holder) shall be entitled to receive from Broadcom an amount of cash
(rounded to the nearest whole cent) equal to the product of (a) such fraction,
multiplied by (b) the Closing Price.
1.10. Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of Company Capital Stock held by a holder who has demanded
and perfected appraisal rights for such shares in accordance with the California
Code and who, as of the Effective Time, has not effectively withdrawn or lost
such appraisal or dissenters' rights ("Dissenting Shares") shall not be
converted into or represent a right to receive Broadcom Common Stock pursuant to
Section 1.6, but the holder thereof shall only be entitled to such rights as are
granted by the California Code.
(b) Notwithstanding the provisions of Section 1.10(a) above, if
any holder of shares of Company Capital Stock who demands appraisal of such
shares under the California Code shall effectively withdraw or lose (through
failure to perfect or otherwise) the right to appraisal, then, as of the later
of (i) the Effective Time or (ii) the occurrence of such event, such holder's
shares shall automatically be converted into and represent only the right to
receive Broadcom Common Stock as provided in Section 1.6, without interest
thereon, upon surrender to the Company of the certificate representing such
shares in accordance with Section 1.11 of this Agreement.
(c) The Company shall give Broadcom (i) prompt notice of its
receipt of any written demands for appraisal of any shares of Company Capital
Stock, withdrawals of such demands, and any other instruments relating to the
Merger served pursuant to the California Code and received by the Company and
(ii) the opportunity to participate in all negotiations and proceedings with
respect to demands for appraisal under the California Code. The Company shall
not, except with the prior written consent of Broadcom or as may be required
under applicable law, voluntarily make any payment with respect to any demands
for appraisal of Company Capital Stock or offer to settle or settle any such
demands.
1.11. Exchange Procedures.
(a) Broadcom Common Stock. On the Closing Date, Broadcom shall
deposit with the Exchange Agent for exchange in accordance with this Article 1,
the aggregate number of shares of Broadcom Common Stock issuable in exchange for
outstanding shares of Company Capital Stock and cash in an amount sufficient to
permit the payment of cash in lieu of fractional shares pursuant to Section 1.9;
provided, however, that, on behalf of the holders of Company Capital Stock,
Broadcom shall deposit into an escrow account a number of shares of Broadcom
Common Stock equal to the Initial Escrow Amount. The portion of the Initial
Escrow Amount contributed on behalf of each holder of Company Capital Stock
shall be in proportion to the aggregate number of shares of Broadcom Common
Stock which such holder would otherwise be entitled to receive by virtue of
ownership of outstanding shares of Company Capital Stock.
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(b) Exchange Procedures. As soon as practicable after the
Effective Time, the Surviving Corporation shall cause to be mailed to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Capital Stock (the
"Certificates") and which shares were converted into the right to receive shares
of Broadcom Common Stock pursuant to Section 1.6, (i) a letter of transmittal in
customary form (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Broadcom may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of Broadcom Common Stock and cash in lieu of fractional
shares. Upon surrender of a Certificate for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by Broadcom, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing the number of whole
shares of Broadcom Common Stock (less the number of shares of Broadcom Common
Stock to be deposited in the Escrow Fund on such holder's behalf pursuant to
Article 7 hereof), to which such holder is entitled pursuant to Section 1.6 and
cash in lieu of fractional shares to which such holder is entitled pursuant to
Section 1.9, and the Certificate so surrendered shall be canceled. As soon as
practicable after the Effective Time, and subject to and in accordance with the
provisions of Article 7 hereof, Broadcom shall cause to be distributed to the
Depositary Agent a certificate or certificates (in such denominations as may be
requested by the Depositary Agent) representing that number of shares of
Broadcom Common Stock equal to the Initial Escrow Amount, which certificate
shall be registered in the name of the Depositary Agent. Such shares shall be
beneficially owned by the holders on whose behalf such shares were deposited in
the Escrow Fund and shall be available to compensate Broadcom as provided in
Article 7. Until surrendered, each outstanding Certificate that, prior to the
Effective Time, represented shares of Company Capital Stock will be deemed from
and after the Effective Time, for all corporate purposes, other than the payment
of dividends (subject to Section 1.11(c)), to evidence the ownership of the
number of full shares of Broadcom Common Stock into which such shares of Company
Capital Stock shall have been so converted (subject only to, if applicable, the
expiration or early termination of any waiting period under the HSR Act which is
applicable to the holder of such shares) and cash in lieu of fractional shares.
(c) Distributions With Respect to Unexchanged Shares of Company
Capital Stock. No dividends or other distributions with respect to Broadcom
Common Stock declared or made after the Effective Time and with a record date
after the Effective Time will be paid to the holder of any unsurrendered
Certificate with respect to the shares of Broadcom Common Stock represented
thereby until the holder of record of such Certificate shall surrender such
Certificate. Subject to applicable law, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing whole shares of Broadcom Common Stock issued in exchange therefor,
without interest, at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore
payable (but for the provisions of this Section 1.11(c)) with respect to such
whole shares of Broadcom Common Stock.
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(d) Transfers of Ownership. If any certificate for shares of
Broadcom Common Stock is to be issued pursuant to the Merger in a name other
than that in which the Certificate surrendered in exchange therefor is
registered, it will be a condition of the issuance thereof that the Certificate
so surrendered will be properly endorsed and otherwise in proper form for
transfer and that the person requesting such exchange will have paid to Broadcom
or any agent designated by it any transfer or other taxes required by reason of
the issuance of a certificate for shares of Broadcom Common Stock in any name
other than that of the registered holder of the Certificate surrendered, or
established to the satisfaction of Broadcom or any agent designated by it that
such tax has been paid or is not payable.
1.12. No Further Ownership Rights in Company Capital Stock. All shares
of Broadcom Common Stock issued upon the surrender for exchange of shares of
Company Capital Stock in accordance with the terms hereof (including any cash in
lieu of fractional shares) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Capital Stock,
and there shall be no further registration of transfers on the records of the
Company of shares of Company Capital Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article 1.
1.13. Lost, Stolen or Destroyed Certificates. In the event any
certificates evidencing shares of Company Capital Stock shall have been lost,
stolen or destroyed, the Exchange Agent shall issue certificates representing
such shares of Broadcom Common Stock in exchange for such lost, stolen or
destroyed Certificates, upon the making of an affidavit of that fact by the
holder thereof; provided, however, that Broadcom or the Exchange Agent may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to provide an indemnity or
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Broadcom or the Exchange Agent with respect to
the Certificates alleged to have been lost, stolen or destroyed.
1.14. Exemption From Registration; California Permit; Registration
Statement Alternative. Broadcom and the Company intend that the shares of
Broadcom Common Stock to be issued pursuant to Section 1.6 in connection with
the Merger will be issued in a transaction exempt from registration under the
Securities Act of 1933, as amended (including the rules and regulations
promulgated thereunder, the "Securities Act"), by reason of Section 3(a)(10)
thereof. Broadcom and the Company intend that the shares of Broadcom Common
Stock to be issued pursuant to Section 1.6 in connection with the Merger will be
qualified under the California Code, pursuant to Section 25121 thereof, after a
fairness hearing has been held by the Commissioner of Corporations of the State
of California pursuant to the authority granted by Section 25142 of such law
(the "Fairness Hearing"), and such Fairness Hearing shall also address the
assumption by Broadcom of all Company Options, Company Warrants and Company
Stock Purchase Rights pursuant to Section 1.6 hereof. Each of Broadcom and the
Company shall use all requisite commercially reasonable efforts (i) to file
promptly following the execution and delivery of this Agreement, an application
for issuance of a permit pursuant to Section 25121 of the California Code to
issue such securities and to assume such Company Options, Company Warrants and
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<PAGE> 16
Company Stock Purchase Rights (the "California Permit") and (ii) to obtain the
California Permit as promptly as practicable thereafter.
If, after the Fairness Hearing, a California Permit is not issued for
the shares of Broadcom Common Stock to be issued in connection with the Merger,
such shares will be registered for sale under a Registration Statement on Form
S-4 (together with all amendments and supplements thereto, the "Registration
Statement"), which shall be filed by the parties in accordance with Section
5.1(c) of this Agreement.
1.15. Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company, or to effect the assignment to the Company
of any and all Company Intellectual Property created by a founder, employee or
consultant of the Company (including Intellectual Property created by any of the
Company's founders prior to the creation of the Company), or to complete and
prosecute all domestic and foreign patent filings related to such Company
Intellectual Property, the officers and directors of the Surviving Corporation
are fully authorized to take, and will take, all such lawful and necessary
action.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Broadcom, subject to such
exceptions as are specifically disclosed with respect to specific numbered and
lettered sections and subsections of this Article 2 in the disclosure schedule
and schedule of exceptions (the "Company Disclosure Schedule") delivered
herewith and dated as of the date hereof, and numbered with corresponding
numbered and lettered sections and subsections, as follows:
2.1. Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, and has full corporate power and authority to conduct its
business as now conducted and as currently proposed to be conducted and to own,
use, license and lease its Assets and Properties. The Company is duly qualified,
licensed or admitted to do business and is in good standing as a foreign
corporation in each jurisdiction in which the ownership, use, licensing or
leasing of its Assets and Properties, or the conduct or nature of its business,
makes such qualification, licensing or admission necessary, except for such
failures to be so duly qualified, licensed or admitted and in good standing that
could not reasonably be expected to have a material adverse effect on the
Business or Condition of the Company. Section 2.1 of the Company Disclosure
Schedule sets forth each jurisdiction where the Company is so qualified,
licensed or admitted to do business and separately lists each other jurisdiction
in which the Company owns, uses, licenses or leases its Assets and Properties,
or conducts business or has employees or engages independent contractors.
2.2. Authority Relative to this Agreement. Subject only to the requisite
approval of the Merger and this Agreement by the shareholders of the Company,
the Company has full corporate power and authority to execute and deliver this
Agreement and the other
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<PAGE> 17
agreements which are attached (or forms of which are attached) as exhibits
hereto (the "Ancillary Agreements") to which the Company is a party, to perform
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The Company's Board of Directors has approved
this Agreement and declared its advisability. The execution and delivery by the
Company of this Agreement and Ancillary Agreements to which the Company is a
party and the consummation by the Company of the transactions contemplated
hereby and thereby, and the performance by the Company of its obligations
hereunder and thereunder, have been duly and validly authorized by all necessary
action by the Board of Directors of the Company, and no other action on the part
of the Board of Directors of the Company is required to authorize the execution,
delivery and performance of this Agreement and the Ancillary Agreements to which
the Company is a party and the consummation by the Company of the transactions
contemplated hereby and thereby. This Agreement and the Ancillary Agreements to
which the Company is a party have been or will be, as applicable, duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof by Broadcom, each constitutes or
will constitute, as applicable, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its respective terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar Laws relating
to the enforcement of creditors' rights generally and by general principles of
equity.
2.3. Capital Stock.
(a) The authorized capital stock of the Company consists only of
20,000,000 shares of Common Stock, no par value (the "Company Common Stock"), of
which 7,386,596 shares of Common Stock are issued and outstanding as of the date
hereof, and 3,950,000 shares of Preferred Stock, no par value (the "Company
Preferred Stock"), of which 2,700,000 shares are designated as Series A
Preferred Stock (the "Series A Preferred Stock"), 2,599,740 of which are issued
and outstanding as of the date hereof. All of the issued and outstanding shares
of Company Common Stock and Company Preferred Stock are validly issued, fully
paid and nonassessable, and have been issued in compliance with all applicable
federal, state and foreign securities Laws. Except as set forth in Section
2.3(a) of the Company Disclosure Schedule, no shares of Company Common Stock or
Company Preferred Stock are held in treasury or are authorized or reserved for
issuance.
(b) Section 2.3(b) of the Company Disclosure Schedule lists the
name and, to the Company's knowledge, state of residence of each holder of
Company Common Stock and Company Preferred Stock provided to the Company by such
holder.
(c) With respect to any Company Common Stock or Company Preferred
Stock that has been issued subject to a repurchase option on the part of the
Company, Section 2.3(c) of the Company Disclosure Schedule sets forth the holder
thereof, the number and type of securities covered thereby, and the vesting
schedule thereof (including a description of the circumstances under which such
vesting schedule can or will be accelerated).
(d) Except as set forth in Section 2.3(d) of the Company
Disclosure Schedule, there are no outstanding Company Options, Company Warrants,
Company Stock
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<PAGE> 18
Purchase Rights, Restricted Stock Purchase Agreement or shares of Company
Restricted Stock or agreements, arrangements or understandings to which the
Company is a party (written or oral) to issue any Options with respect to the
Company. With respect to each Company Option, Company Warrant, Company Stock
Purchase Right, Restricted Stock Purchase Agreement or shares of Company
Restricted Stock or agreements, arrangements or understandings to which the
Company is a party (written or oral) to issue any Options or any other equity
securities with respect to the Company, Section 2.3(d) of the Company Disclosure
Schedule sets forth the holder thereof, the number and type of securities
issuable thereunder, and, if applicable, the exercise price therefor, the
exercise period and vesting schedule thereof (including a description of the
circumstances under which such vesting schedule can or will be accelerated). All
of the Company Options, Company Warrants and Company Stock Purchase Rights were
issued in compliance with all applicable federal, state and foreign securities
Laws.
(e) Except as set forth in Section 2.3(e) of the Company
Disclosure Schedule, there are no preemptive rights or agreements, arrangements
or understandings to issue preemptive rights with respect to the issuance or
sale of Company Capital Stock created by statute, the articles of incorporation
or by-laws of the Company, or any agreement or other arrangement to which the
Company is a party or to which it is bound and there are no agreements,
arrangements or understandings to which the Company is a party (written or oral)
pursuant to which the Company has the right to elect to satisfy any Liability by
issuing Company Common Stock or Equity Equivalents.
(f) The terms of the Company Stock Plans and the applicable stock
option agreements related to the outstanding Company Options permit the
assumption or substitution of options to purchase Broadcom Common Stock as
provided in this Agreement, without the consent or approval of the holders of
such securities, Company Shareholder Action or otherwise and without any
acceleration of the exercise schedule or vesting provisions in effect for those
Company Options. True and complete copies of all agreements and instruments
relating to or issued under the Company Stock Plans have been made available to
Broadcom and such agreements and instruments have not been amended, modified or
supplemented, and there are no agreements to amend, modify or supplement such
agreements or instruments in any case from the form made available to Broadcom
(other than this Agreement). Except for the Support Agreements and as otherwise
set forth in Section 2.3(f) of the Company Disclosure Schedule, the Company is
not a party or subject to any agreement or understanding, and, to the Company's
knowledge, there is no agreement, arrangement or understanding between or among
any Persons which affects, restricts or relates to voting, giving of written
consents, dividend rights or transferability of shares with respect to the
Company Capital Stock, including without limitation any voting trust agreement
or proxy. Except as set forth in Section 2.3(f) of the Company Disclosure
Schedule, no debt securities of the Company are issued and outstanding.
2.4. No Subsidiaries. The Company has no (and prior to the Closing will
have no) Subsidiaries and does not (and prior to the Closing will not) otherwise
hold any equity, membership, partnership, joint venture or other ownership
interest in any Person.
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2.5. Directors and Officers. The name of each director and officer of
the Company on the date hereof, and his or her position with the Company, are
listed in Section 2.5 of the Company Disclosure Schedule.
2.6. No Conflicts. The execution and delivery by the Company of this
Agreement and the Ancillary Agreements to which the Company is a party does not,
and the performance by the Company of its obligations under this Agreement and
the Ancillary Agreement to which the Company is a party and the consummation of
the transactions contemplated hereby and thereby do not and will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the articles of incorporation or by-laws of
the Company;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Section 2.6(c) of the
Company Disclosure Schedule, if any, conflict with or result in a violation or
breach of any Law or Order applicable to the Company or any of its Assets and
Properties, except for any such conflict or violation that would not be
reasonably expected to have a material adverse effect on the Business or
Condition of the Company; or
(c) except as disclosed in Section 2.6(c) of the Company
Disclosure Schedule and except as would not individually or in the aggregate be
reasonably expected to have a material adverse effect on the Business or
Condition of the Company (provided that this second exception shall not apply
with respect to any of the following which affects or relates to any Company
Intellectual Property presently embodied, or proposed to be embodied, in the
Company's products or utilized in Company-designed or modified development tools
(including standard cells) or design environments), (i) conflict with or result
in a violation or breach of, (ii) constitute a default (or an event that, with
or without notice or lapse of time or both, would constitute a default) under,
(iii) require the Company to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the terms of
(except for (A) the filing of the Agreement of Merger, together with the
required officer's certificates; (B) such consents approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state or federal securities laws; and (C) such filings as may be
required under the HSR Act), (iv) result in or give to any Person any right of
termination, cancellation, acceleration or modification in or with respect to,
(v) result in or give to any Person any additional rights or entitlement to
increased, additional, accelerated or guaranteed payments or performance under,
(vi) result in the creation or imposition of (or the obligation to create or
impose) any Lien upon the Company or any of its Assets and Properties under or
(vii) result in the loss of a material benefit under, any of the terms,
conditions or provisions of any Contract or License to which the Company is a
party or by which any of the Company's Assets and Properties is bound.
2.7. Books and Records; Organizational Documents. The minute books and
stock record books and other similar records of the Company have been provided
or made available to Broadcom or its counsel prior to the execution of this
Agreement, are complete and correct in all respects and have been maintained in
accordance with sound business practices. Such minute books contain a true and
complete record of all actions taken at all
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meetings and by all written consents in lieu of meetings of the directors,
shareholders and committees of the Board of Directors of the Company from the
date of the Company's incorporation through the date hereof. The Company has
prior to the execution of this Agreement delivered to Broadcom true and complete
copies of its articles of incorporation and by-laws, both as amended through the
date hereof. The Company is not in violation of any provisions of its articles
of incorporation or bylaws.
2.8. Company Financial Statements. Section 2.8(a) of the Company
Disclosure Schedule sets forth the Company Financial Statements. The Company
Financial Statements delivered to Broadcom are correct and complete in all
material respects and have been prepared in accordance with GAAP applied on a
basis consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto as delivered to Broadcom prior
to the date hereof). The Company Financial Statements present fairly and
accurately in all material respects the financial condition and operating
results of the Company as of the dates and during the periods indicated therein.
Except as set forth in Section 2.8(b) to the Company Disclosure Schedule, since
January 1, 1999, there has been no change in any accounting policies,
principles, methods or practices, including any change with respect to reserves
(whether for bad debts, contingent liabilities or otherwise), of the Company.
2.9. Absence of Changes. Since the Audited Financial Statement Date,
except as set forth in Section 2.9 of the Company Disclosure Schedule, there has
not been any material adverse change in the Business or Condition of the Company
or any occurrence or event which, individually or in the aggregate, could be
reasonably expected to have any material adverse change in the Business or
Condition of the Company. In addition, without limiting the generality of the
foregoing, except as expressly contemplated by this Agreement and except as
disclosed in Section 2.9 of the Company Disclosure Schedule, since the Audited
Financial Statement Date:
(a) the Company has not entered into any Contract, commitment or
transaction or incurred any Liabilities outside of the ordinary course of
business;
(b) the Company has not entered into any Contract in connection
with any transaction involving a Business Combination;
(c) the Company has not altered or entered into any Contract or
other commitment to alter, its interest in any corporation, association, joint
venture, partnership or business entity in which the Company directly or
indirectly holds any interest on the date hereof;
(d) the Company has not entered into any strategic alliance, joint
development or joint marketing Contract;
(e) there has not been any material amendment or other
modification (or agreement to do so) or violation of the terms of, any of the
Contracts set forth or described in the Company Disclosure Schedule;
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(f) the Company has not entered into any transaction with any
officer, director, shareholder, Affiliate or Associate of the Company, other
than pursuant to any Contract in effect on the Audited Financial Statement Date
and disclosed to Broadcom pursuant to (and so identified in) Section 2.9(f),
Section 2.18(a) or Section 2.20 of the Company Disclosure Schedule or other than
pursuant to any contract of employment and listed pursuant to Section 2.18(a) of
the Company Disclosure Schedule;
(g) the Company has not entered into or amended any Contract
pursuant to which any other Person is granted manufacturing, marketing,
distribution, licensing or similar rights of any type or scope with respect to
any products of the Company or Company Intellectual Property other than as
contemplated by the Company's Contracts or Licenses disclosed in the Company
Disclosure Schedule;
(h) no Action or Proceeding has been commenced or, to the
knowledge of the Company, threatened by or against the Company;
(i) the Company has not declared or set aside or paid any
dividends on or made any other distributions (whether in cash, stock or
property) in respect of any Company Capital Stock or Equity Equivalents, or
effected or approved any split, combination or reclassification of any Company
Capital Stock or Equity Equivalents or issued or authorized the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
Company Capital Stock or Equity Equivalents, or repurchased, redeemed or
otherwise acquired, directly or indirectly, any shares of Company Capital Stock
or Equity Equivalents, except repurchases of Company Capital Stock pursuant to
agreements with Company employees, officers, directors and consultants relating
to repurchases at cost upon termination of service with the Company;
(j) except for (i) the issuance of shares of Company Capital Stock
upon exercise or conversion of then-outstanding Company Options, Company
Warrants, Company Stock Purchase Rights or Company Preferred Stock, or (ii) the
issuance of options available for grant under the Company's existing Company
Stock Plans in the ordinary course of business to employees hired after the
March 31, 2000 who are not officers of the Company on terms and in amounts
consistent with past practice, (A) the Company has not issued, granted,
delivered, sold or authorized or proposed to issue, grant, deliver or sell, or
purchased or proposed to purchase, any shares of Company Capital Stock or Equity
Equivalents, (B) the Company has not modified or amended the rights of any
holder of any outstanding shares of Company Capital Stock or Equity Equivalents
(including to reduce or alter the consideration to be paid to the Company upon
the exercise of any outstanding Company Options, Company Warrants, Company Stock
Purchase Rights or other Equity Equivalents), or (C) there have not been any
agreements, arrangements, plans or understandings with respect to any such
modification or amendment;
(k) there has not been any amendment to the Company's articles of
incorporation or by-laws;
(l) there has not been any transfer (by way of a License or
otherwise) to any Person of rights to any Company Intellectual Property;
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(m) the Company has not made or agreed to make any disposition or
sale of, waiver of rights to, license or lease of, or incurrence of any Lien on,
any Assets and Properties of the Company, other than dispositions of inventory,
or nonexclusive licenses of products to Persons to whom the Company had granted
licenses of its products at the Audited Financial Statement Date, in the
ordinary course of business of the Company consistent with past practice;
(n) the Company has not made or agreed to make any purchase of any
Assets and Properties of any Person other than (i) acquisitions of inventory, or
licenses of products, in the ordinary course of business of the Company
consistent with past practice and (ii) other acquisitions in an amount not
exceeding $50,000 in the case of any individual item or $150,000 in the
aggregate;
(o) the Company has not made or agreed to make any capital
expenditures or commitments for additions to property, plant or equipment of the
Company constituting capital assets individually or in the aggregate in an
amount exceeding $100,000;
(p) the Company has not made or agreed to make any write-off or
write-down any determination to write off or write-down, or revalue, any of the
Assets and Properties of the Company, or change any reserves or liabilities
associated therewith, individually or in the aggregate in an amount exceeding
$100,000;
(q) the Company has not made or agreed to make payment, discharge
or satisfaction, in an amount in excess of $50,000, in any one case, or $100,000
in the aggregate, of any claim, Liability or obligation (whether absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business of
Liabilities reflected or reserved against in the Company Financial Statements;
(r) the Company has not failed to pay or otherwise satisfy any
Liabilities presently due and payable of the Company, except such Liabilities
which are being contested in good faith by appropriate means or procedures and
which, individually or in the aggregate, are immaterial in amount;
(s) the Company has not incurred any Indebtedness or guaranteed
any Indebtedness in an aggregate amount exceeding $100,000 or issued or sold any
debt securities of the Company or guaranteed any debt securities of others;
(t) the Company has not granted any severance or termination pay
to any director, officer employee or consultant, except payments made pursuant
to written Contracts outstanding on the date hereof, copies of which have been
made available to Broadcom and the terms of which are disclosed in Section
2.9(t) of the Company Disclosure Schedule;
(u) except pursuant to a Contract disclosed to Broadcom pursuant
to Section 2.9(f) or 2.18 of the Company Disclosure Schedule, the Company has
not granted or approved any increase of greater than five percent (5%) in
salary, rate of commissions, rate
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of consulting fees or any other monetary compensation of any current or former
officer, director, shareholder, employee, independent contractor or consultant
of the Company;
(v) the Company has not paid or approved the payment of any
consideration of any nature whatsoever (other than salary, commissions or
consulting fees and customary benefits paid to any current or former officer,
director, shareholder, employee or consultant of the Company) to any current or
former officer, director, shareholder, employee, independent contractor or
consultant of the Company;
(w) the Company has not established or modified any (i) targets,
goals, pools or similar provisions under any Plan, employment Contract or other
employee compensation arrangement or independent contractor Contract or other
compensation arrangement or (ii) salary ranges, increased guidelines or similar
provisions in respect of any Plan, employment Contract or other employee
compensation arrangement or independent contractor Contract or other
compensation arrangement;
(x) the Company has not adopted, entered into, amended, modified
or terminated (partially or completely) any Plan;
(y) the Company has not paid any discretionary or stay bonus;
(z) to the knowledge of the Company after Good Faith Consultation
with the Company's independent accountants, the Company has not taken or
approved any action, including the acceleration of vesting of any Company
Options or Company Warrants, or other rights to acquire shares of Company
Capital Stock, which could jeopardize the status of the Merger as a tax-free
reorganization;
(aa) the Company has not made or changed any material election in
respect of Taxes, adopted or changed any accounting method in respect of Taxes,
entered into any tax allocation agreement, tax sharing agreement, tax indemnity
agreement or closing agreement, settlement or compromise of any claim or
assessment in respect of Taxes, or consented to any extension or waiver of the
limitation period applicable to any claim or assessment in respect of Taxes with
any Taxing Authority or otherwise;
(bb) the Company has not made any change in accounting policies,
principles, methods, practices or procedures (including without limitation for
bad debts, contingent liabilities or otherwise, respecting capitalization or
expense of research and development expenditures, depreciation or amortization
rates or timing of recognition of income and expense);
(cc) other than in the ordinary course of business, the Company
has not made any representation or proposal to, or engaged in substantive
discussions with, any of the holders (or their representatives) of any
Indebtedness, or to or with any party which has issued a letter of credit which
benefits the Company;
(dd) the Company has not commenced or terminated, or made any
change in, any line of business;
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(ee) the Company has not failed to renew any insurance policy; no
insurance policy of the Company has been cancelled or materially amended; and
the Company has given all notices and presented all claims (if any) under all
such policies in a timely fashion;
(ff) there has been no material amendment or non-renewal of any of
the Company's Approvals, and the Company has used commercially reasonable
efforts to maintain such Approvals and has observed in all material respects all
Laws and Orders applicable to the conduct of the Company's business or the
Company's Assets and Properties;
(gg) the Company has taken all commercially reasonable action
required to procure, maintain, renew, extend or enforce any Company Intellectual
Property, including submission of required documents or fees during the
prosecution of patent, trademark or other applications for Registered
Intellectual Property rights;
(hh) there has been no physical damage, destruction or other
casualty loss (whether or not covered by insurance) affecting any of the real or
personal property or equipment of the Company individually or in the aggregate
in an amount exceeding $50,000;
(ii) the Company has not repurchased, cancelled or modified the
terms of any Company Capital Stock, Equity Equivalents, Company Options, Company
Warrants, Company Stock Purchase Rights or other financial instrument that
derives value from its convertibility into Company Capital Stock or Equity
Equivalents, other than transactions entered into in the ordinary course of
business and pursuant to either (i) contractual provisions or (ii) the Company
Stock Plans, in each case as in effect at the time of execution and delivery of
this Agreement; or
(jj) the Company has not entered into or approved any contract,
arrangement or understanding or acquiesced in respect of any arrangement or
understanding, to do, engage in or cause or having the effect of any of the
foregoing, including with respect to any Business Combination not otherwise
restricted by the foregoing paragraphs.
2.10. No Undisclosed Liabilities. Except as reflected or reserved
against in the Company Financial Statements (including the notes thereto) or as
disclosed in Section 2.10 of the Company Disclosure Schedule, there are no
Liabilities (exceeding $50,000 either individually or in the aggregate) of,
relating to or affecting the Company or any of its Assets and Properties, other
than Liabilities incurred in the ordinary course of business consistent with
past practice since the Audited Financial Statement Date and in accordance with
the provisions of this Agreement which, individually and in the aggregate, are
not material to the Business or Condition of the Company, and are not for tort
or for breach of contract.
2.11. Taxes.
(a) All Tax Returns required to have been filed by the Company
have been duly and timely filed (including any extensions). All such Tax Returns
are true, complete and correct in all material respects. All Taxes owed by the
Company, whether or
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not shown on any Tax Return, for periods (or portions of periods) covered by the
Company Financial Statements, have been paid or accrued on the balance sheet
included in the Company Financial Statements.
(b) The unpaid Income Taxes of the Company (i) did not, as of the
most recent fiscal month end, exceed by any material amount the reserve for
Liability for Income Tax (other than the reserve for deferred taxes established
to reflect timing differences between book and tax income) set forth on the face
of the balance sheet included in the Company Financial Statements and (ii) will
not exceed by any material amount such reserve as adjusted for operations and
transactions in the ordinary course of business through the Closing Date.
(c) The Company is not a party to any agreement extending the time
within which to file any Tax Return. No claim has ever been made by a Taxing
Authority of any jurisdiction in which the Company does not file Tax Returns
that the Company is or may be subject to taxation by that jurisdiction.
(d) The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
creditor or independent contractor.
(e) The Company does not have knowledge of any actions by any
Taxing Authority in connection with assessing additional Taxes against it for
any past period. There is no dispute or claim concerning any Tax Liability of
the Company either (i) threatened, claimed or raised by any Taxing Authority or
(ii) of which the Company is otherwise aware. There are no Liens for Taxes upon
the Assets and Properties of the Company other than Liens for Taxes not yet due.
Section 2.11(e) of the Company Disclosure Schedule indicates those Tax Returns,
if any, of the Company that have been audited or examined by Taxing Authorities,
and indicates those Tax Returns of the Company that currently are the subject of
audit or examination. The Company has delivered to Broadcom complete and correct
copies of all federal, state, local and foreign income Tax Returns filed by, and
all Tax examination reports and statements of deficiencies assessed against or
agreed to by, the Company.
(f) There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Returns required to be
filed by, or which include or are treated as including, the Company or with
respect to any Tax assessment or deficiency affecting the Company.
(g) The Company has not received any written ruling related to
Taxes or entered into any agreement with a Taxing Authority relating to Taxes.
(h) The Company is not and has never been a member of an
affiliated, consolidated, combined, unitary or similar group. The Company has no
liability for the Taxes of any Person other than the Company (i) under Section
1.1502-6 of the Treasury regulations (or any similar provision of state, local
or foreign Law), (ii) as a transferee or successor, (iii) by Contract or (iv)
otherwise.
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(i) The Company (i) has neither agreed to make nor is required to
make any adjustment under Section 481 of the Internal Revenue Code by reason of
a change in accounting method and (ii) is not a "consenting corporation" within
the meaning of Section 341(f)(1) of the Internal Revenue Code.
(j) The Company is not a party to or bound by any obligations
under any tax sharing, tax allocation, tax indemnity or similar agreement or
arrangement.
(k) The Company is not involved in, subject to, or a party to any
joint venture, partnership, Contract or other arrangement that is treated as a
partnership for federal, state, local or foreign Income Tax purposes.
(l) The Company was not included and is not includible in the Tax
Return of any other corporation.
(m) The Company has not made any payments, is not obligated to
make any payments, nor is a party to any contract, agreement or arrangement
covering any current or former employee or consultant of the Company that under
certain circumstances could require it to make or give rise to any payments that
are not deductible as a result of the provisions set forth in Section 280G of
the Internal Revenue Code or the treasury regulations thereunder or would result
in an excise tax to the recipient of any such payment under Section 4999 of the
Internal Revenue Code.
(n) Excluding any impact of this Agreement and the transactions
contemplated thereby, including the Merger, there is currently no limitation on
the utilization of the net operating losses, built-in losses, capital losses,
Tax credits or other similar items of the Company under (i) Section 382 of the
Internal Revenue Code, (ii) Section 383 of the Internal Revenue Code, (iii)
Section 384 of the Internal Revenue Code, and (iv) Section 1502 of the Internal
Revenue Code and Treasury regulations promulgated thereunder.
(o) All material elections with respect to income Taxes affecting
the Company are set forth in Section 2.11(o) of the Company Disclosure Schedule.
(p) The Company is not nor has it ever been a United States real
property holding corporation within the meaning of Section 897(c)(1)(A)(ii) of
the Internal Revenue Code.
Notwithstanding the remainder of this Agreement, for purposes of the foregoing
representations, Taxes, Income Taxes and Other Taxes shall not include any such
amounts imposed on the Company as a result of consummation of the Merger.
2.12. Legal Proceedings.
(a) Except as set forth in Section 2.12 of the Company Disclosure
Schedule:
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(i) there are no Actions or Proceedings pending or, to the
knowledge of the Company, threatened against, relating to or affecting the
Company or its Assets and Properties;
(ii) there are no facts or circumstances known to the Company
that could reasonably be expected to give rise to any Action or Proceeding
against, relating to or affecting the Company; provided, however, that the
Company makes no representation or warranty, other than to its knowledge, with
respect to an investigation which constitutes an Action or Proceeding; and
(iii) the Company has not received notice, and does not
otherwise have knowledge of any Orders outstanding against the Company.
(b) Prior to the execution of this Agreement, the Company has made
available to Broadcom all responses of counsel for the Company to auditor's
requests for information since its formation (together with any updates provided
by such counsel) regarding Actions or Proceedings pending or threatened against,
relating to or affecting the Company. Section 2.12(b) of the Company Disclosure
Schedule sets forth all Actions or Proceedings relating to or affecting, or, to
the knowledge of the Company, threatened against, the Company or any of its
Assets and Properties during the three-year period prior to the date hereof.
2.13. Compliance with Laws and Orders. The Company has not violated, and
is not currently in default or violation under, any Law or Order applicable to
the Company or any of its Assets and Properties, except for any such violations
or defaults that, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on the Business and Condition of the
Company, and the Company is not aware of any claim of violation, or of any
actual violation, of any such Laws and Orders by the Company since the
incorporation of the Company.
2.14. Plans; ERISA.
(a) Existence of Plans. Except as disclosed on Section 2.14(a) of
the Company Disclosure Schedule, (i) neither the Company nor any of its ERISA
Affiliates maintains or sponsors (or ever maintained or sponsored), or makes or
is required to make contributions to, any Plans, (ii) none of the Plans is or
was a "multi-employer plan", as defined in Section 3(37) of ERISA, (iii) none of
the Plans is or was a "defined benefit pension plan" within the meaning of
Section 3(35) of ERISA, (iv) none of the Plans provides or provided
post-retirement medical or health benefits, except as required by any Law, (v)
none of the Plans is or was a "welfare benefit fund," as defined in Section
419(e) of the Internal Revenue Code, or an organization described in Sections
501(c)(9) or 501(c)(20) of the Internal Revenue Code, (vi) neither the Company
nor any of its ERISA Affiliates is or was a party to any collective bargaining
agreement, and (vii) neither the Company nor any of its ERISA Affiliates has
announced or otherwise made any commitment to create or amend any Plan.
Notwithstanding any statement or indication in this Agreement to the contrary,
there are no Plans (A) as to which Broadcom will be required to make any
contributions or with respect to which Broadcom shall have any obligation or
liability whatsoever, whether on behalf of any of the current employees of the
Company or on behalf
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of any other person, after the Closing, or (B) which Broadcom or the Surviving
Corporation will not be able to terminate immediately after the Closing in
accordance with their terms and ERISA. With respect to each of such Plans, at
the Closing there will be no unrecorded liabilities with respect to the
establishment, implementation, operation, administration or termination of any
such Plan, or the termination of the participation in any such Plan by the
Company or any of its ERISA Affiliates. The Company has delivered to Broadcom
true and complete copies of: (I) each of the Plans and any related funding
agreements thereto (including insurance contracts) including all amendments,
(II) the currently effective Summary Plan Description pertaining to each of the
Plans, (III) the three most recently filed annual reports for each of the Plans
(including all related schedules), (IV) the most recently filed PBGC Form 1 (if
applicable), (V) the most recent Internal Revenue Service determination letter,
opinion, notification or advisory letter (as the case may be) for each Plan
which is intended to constitute a qualified plan under Section 401 of the
Internal Revenue Code and each amendment to each of the foregoing documents, and
(VI) for each unfunded Plan which is not fully insured, financial statements
consisting of (a) the consolidated statement of assets and liabilities of such
Plan as of its most recent valuation date, and (b) the statement of changes in
fund balance and in financial position or the statement of changes in net assets
available for benefits under such Plan for the most recently-ended plan year,
which such financial statements shall fairly present the financial condition and
the results of operations of such Plan in accordance with GAAP, consistently
applied, as of such dates.
(b) Present Value of Benefits. The present value of all accrued
benefits under any Plan subject to Title IV of ERISA shall not, as of the
Closing Date, exceed the value of the assets of such Plans allocated to such
accrued benefits, based upon the applicable provisions of the Internal Revenue
Code and ERISA, and each such Plan shall be capable of being terminated as of
the Closing Date in a "standard termination" under Section 4041(b) of ERISA.
With respect to each Plan that is subject to Title IV of ERISA, (i) no amount is
due or owing from the Company or any of its ERISA Affiliates to the PBGC or to
any "multi-employer plan" as defined in Section 3(37) of ERISA on account of any
withdrawal therefrom and (ii) no such Plan has been terminated other than in
accordance with ERISA or at a time when the Plan was not sufficiently funded.
The transactions contemplated hereunder, including without limitation the
termination of any such Plan at or prior to the Closing, shall not result in any
such withdrawal or other liability with respect to any Plan subject to Title IV
of ERISA under any applicable Laws.
(c) Penalties; Reportable Events. Neither the Company nor any of
its ERISA Affiliates is subject to any material liability, tax or penalty
whatsoever to any person or agency whomsoever as a result of engaging in a
prohibited transaction under ERISA or the Internal Revenue Code, and neither the
Company nor any of its ERISA Affiliates has any knowledge of any circumstances
which reasonably might result in any material liability, tax or penalty to the
Company, including but not limited to, a penalty under Section 502 of ERISA, as
a result of a breach of any duty under ERISA or under other Laws. Each Plan
which is required to comply with the provisions of Sections 4980B and 4980C of
the Internal Revenue Code, or with the requirements referred to in Section 4980D
of the Internal Revenue Code, has complied in all material respects. No event
has occurred which could subject any Plan to tax under Section 511 of the
Internal Revenue Code. None of the Plans
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subject to Title IV of ERISA has, since September 2, 1974, been completely or
partially terminated nor has there been any "reportable event", as such term is
defined in Section 4043(b) of ERISA, with respect to any of the Plans since the
effective date of ERISA nor has any notice of intent to terminate been filed or
given with respect to any such Plan. There has been no (i) withdrawal by the
Company or any of its ERISA Affiliates that is a substantial employer from a
single-employer plan which is a Plan and which has two or more contributing
sponsors at least two of whom are not under common control, as referred to in
Section 4063(b) of ERISA, or (ii) cessation by the Company or any of its ERISA
Affiliates of operations at a facility causing more than 20% of Plan
participants to be separated from employment, as referred to in Section 4062(f)
of ERISA. Neither the Company nor any of its ERISA Affiliates, nor any other
organization of which any of them are a successor or Broadcom corporation as
defined in Section 4069(b) of ERISA, have engaged in any transaction described
in Section 4069(a) of ERISA with respect to any Plan.
(d) Deficiencies; Qualification. None of the Plans nor any trust
created thereunder has incurred any "accumulated funding deficiency" as such
term is defined in Section 412 of the Internal Revenue Code, whether or not
waived, since the effective date of said Section 412, and no condition has
occurred or exists which by the passage of time could be expected to result in
an accumulated funding deficiency as of the last day of the current plan year of
any such Plan. Furthermore, neither the Company nor any of its ERISA Affiliates
has any unfunded material liability under ERISA in respect of any of the Plans.
Each of the Plans which is intended to be a qualified plan under Section 401(a)
of the Internal Revenue Code has received a favorable determination letter,
opinion, notification or advisory letter from the Internal Revenue Service, and
has been operated in accordance with its terms and with the provisions of the
Internal Revenue Code. All of the Plans have been administered and maintained in
substantial compliance with ERISA, the Internal Revenue Code and all other
applicable Laws. All material contributions required to be made to each of the
Plans under the terms of that Plan, ERISA, the Internal Revenue Code or any
other applicable Laws have been timely made. Each Plan intended to meet the
requirements for tax-favored treatment under Subchapter B of Chapter 1 of the
Internal Revenue Code is in compliance with such requirements. There are no
Liens against the property of the Company or any of its ERISA Affiliates under
Section 412(n) of the Internal Revenue Code or Sections 302(f) or 4068 of ERISA.
The Company Financial Statements properly reflect all amounts required to be
accrued as liabilities through the date of such financial statements under each
of the Plans and the amounts required to be accrued since such date are not
material in amount.
(e) Acceleration. Neither the execution of this Agreement nor the
consummation of any of the transactions contemplated hereby (whether alone or
upon the occurrence of any additional or further acts or events) will (i) result
in any obligation or liability (with respect to accrued benefits or otherwise)
on the part of the Company, Broadcom, the Surviving Corporation, or any of their
respective Subsidiaries to the PBGC, to any Plan, or to any present or former
employee, director, officer, shareholder, contractor or consultant of Broadcom,
the Surviving Corporation, or any their respective Subsidiaries or any of their
dependents, (ii) be a trigger event under any Plan that will result in any
payment (whether of severance pay or otherwise) becoming due to any such present
or former employee, officer, director, shareholder, contractor, or consultant,
or any of their
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dependents, or (iii) accelerate the time of payment or vesting, or increase the
amount, of any compensation theretofore or thereafter due or granted to any
employee, officer, director, shareholder, contractor, or consultant of the
Company or any of their dependents. With respect to any insurance policy or
investment vehicle which provides, or has provided, funding for benefits under
any Plan, there is and will be no liability of the Company, Broadcom or any of
their respective Subsidiaries in the nature of a retroactive or retrospective
rate adjustment, loss sharing arrangement, termination charge, or actual or
contingent liability as of the Closing Date, nor would there be any such
liability if such insurance policy were terminated as of the Closing Date.
(f) COBRA. With respect to each Plan which provides health care
coverage, the Company and each ERISA Affiliate have complied in all material
respects with (i) the applicable health care continuation and notice provisions
of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), and the applicable COBRA regulations and (ii) the applicable
requirements of the Health Insurance Portability and Accountability Act of 1996
and the regulations thereunder, and neither the Company nor any ERISA Affiliate
has incurred any material liability under Section 4980B of the Internal Revenue
Code.
(g) Litigation. Other than routine claims for benefits under the
Plans, there are no pending, or, to the best knowledge of the Company,
threatened, Actions or Proceedings involving the Plans, or, with respect to any
Plan, the fiduciaries, administrators, or trustees of any of the Plans or the
Company, or any of its ERISA Affiliates as the employer or sponsor under any
Plan, with any of the IRS, the Department of Labor, the PBGC, any participant in
or beneficiary of any Plan or any other person whomsoever. The Company knows of
no reasonable basis for any such claim, lawsuit, dispute, action or controversy.
2.15. Real Property.
(a) Section 2.15(a) of the Company Disclosure Schedule contains a
true and correct list of (i) each parcel of real property leased, utilized
and/or operated by the Company (as lessor or lessee or otherwise) (the "Leased
Real Property") and (ii) all Liens relating to or affecting any parcel of real
property referred to in clause (i) to which the Company is a party. The Company
owns no real property other than Company owned leasehold improvements, if any,
on the Leased Real Property.
(b) Subject to the terms of its respective leases, the Company has
a valid and subsisting leasehold estate in and the right to quiet enjoyment of
the Leased Real Properties for the full term of the leases (including renewal
periods) relating thereto. Each lease referred to in clause (i) of paragraph (a)
above is a legal, valid and binding agreement, enforceable in accordance with
its terms, of the Company and of each other Person that is a party thereto, and
except as set forth in Section 2.15(b) of the Company Disclosure Schedule, the
Company is not in, and has not received notice of any, default (or any condition
or event which, after notice or lapse of time or both, would constitute a
default) of the Company thereunder. The Company does not owe brokerage
commissions or finders fees with respect to any such Leased Real Property,
except to the extent that the Company may renew the term of any such lease, in
which case, any such commissions and fees would
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be in amounts that are reasonable and customary for the spaces so leased, given
their intended use and terms.
(c) Except as disclosed in Section 2.15(c) of the Company
Disclosure Schedule, all Company owned improvements on the Leased Real Property
(A) comply with and are operated in all material respects in accordance with
applicable laws (including, without limitation, Environmental Laws) and all
applicable Liens, Approvals, Contracts, covenants and restrictions and (B) are
in all material respects in good operating condition and in a state of good
maintenance and repair, ordinary wear and tear excepted. To the knowledge of the
Company, there are no condemnation or appropriation proceedings pending or
threatened against any of such real property or the improvements thereon.
(d) True and correct copies of the documents under which the
Leased Real Property is leased, subleased (to or by the Company or otherwise),
utilized, and/or operated (the "Lease Documents") have been delivered to
Broadcom. The Lease Documents are unmodified and in full force and effect, and
there are no other Contracts between the Company and any third parties, or, to
the knowledge of the Company, by and among any third parties, claiming an
interest in the interest of the Company in the Leased Real Property or otherwise
relating to the use and occupancy of the Leased Real Property.
2.16. Tangible Personal Property. The Company is in possession of and
has good and marketable title to, or has valid leasehold interests in or valid
rights under Contract to use, all tangible personal property used in the conduct
of its business, including all tangible personal property reflected on the
Company Financial Statements and tangible personal property acquired since the
Audited Financial Statement Date, other than property disposed of since such
date in the ordinary course of business consistent with past practice. Except as
disclosed in Section 2.16 of the Company Disclosure Schedule, all such tangible
personal property (including plant, property and equipment) is free and clear of
all Liens and is adequate and suitable in all material respects for the conduct
by the Company of its business as presently conducted, and is in good working
order and condition in all material respects, ordinary wear and tear excepted,
and its use complies in all material respects with all applicable Laws.
2.17. Intellectual Property.
(a) Section 2.17(a) of the Company Disclosure Schedule lists all
Company Registered Intellectual Property (including all trademarks and service
marks that the Company has used with the intent of creating or benefiting from
any common law rights relating to such marks) and lists any proceedings or
actions pending as of the date hereof before any court or tribunal (including
the PTO or equivalent authority anywhere in the world) related to any of the
Company Registered Intellectual Property.
(b) The Company has all requisite right, title and interest in or
valid and enforceable rights under Contracts or Licenses to use all Company
Intellectual Property necessary to the conduct of its business as presently
conducted. Except as set forth in Section 2.17(b) of the Company Disclosure
Schedule, each item of Company Intellectual Property, including all Company
Registered Intellectual Property listed in Section 2.17(a) of the Company
Disclosure Schedule, is owned exclusively by the Company (excluding
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Intellectual Property licensed to the Company under any License) and is free and
clear of any Liens. Except as set forth in Section 2.17(b) of the Company
Disclosure Schedule, the Company (i) owns exclusively all trademarks, service
marks and trade names used by the Company in connection with the operation or
conduct of the business of the Company, including the sale of any products or
technology or the provision of any services by the Company; provided, however,
that the Company may use trademarks, service marks and trade names of third
parties which are licensed to the Company or are in the public domain, and (ii)
owns exclusively, and has good title to, all copyrighted works that are Company
products or other works of authorship that the Company otherwise purports to
own; provided, however, that such works may incorporate copyrighted works or
works of authorship, trademarks or trade names of third parties which are
licensed to the Company or are in the public domain.
(c) To the extent that any Company Intellectual Property has been
developed or created by any Person other than the Company, the Company has a
written agreement with such Person with respect thereto and the Company has
either (i) obtained ownership of, and is the exclusive owner of, all such
Company Intellectual Property by operation of law or by valid assignment of any
such rights or (ii) has obtained a License under or to such Company Intellectual
Property.
(d) Except pursuant to agreements described in Section 2.17(d) of
the Company Disclosure Schedule, the Company has not transferred ownership of or
granted any License of or other right to use or authorized the retention of any
rights to use any Intellectual Property that is or was Company Intellectual
Property, to any other Person.
(e) The Company Intellectual Property constitutes all the
Intellectual Property used in and/or necessary to the conduct of the Company's
business as it currently is conducted or as reasonably contemplated to be
conducted, including, without limitation, the design, development, distribution,
marketing, manufacture, use, import, license, and sale of the products,
technology and services of the Company (including products, technology, or
services currently under development).
(f) Section 2.17(f) of the Company Disclosure Schedule lists all
Contracts and Licenses (including all inbound Licenses) to which the Company is
a party with respect to any Company Intellectual Property. No Person other than
the Company has ownership rights to improvements made by the Company in
Intellectual Property which has been licensed to the Company.
(g) Section 2.17(g) of the Company Disclosure Schedule lists all
Contracts, Licenses and agreements between the Company and any other Person
wherein or whereby the Company has agreed to, or assumed, any obligation or duty
to warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or
incur any obligation or Liability or provide a right of rescission with respect
to the infringement or misappropriation by the Company or such other Person of
the Intellectual Property of any Person other than the Company.
(h) The operation of the business of the Company as currently
conducted or as presently proposed to be conducted, including the Company's
design, development,
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use, import, manufacture and sale of the products, technology or services
(including products, technology or services currently under development) of the
Company, does not infringe or misappropriate the Intellectual Property of any
Person, violate the rights of any Person (including rights to privacy or
publicity), or constitute unfair competition or an unfair trade practice under
any Law, and the Company has not received notice from any Person claiming that
such operation or any act, product, technology or service (including products,
technology or services currently under development) of the Company infringes or
misappropriates the Intellectual Property of any Person or constitutes unfair
competition or trade practices under any Law, including notice of third party
patent or other Intellectual Property rights from a potential licensor of such
rights.
(i) Each item of Company Registered Intellectual Property is valid
and subsisting, and all necessary registration, maintenance, renewal fees,
annuity fees and taxes in connection with such Registered Intellectual Property
have been paid and all necessary documents and certificates in connection with
such Company Registered Intellectual Property have been filed with the relevant
patent, copyright, trademark or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property. To the knowledge of the Company, Section
2.17(i)(1) of the Company Disclosure Schedule lists all actions that must be
taken by the Company within one hundred eighty (180) days from the date hereof,
including the payment of any registration, maintenance, renewal fees, annuity
fees and taxes or the filing of any documents, applications or certificates for
the purposes of maintaining, perfecting or preserving or renewing any Company
Registered Intellectual Property. Except as set forth in Section 2.17(i)(2) of
the Company Disclosure Schedule, the Company has registered the copyright with
the U.S. Copyright Office for the latest version of each product or technology
of the Company that constitutes or includes a copyrightable work. In each case
in which the Company has acquired ownership of any Intellectual Property rights
from any Person, the Company has obtained a valid and enforceable assignment
sufficient to irrevocably transfer all rights in such Intellectual Property
(including the right to seek past and future damages with respect to such
Intellectual Property) to the Company and, to the maximum extent provided for by
and required to protect the Company's ownership rights in and to such
Intellectual Property in accordance with, applicable Laws, the Company has
recorded each such assignment of Registered Intellectual Property with the
relevant Governmental or Regulatory Authority, including the PTO, the U.S.
Copyright Office, or their respective equivalents in any relevant foreign
jurisdiction, as the case may be.
(j) There are no Contracts or Licenses between the Company and any
other Person with respect to Company Intellectual Property under which there is
any dispute (or, to the Company's knowledge, facts that may reasonably lead to a
dispute) known to the Company regarding the scope of such Contract or License,
or performance under such Contract or License, including with respect to any
payments to be made or received by the Company thereunder.
(k) To the knowledge of the Company, no Person is infringing or
misappropriating any Company Intellectual Property.
(l) The Company has taken all commercially reasonable steps to
protect the Company's rights in confidential information and trade secrets of
the Company or
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provided by any other Person to the Company subject to a duty of
confidentiality. Without limiting the generality of the foregoing, the Company
has, and enforces, a policy requiring each employee, consultant and independent
contractor to execute proprietary information, confidentiality and invention and
copyright assignment agreements substantially in the form set forth in Section
2.17(l) of the Company Disclosure Schedule, and all current and former
employees, consultants and independent contractors of the Company have executed
such an agreement. Copies of all such agreements have been provided to Broadcom
or made available to Broadcom for review.
(m) No Company Intellectual Property or product, technology or
service of the Company is subject to any Order or Action or Proceeding that
restricts, or that is reasonably expected to restrict in any manner, the use,
transfer or licensing of any Company Intellectual Property by the Company or
that may affect the validity, use or enforceability of such Company Intellectual
Property.
(n) No (i) product, technology, service or publication of the
Company, (ii) material published or distributed by the Company or (iii) conduct
or statement of Company constitutes obscene material, a defamatory statement or
material, false advertising or otherwise violates any Law.
(o) The Company has taken all commercially reasonable actions
necessary and appropriate to assure that there shall be no material adverse
change to its business or electronic systems or material interruptions in the
delivery of the Company's products and services by reason of the advent of the
year 2000, including, without limitation, that all of its products (including
products currently under development) will, without interruption or manual
intervention, continue to consistently, predictably and accurately record,
store, process, calculate and present calendar dates falling on and after (and
if applicable, spans of time including) January 1, 2000, and will consistently,
predictably and accurately calculate any information dependent on or relating to
such dates in the same manner, and with the same functionality, data integrity
and performance, as such products record, store, process, calculate and present
calendar dates on or before December 31, 1999, or calculate any information
dependent on or relating to such dates. Without limiting the generality of the
foregoing, the Company has taken all commercially reasonable actions necessary
and appropriate to ensure that the IT systems and non-IT systems used by the
Company in its internal operations will function properly beyond 1999 and the
Company has no knowledge of any material issues that have arisen in connection
therewith and has not uncovered any problems that could materially disrupt or
harm the day-to-day functioning of business and operations of the Company.
(p) Neither this Agreement nor any transactions contemplated by
this Agreement will result in Broadcom's granting any rights or licenses with
respect to the Intellectual Property of Broadcom to any Person pursuant to any
Contract to which the Company is a party or by which any of its Assets and
Properties are bound.
(q) Section 2.17(q) of the Company Disclosure Schedule sets forth
a list of (x) all software which is material to the business of the Company and
which the Company has licensed from any third party which is used by the Company
in its products or otherwise in its business (other than standard off-the-shelf
software) and (y) a list of all "freeware" and
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"shareware" incorporated into any product now or heretofore shipped by the
Company. The Company has all rights necessary to the use of such software,
"freeware" and "shareware".
(r) The Company has taken all commercially reasonable necessary
and appropriate steps to protect and preserve ownership of Company Intellectual
Property. The Company has secured valid written assignments from all consultants
and employees who contributed to the creation or development of the Company
Intellectual Property. In the event that the consultant is concurrently employed
by the Company and a third party, the Company has taken additional steps to
ensure that any Company Intellectual Property developed by such a consultant
does not belong to the third party or conflict with the third party's employment
agreement such steps include, but are not limited to, ensuring that all research
and development work performed by such a consultant are performed only on the
Company's facilities and only using the Company's resources, except as set forth
in Section 2.17(r) of the Company Disclosure Schedule.
2.18. Contracts.
(a) Section 2.18(a)(1) of the Company Disclosure Schedule contains
a true and complete list of each of the Contracts (true and complete copies or,
if none, reasonably complete and accurate written descriptions of which,
together with all amendments and supplements thereto and all waivers of any
terms thereof, have been made available to Broadcom prior to the execution of
this Agreement), to which the Company is a party or by which any of its Assets
and Properties is bound (other than employee offer letters). Section 2.18(a)(2)
of the Company Disclosure Schedule contains a true and complete list of each
Contract of the Company (i) not terminable by the Company upon 30 days (or less)
notice by the Company without penalty or obligation to make payments based on
such termination or (ii) which provides for continuing design or other services
by the Surviving Corporation after the Closing Date.
(b) Each Contract required to be disclosed in Section 2.18(a) of
the Company Disclosure Schedule is in full force and effect and constitutes a
legal, valid and binding agreement of the Company, enforceable in accordance
with its terms, and to the knowledge of the Company, of each other party
thereto; and except as disclosed in Section 2.18(b) of the Company Disclosure
Schedule, to the knowledge of the Company, no other party to such Contract is,
nor has received notice that it is, in violation or breach of or default under
any such Contract (or with notice or lapse of time or both, would be in
violation or breach of or default under any such Contract).
(c) Except as disclosed in Section 2.18(c) of the Company
Disclosure Schedule, the Company is not a party to or bound by any Contract that
has been or could reasonably be expected to be, individually or in the aggregate
with any other similar Contracts, materially adverse to the Business or
Condition of the Company or that has been or could reasonably be expected to
result, individually or in the aggregate with any such other Contracts, in
material Losses to the Company or be materially adverse to the Business or
Condition of the Company.
(d) Except as disclosed in Section 2.18(d) of the Company
Disclosure Schedule, the Company is not a party to or bound by any Contract that
(i) automatically
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terminates or allows termination by the other party thereto upon consummation of
the transactions contemplated by this Agreement or (ii) contains any covenant or
other provision which limits the Company's ability to compete with any Person in
any line of business or in any area or territory.
2.19. Insurance.
(a) Section 2.19(a) of the Company Disclosure Schedule contains a
true and complete list (including the names and addresses of the insurers, the
expiration dates thereof, the annual premiums and payment terms thereof, the
period of time covered thereby and a brief description of the interests insured
thereby) of all liability, property, workers' compensation, directors' and
officers' liability and other insurance policies currently in effect that insure
the business, operations or employees of the Company or affect or relate to the
ownership, use or operation of any of the Assets and Properties of the Company
and that (a) have been issued to the Company or (b) to the knowledge of the
Company, have been issued to any Person (other than the Company) for the benefit
of the Company. The insurance coverage provided by the policies set forth in
Section 2.19(a) of the Company Disclosure Schedule will not terminate or lapse
by reason of any of the transactions contemplated by this Agreement or any of
the Ancillary Agreements. Each policy listed in Section 2.19(a) of the Company
Disclosure Schedule is valid and binding and in full force and effect, all
premiums due thereunder have been paid when due and neither the Company or the
Person to whom such policy has been issued has received any notice of
cancellation or termination in respect of any such policy or is in default
thereunder, and the Company has no knowledge of any reason or state of facts
that could reasonably be expected to lead to the cancellation of such policies
and the Company has no knowledge of any threatened termination of, or material
premium increase with respect to, any of such policies.
(b) Section 2.19(b) of the Company Disclosure Schedule contains a
list of all claims made under any insurance policies covering the Company in the
last two years. The Company has not received notice that any insurer under any
policy referred to in this Section is denying, disputing or questioning
liability with respect to a claim thereunder or defending under a reservation of
rights clause. The Company has, in the reasonable judgment of the Company, in
light of its business, location, operations and Assets and Properties,
maintained, at all times, without interruption, appropriate insurance, both in
scope and amount of coverages.
2.20. Affiliate Transactions.
(a) Except as disclosed in Section 2.9(f) or Section 2.20(a) of
the Company Disclosure Schedule, (i) there are no Contracts (except Contracts
related to the Company Stock Plans) or Liabilities between the Company, on the
one hand, and (A) any officer, director, shareholder, or to the Company's
knowledge, any Affiliate or Associate of the Company or (B) any Person who, to
the Company's knowledge, is an Associate of any such officer, director,
shareholder or Affiliate, on the other hand, (ii) the Company does not provide
or cause to be provided any assets, services or facilities to any such officer,
director, shareholder, Affiliate or Associate, (iii) neither the Company nor any
such officer, director, shareholder, Affiliate or Associate provides or causes
to be provided any assets, services or facilities to the Company and (iv) the
Company does not beneficially own, directly or
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indirectly, any Investment Assets of any such current or former officer,
director, shareholder, Affiliate or Associate.
(b) Except as disclosed in Section 2.20(b) of the Company
Disclosure Schedule, each of the Contracts and Liabilities listed in Section
2.20(a) of the Company Disclosure Schedule were entered into or incurred, as the
case may be, on terms no less favorable to the Company (in the reasonable
judgment of the Company) than if such Contract or Liability was entered into or
incurred on an arm's-length basis on competitive terms. Any Contract to which
the Company is a party and in which any director of the Company has a financial
interest in such Contract was approved by a majority of the disinterested
members of the Board of Directors of the Company and/or shareholders of the
Company, as the case may be, in accordance with Section 310 of the California
Code.
2.21. Employees; Labor Relations.
(a) The Company is not a party to any collective bargaining
agreement and there is no unfair labor practice or labor arbitration proceedings
pending with respect to the Company, or, to the knowledge of the Company,
threatened, and there are no facts or circumstances known to the Company that
could reasonably be expected to give rise to such complaint or claim. To the
knowledge of the Company, there are no organizational efforts presently underway
or threatened involving any employees of the Company or any of the employees
performing work for the Company but provided by an outside employment agency, if
any. There has been no work stoppage, strike or other concerted action by
employees of the Company.
(b) All employees of the Company are employed at will, and no
employees of the Company are represented by a union. Section 2.21(b)(i) of the
Company Disclosure Schedule sets forth, individually and by category, the name
of each officer, employee and consultant, together with such person's position
or function, annual base salary or wage and any incentive, severance or bonus
arrangements with respect to such person. Except as described in Section
2.21(b)(ii) of the Company Disclosure Schedule, the completion of the
transactions contemplated by this Agreement will not result in any payment or
increased payment becoming due from the Company to any current or former
officer, director, or employee of, or consultant to, the Company, and to the
knowledge of the Company no employee of the Company has made any threat, or
otherwise revealed an intent, to terminate such employee's relationship with the
Company, for any reason, including because of the consummation of the
transactions contemplated by this Agreement. The Company is not a party to any
agreement for the provision of labor from any outside agency. To the knowledge
of the Company, since its formation there have been no claims by employees of
such outside agencies, if any, with regard to employees assigned to work for the
Company, and no claims by any governmental agency with regard to such employees.
(c) Since its formation, there have been no federal or state
claims based on sex, sexual or other harassment, age, disability, race or other
discrimination or common law claims, including claims of wrongful termination,
by any employees of the Company or by any of the employees performing work for
the Company but provided by an outside employment agency, and there are no facts
or circumstances known to the Company that
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<PAGE> 38
could reasonably be expected to give rise to such complaint or claim. The
Company has complied with all laws related to the employment of employees and,
except as set forth in Section 2.21(c) of the Company Disclosure Schedule, since
its formation, the Company has not received any notice of any claim that it has
not complied in any material respect with any Laws relating to the employment of
employees, including without limitation, any provisions thereof relating to
wages, hours, collective bargaining, the payment of Social Security and similar
taxes, equal employment opportunity, employment discrimination, the WARN Act,
employee safety, or that it is liable for any arrearages of wages or any taxes
or penalties for failure to comply with any of the foregoing.
(d) The Company has no written policies and/or employee handbooks
or manuals except as described in Section 2.21(d) of the Company Disclosure
Schedule.
(e) To the knowledge of the Company, no officer, employee or
consultant of the Company is obligated under any Contract or other agreement or
subject to any Order or Law that would interfere with the Company's business as
currently conducted. Neither the execution nor delivery of this Agreement, nor
the carrying on of the Company's business as presently conducted nor any
activity of such officers, employees or consultants in connection with the
carrying on of the Company's business as presently conducted, will conflict with
or result in a breach of the terms, conditions or provisions of, constitute a
default under, or trigger a condition precedent to any rights under any Contract
or other agreement under which any of such officer's, employees or consultants
is now bound.
2.22. Environmental Matters.
(a) To the knowledge of the Company, the Company possesses any and
all Environmental Permits necessary to or required for the operation of its
business. The Company will use commercially reasonable efforts (with Broadcom's
cooperation) to obtain, prior to the Closing, any Environmental Permits that
must be obtained as of or immediately after the Closing in order for the
Surviving Corporation and/or the Company to conduct the business of the Company
as it was conducted prior to the Closing.
(b) To the knowledge of the Company, the Company is in compliance
with (i) all terms, conditions and provisions of its Environmental Permits; and
(ii) all Environmental Laws.
(c) The Company has not received any notice of alleged, actual or
potential responsibility for, or any inquiry regarding, (i) any Release or
threatened or suspected Release of any Hazardous Material, or (ii) any violation
of Environmental Law.
(d) To the knowledge of the Company, the Company does not have any
obligation or liability with respect to any Hazardous Material, including any
Release or threatened or suspected Release of any Hazardous Material, and there
have been no events, facts or circumstances which could form the basis of any
such obligation or liability.
(e) To the knowledge of the Company, no Releases of Hazardous
Material(s) have occurred at, from, in, to, on, or under any Site and no
Hazardous Material is present in, on, about or migrating to or from any Site.
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(f) The Company has not transported or arranged for the treatment,
storage, handling, disposal or transportation of any Hazardous Material at or to
any location.
(g) No Site is a current or proposed Environmental Clean-up Site.
(h) To the knowledge of the Company, there are no Liens under or
pursuant to any Environmental Law on any Site.
(i) To the knowledge of the Company, there is no (i) underground
storage tank, active or abandoned, (ii) polychlorinated biphenyl containing
equipment, (iii) asbestos-containing material, (iv) radon, (v) lead-based paint
or (vi) urea formaldehyde at any Site.
(j) To the knowledge of the Company, there have been no
environmental investigations, studies, audits, tests, reviews or other analyses
conducted with respect to any Site which have not been delivered to Broadcom
prior to execution of this Agreement.
(k) The Company is not a party, whether as a direct signatory or
as successor, assign, third party beneficiary, guarantor or otherwise, to, and
is not otherwise bound by, any lease or other contract under which the Company
is obligated or may be obligated by any representation, warranty, covenant,
restriction, indemnification or other undertaking respecting Hazardous Materials
or under which any other person is or has been released respecting Hazardous
Materials except as would not reasonably be expected to have a material adverse
effect on the Business or Condition of the Company
(l) To the knowledge of the Company, the Company has provided all
notifications and warnings, made all reports, and kept and maintained all
records required pursuant to Environmental Laws.
2.23. Substantial Customers and Suppliers. Section 2.23(a) of the
Company Disclosure Schedule lists the 15 largest customers of the Company,
collectively, on the basis of revenues collected or accrued for the most recent
complete fiscal year. Section 2.23(b) of the Company Disclosure Schedule lists
the 15 largest suppliers of the Company on the basis of cost of goods or
services purchased for the most recent fiscal year. Except as disclosed in
Section 2.23(c) of the Company Disclosure Schedule, no such customer or supplier
has ceased or materially reduced its purchases from or sales or provision of
services to the Company since its formation or, to the knowledge of the Company,
has threatened to cease or materially reduce such purchases or sales or
provision of services after the date hereof. Except as disclosed in Section
2.23(d) of the Company Disclosure Schedule, to the knowledge of the Company, no
such customer or supplier is threatened with bankruptcy or insolvency.
2.24. [Intentionally Omitted].
2.25. [Intentionally Omitted].
2.26. Other Negotiations; Brokers; Third Party Expenses. Neither the
Company nor any of its officers, directors, employees, agents, or, to the
knowledge of the Company,
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any of its shareholders or Affiliates (nor any investment banker, financial
advisor, attorney, accountant or other Person retained by or acting for or on
behalf of the Company or any such Affiliate) (a) has entered into any Contract
that conflicts with any of the transactions contemplated by this Agreement or
(b) has entered into any Contract or had any discussions with any Person
regarding any transaction involving the Company which could result in Broadcom,
the Company or any general partner, limited partner, manager, officer, director,
employee, agent or Affiliate of any of them being subject to any claim for
liability to said Person as a result of entering into this Agreement or
consummating the transactions contemplated hereby. No broker, investment banker,
financial advisor or other Person is entitled to any broker's, finder's,
financial advisor's or similar fee or commission in connection with this
Agreement and the transactions contemplated hereby based on arrangements made by
or on behalf of the Company. Section 2.26 of the Company Disclosure Schedule
sets forth the principal terms and conditions of any Contract with respect to,
and a reasonable estimate of, all Third Party Expenses expected to be incurred
by the Company in connection with the negotiation and effectuation of the terms
and conditions of this Agreement and the transactions contemplated hereby
("Estimated Third Party Expenses").
2.27. Banks and Brokerage Accounts. Section 2.27 of the Company
Disclosure Schedule sets forth (a) a true and complete list of the names and
locations of all banks, trust companies, securities brokers and other financial
institutions at which the Company has an account or safe deposit box or
maintains a banking, custodial, trading or other similar relationship, (b) a
true and complete list and description of each such account, box and
relationship, indicating in each case the account number and the names of the
respective officers, employees, agents or other similar representatives of the
Company having signatory power with respect thereto and (c) a list of each
Investment Asset, the name of the record and beneficial owner thereof, the
location of the certificates, if any, therefor, the maturity date, if any, and
any stock or bond powers or other authority for transfer granted with respect
thereto.
2.28. Warranty Obligations. Since its inception, the Company has had no
inventory of products and has not sold any products or services and accordingly
does not have and has not had any warranties, guarantees or warranty policies in
respect of any products and services ("Warranty Obligations"), and salespersons,
employees and agents of the Company have not been authorized to undertake
obligations to any customer or other Person with respect to Warranty
Obligations.
2.29. Foreign Corrupt Practices Act. Neither the Company, nor to the
knowledge of the Company, any agent, employee or other Person associated with or
acting on behalf of the Company has, directly or indirectly, used any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds, violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff,
influence payment, kickback or other similar unlawful payment.
2.30. Tax-Free Reorganization. To the knowledge of the Company after
Good Faith Consultation with the Company's independent accountants, neither the
Company nor
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any of its directors, officers or shareholders has taken any action which could
reasonably be expected to jeopardize the status of the Merger as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code.
2.31. Financial Projections/Operating Plan.
(a) The Company has made available to Broadcom certain financial
projections with respect to the Company's business which projections were
prepared for internal use only. The Company makes no representation or warranty
regarding the accuracy of such projections or as to whether such projections
will be achieved, except that the Company represents and warrants that such
projections were prepared in good faith and are based on assumptions believed by
the Company to be reasonable as of the date they were prepared.
(b) The Company has made available to Broadcom the 2000 Operating
Plan (a copy of which is attached hereto as part of Section 2.31(b) of the
Company Disclosure Schedule). The Company makes no representation or warranty
regarding its ability to successfully execute the 2000 Operating Plan, except
that the Company represents and warrants that the 2000 Operating Plan was
prepared in good faith and is based on assumptions believed by the Company to be
reasonable as of the date they were prepared.
2.32. Approvals.
(a) Section 2.32(a) of the Company Disclosure Schedule contains a
list of all material Approvals of Governmental or Regulatory Authorities
relating to the business conducted by the Company which are required to be given
to or obtained by the Company from any and all Governmental or Regulatory
Authorities in connection with the consummation of the transactions contemplated
by this Agreement (other than the filing of the California Agreement of Merger,
together with the required officers' certificates, and such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under state or federal securities laws).
(b) Section 2.32(b) of the Company Disclosure Schedule contains a
list of all material Approvals which are required to be given to or obtained by
the Company from any and all third parties other than Governmental or Regulatory
Authorities in connection with the consummation of the transactions contemplated
by this Agreement.
(c) Except as set forth in Section 2.32(c)(1) of the Company
Disclosure Schedule, the Company has obtained all material Approvals from
Governmental or Regulatory Authorities necessary to conduct the business
conducted by the Company in the manner as it is currently being conducted and
since its inception, there has been no written notice received by the Company of
any material violation or material non-compliance with any such Approvals. All
material Approvals from Governmental or Regulatory Authorities necessary to
conduct the business conducted by the Company as it is currently being conducted
are set forth in Section 2.32(c)(2) of the Company Disclosure Schedule.
(d) The affirmative vote or consent of the holders of (i) a
majority of the shares of Company Common Stock outstanding as of the applicable
record date, voting as a
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separate class, (ii) a majority of the shares of Series A Preferred Stock
outstanding as of the applicable record date, voting as a single class and (iii)
a majority of the shares of Company Common Stock and Series A Preferred Stock
(with each share of Series A Preferred Stock entitled to vote a number of shares
equal to a whole number of shares of Company Common Stock into which such shares
of Series A Preferred Stock would be converted on the applicable record date),
voting together as a single class, are the only votes of the holders of any of
the Company Capital Stock necessary to approve this Agreement and the Merger and
the transactions contemplated hereby.
(e) The shares owned by shareholders of the Company who have
concurrently herewith entered into Support Agreements constitute (x) a majority
of the outstanding shares of Company Common Stock, (y) a majority of the
outstanding shares of Series A Preferred Stock and (z) a majority of the
outstanding shares of Company Common Stock and Series A Preferred Stock (with
each share of Series A Preferred Stock entitled to vote a number of shares equal
to a whole number of shares of Company Common Stock into which such shares of
Series A Preferred Stock would be converted on the applicable record date)
combined.
2.33. [Intentionally Omitted].
2.34. Takeover Statutes. No Takeover Statute applicable to the Company
is applicable to the Merger or the transactions contemplated hereby.
2.35. Company Information for Permit Application, Information Statement
and Registration Statement. The information supplied by the Company for
inclusion in the application for issuance of a California Permit pursuant to
which the shares of Broadcom Common Stock to be issued in the Merger and the
Company Options to be assumed in the Merger will be qualified under the
California Code (the "Permit Application") shall not at the time the fairness
hearing is held pursuant to Section 25142 of the California Code or the time the
qualification of such securities is effective under Section 25122 of the
California Code contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The information supplied by the Company for inclusion in
the information statement to be sent to the shareholders of the Company in
connection with the Company shareholders' consideration of the Merger (the
"Company Shareholder Action") (such information statement as amended or
supplemented is referred to herein as the "Information Statement") shall not, on
the date the Information Statement is first mailed to the Company's
shareholders, at the time of the Company Shareholder Action and at the Effective
Time, contain any statement which, at such time, is false or misleading with
respect to any material fact, or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they are made, not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies or written consents for the Company Shareholder
Action which has become false or misleading.
If the parties prepare and file the Registration Statement, the
information supplied by the Company (i) for inclusion in the Registration
Statement shall not at the time the
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Registration Statement or any amendments thereto is filed with the SEC or at the
time the Registration Statement is declared effective by the SEC contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading and (ii) for inclusion in the proxy statement to be sent to the
stockholders of the Company in connection with Company Shareholder Action (such
proxy statement as amended or supplemented is referred to herein as the "Proxy
Statement/Prospectus") shall not, on the date the Proxy Statement/Prospectus is
mailed to the Company's stockholders, at the time of the Company Shareholder
Action and at the Effective Time, contain any statement which, at such time, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they are made, not false or misleading; or omit
to state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Company
Shareholder Action which has become false or misleading.
Notwithstanding the foregoing, the Company makes no representation,
warranty or covenant with respect to any information supplied by Broadcom which
is contained in any of the foregoing documents.
2.36. Disclosure. No representation or warranty contained in this
Agreement, and no statement contained in the Company Disclosure Schedule or in
any Closing certificate furnished to Broadcom pursuant to any provision of this
Agreement (including the Company Financial Statements and the notes thereto)
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein or therein, in the light
of the circumstances under which they were made, not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BROADCOM
Broadcom hereby represents and warrants to the Company, subject to such
exceptions as are specifically disclosed with respect to specific numbered and
lettered sections and subsections of this Article 3 in the disclosure schedule
and schedule of exceptions (the "Broadcom Disclosure Schedule") delivered
herewith and dated as of the date hereof, and numbered with corresponding
numbered and lettered sections and subsections, as follows:
3.1. Organization and Qualification. Broadcom is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
California. Broadcom has full corporate power and authority to conduct its
business as now conducted and as currently proposed to be conducted and to own,
use and lease its Assets and Properties. Broadcom is duly qualified, licensed or
admitted to do business and is in good standing in each jurisdiction in which
the ownership, use, licensing or leasing of its Assets and Properties, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for such failures to be so duly qualified, licensed
or admitted and in good standing that could not reasonably be expected to have a
material adverse effect on the Business or Condition of Broadcom.
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3.2. Authority Relative to this Agreement. Broadcom has full corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements to which it is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by Broadcom of this Agreement and the Ancillary
Agreements to which it is a party and the consummation by Broadcom of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary action by the Board of Directors of Broadcom, and no
other action on the part of the Board of Directors of Broadcom is required to
authorize the execution, delivery and performance of this Agreement and the
Ancillary Agreements to which it is a party and the consummation by Broadcom of
the transactions contemplated hereby and thereby. This Agreement and the
Ancillary Agreements to which Broadcom is a party have been or will be, as
applicable, duly and validly executed and delivered by Broadcom and, assuming
the due authorization, execution and delivery hereof by the Company and/or the
other parties thereto, constitutes or will constitute, as applicable, a legal,
valid and binding obligation of Broadcom enforceable against Broadcom in
accordance with its respective terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar Laws relating to the enforcement of creditors'
rights generally and by general principles of equity.
3.3. Issuance of Broadcom Common Stock. The shares of Broadcom Common
Stock to be issued pursuant to the Merger, when issued, will be duly authorized,
validly issued, fully paid, non-assessable and issued in compliance with
applicable federal and state securities laws subject to the truth and accuracy
of the representations made by the Company in Section 2.3.
3.4. SEC Documents; Broadcom Financial Statements. Broadcom has
furnished or made available to the Company true and complete copies of all SEC
Documents filed by it with the SEC since January 1, 1999, all in the form so
filed. As of their respective filing dates, such SEC Documents filed by Broadcom
and all SEC Documents filed after the date hereof but before the Closing
complied or, if filed after the date hereof, will comply in all material
respects with the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the SEC thereunder, as the case may be, and none of
the SEC Documents contained or will contain any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading, except to the extent such SEC Documents
have been corrected, updated or superseded by a document subsequently filed with
the SEC. The financial statements of Broadcom, including the notes thereto,
included in the SEC Documents (the "Broadcom Financial Statements") comply as to
form in all material respects with the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with GAAP
consistently applied (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q under the Exchange Act)
and present fairly the consolidated financial position of Broadcom at the dates
thereof and the consolidated results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited financial statements, to
normal year-end adjustments), it being understood that such financial statements
may be required to be restated from time to time as may be required under
applicable pooling of
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interests accounting rules in connection with past, present or future
acquisitions. There has been no change in Broadcom's accounting policies except
as described in the notes to the Broadcom Financial Statements. Except as
reflected or reserved against in the Broadcom Financial Statements (including
the notes thereto), Broadcom has no material Liabilities relating to or
affecting it or any its Assets and Properties, except for Liabilities and
obligations (i) incurred in the ordinary course of business since the date of
the most recent Broadcom Financial Statements or (ii) that would not be required
to be reflected or reserved against in the balance sheet of Broadcom prepared in
accordance with GAAP.
3.5. No Conflicts. The execution and delivery by Broadcom of this
Agreement and the Ancillary Agreements to which it is a party does not, and the
performance by Broadcom of its obligations under this Agreement and the
Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby do not and will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the articles of incorporation or by-laws of
Broadcom;
(b) conflict with or result in a violation or breach of any Law or
Order applicable to Broadcom or its Assets or Properties; or
(c) except as would not have a material adverse effect on the
Business or Condition of Broadcom, (i) conflict with or result in a violation or
breach of, (ii) constitute a default (or an event that, with or without notice
or lapse of time or both, would constitute a default) under, (iii) require
Broadcom to obtain any consent, approval or action of, make any filing with or
give any notice to any Person as a result of the terms of (except for (A) the
filing of the Agreement of Merger, together with the required officer's
certificates; (B) such consents approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state or federal securities laws; and (C) such filings as may be required under
the HSR Act), (iv) result in or give to any Person any right of termination,
cancellation, acceleration or modification in or with respect to, (v) result in
or give to any person any additional rights or entitlement to increased,
additional, accelerated or guaranteed payments or performance under, (vi) result
in the creation or imposition of (or the obligation to create or impose) any
Lien upon Broadcom or any of its Assets or Properties, or (vii) result in the
loss of a material benefit under, any of the terms, conditions or provisions of
any Contract or License to which Broadcom is a party or by which any of its
Assets and Properties are bound.
3.6. Information to be Supplied by Broadcom. The information supplied by
Broadcom for inclusion in the Permit Application shall not either at the time
the fairness hearing is held pursuant to Section 25142 of the California Code or
the time the qualification of such securities is effective under Section 25122
of the California Code, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The information supplied by Broadcom for inclusion in
the Information Statement shall not, on the date the Information Statement is
first mailed to the Company's shareholders, at the time of the shareholders of
the Company Meeting and at the Effective Time, contain any statement which, at
such time, is false or
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misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which it is made, not false or misleading; or omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies or written consents for the Company
Shareholder Action which has become false or misleading.
If the parties prepare and file the Registration Statement, the
information supplied by Broadcom for inclusion in (i) the Registration Statement
shall not at the time the Registration Statement is declared effective by the
SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (ii) the Proxy Statement/Prospectus shall not, on the date
the Proxy Statement/Prospectus is mailed to the Company's shareholders, at the
time of the Company Shareholder Action and at the Effective Time, contain any
statement which, at such time, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not false or misleading; or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Company Shareholder Action which has become
false or misleading.
Notwithstanding the foregoing, Broadcom makes no representation,
warranty or covenant with respect to any information supplied by the Company
which is contained in any of the foregoing documents.
3.7. Investment Advisors. No broker, investment banker, financial
advisor or other Person, is entitled to any broker's, finder's, financial
advisor's or similar fee or commission in connection with this Agreement and the
transactions contemplated hereby based on arrangements made by or on behalf of
Broadcom.
3.8. Tax-Free Reorganization. To the knowledge of Broadcom after Good
Faith Consultation with Broadcom's independent accountants, neither Broadcom nor
any of its directors, officers or shareholders has taken any action which could
reasonably be expected to jeopardize the status of the Merger as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code.
3.9. Absence of Changes. From the Audited Financial Statement Date
through the date hereof, there has not been any material adverse change in the
Business or Condition of Broadcom.
3.10. Approvals. Other than the filing of the California Agreement of
Merger, together with the required officers' certificates, and such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under state or federal securities laws, there are no material
Approvals of Governmental or Regulatory Authorities relating to the business
conducted by Broadcom required to be given to or obtained by Broadcom from any
Governmental or Regulatory Authorities in connection with the consummation of
the transactions contemplated by this Agreement.
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ARTICLE 4
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1. Conduct of Business of the Company. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement and the Effective Time, the Company agrees (unless the Company is
required to take such action pursuant to this Agreement or Broadcom shall give
its prior consent in writing which consent shall not be unreasonably withheld)
to carry on its business in the usual, regular and ordinary course consistent
with past practice and in any event consistent with the Company's 2000 Operating
Plan attached hereto, to pay its Liabilities and Taxes consistent with the
Company's past practices (and in any event when due), to pay or perform other
obligations when due consistent with the Company's past practices (other than
Liabilities, Taxes and other obligations, if any, contested in good faith
through appropriate proceedings), and, to the extent consistent with such
business, to use reasonable efforts and institute all policies to preserve
intact its present business organization, keep available the services of its
present officers and key employees and preserve its relationships with
customers, suppliers, distributors, licensors, licensees, independent
contractors and other Persons having business dealings with it, all with the
express purpose and intent of preserving unimpaired its goodwill and ongoing
businesses at the Effective Time. Except as expressly contemplated by this
Agreement, the Company shall not, without the prior written consent of Broadcom
(which consent will not be unreasonably withheld), take or agree in writing or
otherwise to take, any action that would result in the occurrence of any of the
changes described in Section 2.9 of this Agreement, or any other action that
would make any of its representations or warranties contained in this Agreement
untrue or incorrect in any material respect or prevent the Company from
performing or cause the Company not to perform its agreements and covenants
hereunder or knowingly cause any condition to Broadcom's closing obligations in
Section 6.1 or Section 6.3 not to be satisfied. Without limiting the generality
of the foregoing, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, except as set forth in the Company Disclosure Schedule or as
required or expressly permitted by this Agreement, the Company shall not do,
cause or permit any of the following, without the prior written consent of
Broadcom (which consent shall not be unreasonably withheld):
(a) Charter Documents: cause or permit any amendments to its
articles of incorporation or bylaws;
(b) Dividends; Changes in Capital Stock: declare or pay any
dividend on or make any other distribution (whether in cash, stock or property)
in respect of any of its capital stock, or split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or
repurchase or otherwise acquire, directly or indirectly, any shares of its
capital stock except from former employees, directors and consultants in
accordance with agreements providing for the repurchase of shares in connection
with any termination of service to it;
(c) Stock Option Plans: except as set forth on Schedule 4.1(c),
accelerate, amend or change the period of exercisability or vesting of options
or other rights
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granted under its stock plans or authorize cash payments in exchange for any
options or other rights granted under any of such plans; or grant any Option
with an exercise price of less than the fair market value of the Company Common
Stock on the date the Option was granted (as determined in good faith by the
Company's board of directors following consultation with, and consistent with
the advice provided by, each of the Company's and Broadcom's independent public
accountants);
(d) Contracts: enter into any Contract or commitment, or violate,
amend or otherwise modify or waive any of the terms of any of its Contracts,
other than Contracts in the ordinary course of business consistent with past
practice which involve total obligations of less than $100,000 and which are not
otherwise material to the business of the Company;
(e) Issuance of Securities: except as set forth on Schedule
4.1(c), issue, deliver or sell or authorize or propose the issuance, delivery or
sale of, any shares of Company Capital Stock or securities convertible into, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities, other than the issuance of shares of its Common Stock
pursuant to the conversion of outstanding shares of Company Preferred Stock and
the exercise of Company Options or Company Warrants and Option grants to
employees hired after the date of this Agreement;
(f) Intellectual Property: transfer to any person or entity any
rights to any Intellectual Property other than non-exclusive licenses in
connection with the sale of Company products in the ordinary course of business
consistent with past practice;
(g) Exclusive Rights: enter into or amend any agreement pursuant
to which any other party is granted exclusive marketing or other exclusive
rights of any type or scope with respect to any of Company's products or
technology;
(h) Dispositions: sell, lease, license or otherwise dispose of or
encumber any of Company's properties or assets, except for sales of products
(and related nonexclusive licenses) in the ordinary course consistent with past
practice;
(i) Indebtedness: incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(j) Leases: enter into any operating lease;
(k) Payment of Obligations: pay, discharge or satisfy any claim,
liability or obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise) arising other than in the ordinary course of business, other than
the payment, discharge or satisfaction of liabilities reflected or reserved
against in the Company Financial Statements and reasonable expenses incurred in
connection with the transactions contemplated by this Agreement;
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(l) Capital Expenditures: make any capital expenditures, capital
additions or capital improvements except in accordance with the Company's 2000
Operating Plan or, if greater, in excess of $50,000;
(m) Insurance: reduce the amount of any insurance coverage
provided by existing insurance policies;
(n) Termination or Waiver: terminate or waive any right of
substantial value;
(o) Employee Benefit Plans; New Hires; Pay Increases: adopt or
amend any employee benefit or stock purchase or option plan, or hire any new
director level or officer level consultant or employee (other than as
contemplated by the 2000 Operating Plan), or pay any special bonus or special
remuneration to any employee, consultant or director or increase the salaries,
wage rates or compensation of any employee or consultant or as set forth in
Schedule 4.1(o);
(p) Severance Arrangements: grant any severance or termination pay
(i) to any director, officer or consultant or (ii) to any other employee or
consultant except payments made pursuant to written agreements outstanding on
the date hereof;
(q) Lawsuits: commence a lawsuit other than (i) for the routine
collection of bills, (ii) in such cases where it in good faith determines that
failure to commence suit would result in the material impairment of a valuable
aspect of its business, provided that it consults with Broadcom prior to the
filing of such a suit, or (iii) for a breach of this Agreement;
(r) Acquisitions: acquire or agree to acquire by merging or
consolidating with, or by purchasing 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;
(s) Taxes: make or change any election in respect of Taxes, adopt
or change any accounting method in respect of Taxes, file any Tax Return or any
amendment to a Tax Return other than Company's corporate Tax Return for the year
ended December 31, 1999, 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;
(t) Revaluation: revalue any of its assets, including writing down
the value of inventory or writing off notes or accounts receivable; or
(u) Other: take or agree in writing or otherwise to take, any of
the actions described in Sections 4.1(a) through (t) above.
4.2. No Solicitation. Until the earlier of the Effective Time and the
date of termination of this Agreement pursuant to the provisions of Section 8.1
hereof, the Company will not take nor will the Company permit any of the
Company's officers, directors,
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employees, shareholders, attorneys, investment advisors, agents,
representatives, Affiliates or Associates (collectively, "Representatives") to
(directly or indirectly), take any of the following actions with any Person
other than Broadcom and its designees: (a) solicit, encourage, initiate,
entertain, substantively review or encourage any proposals or offers from, or
participate in or conduct discussions with or engage in negotiations with, any
Person relating to any offer or proposal, oral, written or otherwise, formal or
informal (a "Competing Proposed Transaction"), with respect to any possible
Business Combination with the Company or any of its Subsidiaries (whether such
Subsidiaries are in existence on the date hereof or are hereafter organized),
(b) provide information with respect to the Company to any Person, other than
Broadcom, relating to (or which the Company believes would be used for the
purpose of formulating an offer or proposal with respect to), or otherwise
assist, cooperate with, facilitate or encourage any effort or attempt by any
such Person with regard to, any possible Business Combination with the Company
or any Subsidiary of the Company (whether such Subsidiaries are in existence on
the date hereof or are hereafter organized), (c) agree to, enter into a Contract
with any Person, other than Broadcom, providing for, or approve a Business
Combination with the Company or any Subsidiary (whether such Subsidiaries are in
existence on the date hereof or are hereafter organized), (d) make or authorize
any statement, recommendation, solicitation or endorsement in support of any
possible Business Combination with the Company or any Subsidiary (whether such
Subsidiary is in existence on the date hereof or are hereafter organized) other
than by Broadcom, or (e) authorize or permit any of the Company's
Representatives to take any such action. The Company shall immediately cease and
cause to be terminated any such contacts or negotiations with any Person
relating to any such transaction or Business Combination. In addition to the
foregoing, if the Company receives prior to the Effective Time or the
termination of this Agreement any offer or proposal (formal or informal, oral,
written or otherwise) relating to, or any inquiry or contact from any Person
with respect to, a Competing Proposed Transaction, the Company shall immediately
notify Broadcom thereof and provide Broadcom with the details thereof, including
the identity of the Person or Persons making such offer or proposal, and will
keep Broadcom fully informed on a current basis of the status and details of any
such offer or proposal and of any modifications to the terms thereof; provided,
however, that this provision shall not in any way be deemed to limit the
obligations of the Company and its Representatives set forth in the previous
sentence. Each of the Company and Broadcom acknowledge that this Section 4.2 was
a significant inducement for Broadcom to enter into this Agreement and the
absence of such provision would have resulted in either (i) a material reduction
in the merger consideration to be paid to the shareholders of the Company or
(ii) a failure to induce Broadcom to enter into this Agreement.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1. Information Statement; Permit Application; Registration Statement.
(a) As soon as practicable after the execution of this Agreement,
the Company shall prepare, with the cooperation of Broadcom, the Information
Statement for the shareholders of the Company to approve this Agreement, the
California Agreement of Merger and the transactions contemplated hereby.
Broadcom and the Company shall each
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use reasonable commercial efforts to cause the Information Statement to comply
with applicable federal and state securities laws requirements. Each of Broadcom
and the Company agrees to provide promptly to the other such information
concerning its business and financial statements and affairs as, in the
reasonable judgment of the providing party or its counsel, may be required or
appropriate for inclusion in the Information Statement, or in any amendments or
supplements thereto, and to cause its counsel and auditors to cooperate with the
other's counsel and auditors in the preparation of the Information Statement.
The Company will promptly advise Broadcom, and Broadcom will promptly advise the
Company, in writing, if at any time prior to the Effective Time either the
Company or Broadcom, as applicable, shall obtain knowledge of any facts that
might make it necessary or appropriate to amend or supplement the Information
Statement in order to make the statements contained or incorporated by reference
therein not misleading or to comply with applicable law. The Information
Statement shall contain the unanimous recommendation of the Board of Directors
of the Company that the Company's shareholders approve the Merger and this
Agreement and the conclusion of the Board of Directors that the terms and
conditions of the Merger are advisable and fair and reasonable to, and in the
best interests of, the shareholders of the Company. Anything to the contrary
contained herein notwithstanding, the Company shall not include in the
Information Statement any information with respect to Broadcom or its affiliates
or associates, the form and content of which information shall not have been
approved by Broadcom prior to such inclusion.
(b) As soon as practicable after the execution of this Agreement,
Broadcom shall prepare, with the cooperation of the Company, and file the Permit
Application. Broadcom and the Company shall each use commercially reasonable
efforts to cause the Permit Application to comply with the requirements of
applicable federal and state laws. Each of Broadcom and the Company agrees to
provide promptly to the other such information concerning its business and
financial statements and affairs as, in the reasonable judgment of the providing
party or its counsel, may be required or appropriate for inclusion in the Permit
Application, or in any amendments or supplements thereto, and to cause its
counsel and auditors to cooperate with the other's counsel and auditors in the
preparation of the Permit Application. The Company will promptly advise
Broadcom, and Broadcom will promptly advise the Company, in writing if at any
time prior to the Effective Time either the Company or Broadcom, as applicable,
shall obtain knowledge of any facts that might make it necessary or appropriate
to amend or supplement the Permit Application in order to make the statements
contained or incorporated by reference therein not misleading or to comply with
applicable law. Anything to the contrary contained herein notwithstanding,
Broadcom shall not include in the Permit Application any information with
respect to the Company or its affiliates or associates, the form and content of
which information shall not have been approved by the Company prior to such
inclusion.
(c) In the event that the California Permit cannot be obtained in
time to permit the Closing to occur on or before July 3, 2000, then, at the
Company's election, unless Broadcom shall certify to the Company that Broadcom
believes in good faith that the California Permit can be obtained within thirty
(30) days after such date, Broadcom and the Company shall use commercially
reasonable efforts to prepare, and Broadcom shall file with the SEC, the
Registration Statement, in which the Proxy Statement/Prospectus shall be
included. Each of Broadcom and the Company agrees to provide promptly to the
other such
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information concerning its business and financial statements and affairs as, in
the reasonable judgment of the party or its counsel, may be required or
appropriate for inclusion in the Proxy Statement/Prospectus or Registration
Statement, or in any amendments or supplements thereto, and to cause its counsel
and auditors to cooperate with the other's counsel and auditors in the
preparation of the same. Each of Broadcom and the Company shall (i) cause the
Proxy Statement/Prospectus and the Registration Statement to comply as to form
in all material respects with the applicable provisions of the Securities Act,
(ii) shall use commercially reasonable efforts to have or cause the Registration
Statement to become effective as promptly as practicable and (iii) take all or
any action required under any applicable federal or state securities Laws in
connection with the issuance of shares of Broadcom Common Stock pursuant to the
Merger. The Company will promptly advise Broadcom, and Broadcom will promptly
advise the Company, in writing if at any time prior to the Effective Time either
the Company or Broadcom shall obtain knowledge of any facts that might make it
necessary or appropriate to amend or supplement the Registration Statement in
order to make the statements contained or incorporated by reference therein not
misleading or to comply with applicable law. As promptly as practicable after
the Registration Statement has become effective, the Company shall mail the
Proxy Statement/Prospectus.
5.2. Shareholder Approval. As soon as practicable following the
execution and delivery of this Agreement, the Company shall give written notice
of this Agreement and the proposed Merger to all Company shareholders and shall
use commercially reasonable efforts to take all other action necessary in
accordance with the California Code and its articles of incorporation and bylaws
to convene a meeting of the shareholders of the Company or to secure the written
consent of its shareholders ("Company Shareholder Action") before July 15, 2000.
To the maximum extent permitted by Law, the Company shall submit this Agreement
to its shareholders for adoption whether or not the Company's board of directors
determines at any time subsequent to declaring its advisability that this
Agreement is no longer advisable and recommends that its shareholders reject it.
The Company shall consult with Broadcom regarding the date of the Company
Shareholder Action and shall not postpone or adjourn (other than for the absence
of a quorum) any meeting of the shareholders of the Company without the consent
of Broadcom, which consent shall not be unreasonably withheld. The Company shall
use all commercially reasonable efforts required to solicit and obtain from
shareholders of the Company proxies or written consents in favor of the Merger
and this Agreement and shall take all other action necessary or advisable to
secure the vote or consent of shareholders of the Company required with respect
to the Merger. The materials submitted to the shareholders of the Company in
respect of the Merger shall have been subject to prior review and comment by
Broadcom and shall include (a) information regarding the Company, the terms of
the Merger and this Agreement, (b) the unanimous recommendation of the Board of
Directors of the Company that the Company's shareholders approve the Merger and
this Agreement and the transactions contemplated hereby and approve and execute
such other documents as may be required to satisfy the applicable requirements
of the Securities Act in connection with the issuance and sale of Broadcom
Common Stock in the Merger, (c) the conclusion of the Board of Directors of the
Company that the terms and conditions of the Merger are advisable, fair and
reasonable to, and in the best interests of, the Company's shareholders and (d)
such other documents as may be required to satisfy the applicable requirements
of
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the Securities Act in connection with the issuance and sale of Broadcom Common
Stock in the Merger.
5.3. Access to Information. Between the date of this Agreement and the
earlier of the Effective Time or the termination of this Agreement, upon
reasonable notice the Company shall (a) give Broadcom and its officers,
employees, accountants, counsel, financing sources and other agents and
representatives reasonable access during normal business hours to all buildings,
offices, and other facilities and to all Books and Records of the Company,
whether located on the premises of the Company or at another location; (b)
permit Broadcom to make such inspections as they may reasonably require; (c)
cause its officers to furnish Broadcom such financial, operating, technical and
product data and other information with respect to the business and Assets and
Properties of the Company as Broadcom from time to time may reasonably request,
including without limitation financial statements and schedules; (d) allow
Broadcom the opportunity to interview such employees and other personnel and
Affiliates of the Company with the Company's prior written consent, which
consent shall not be unreasonably withheld or delayed; and (e) assist and
cooperate with Broadcom in the development of integration plans for
implementation by Broadcom and the Surviving Corporation following the Effective
Time; provided, however, that no investigation pursuant to this Section 5.3
shall affect or be deemed to modify any representation or warranty made by the
Company herein. Materials furnished to Broadcom pursuant to this Section 5.3 may
be used by Broadcom for strategic and integration planning purposes relating to
accomplishing the transactions contemplated hereby.
5.4. Confidentiality. The parties acknowledge that Broadcom and the
Company have previously executed a non-disclosure agreement dated as of January
1, 2000 (the "Confidentiality Agreement"), which Confidentiality Agreement shall
continue in full force and effect in accordance with its terms. Without limiting
the foregoing, all information furnished to Broadcom and its officers,
employees, accountants and counsel by the Company, and all information furnished
to the Company by Broadcom and its officers, employees, accountants and counsel,
shall be covered by the Confidentiality Agreement, and Broadcom and the Company
shall be fully liable and responsible under the Confidentiality Agreement for
any breach of the terms and conditions thereof by their respective subsidiaries,
officers, employees, accountants and counsel.
5.5. Expenses. Whether or not the Merger is consummated, all fees and
expenses incurred in connection with the Merger including all legal, accounting,
financial advisory, consulting and all other fees and expenses of third parties
("Third Party Expenses") incurred by a party in connection with the negotiation
and effectuation of the terms and conditions of this Agreement and the
transactions contemplated hereby, shall be the obligation of the respective
party incurring such fees and expenses. Broadcom shall have the right to approve
Third Party Expenses to be incurred by the Company between the date hereof and
the Closing, including necessary fees and expenses of legal counsel, auditors
and tax advisors, which such approvals will not be unreasonably withheld (it
being understood that Third Party Expenses (exclusive of premiums) incurred by
the Company in connection with the transactions contemplated by this Agreement
(whether before or after the date hereof) which do not exceed $300,000 in the
aggregate shall be deemed to have been approved by Broadcom). If the Merger is
consummated, Broadcom agrees to pay the Estimated Third
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Party Expenses (as set forth on Section 2.26 of the Company Disclosure Schedule)
incurred by the Company and the Company agrees that Broadcom will have full
recourse to the Escrow Fund for any Third Party Expenses of the Company in
excess of the Estimated Third Party Expenses, whether such Third Party Expenses
have been paid by the Company, accrued by the Company or have been incurred (and
not accrued and paid) by the Company.
5.6. Public Disclosure. Unless otherwise required by Law (including
federal and state securities laws) or, as to Broadcom, by the rules and
regulations of the NASD, prior to the Effective Time, no public disclosure
(whether or not in response to any inquiry) of the existence of any subject
matter of, or the terms and conditions of, this Agreement shall be made by any
party hereto unless approved by Broadcom and the Company prior to release;
provided, however, that such approval shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, Broadcom and the Company shall be
permitted to disclose the existence of this Agreement to their customers,
suppliers and sales representatives with whom it has non-disclosure agreements
that apply to such disclosure (or the other party otherwise agrees to such
disclosure) and for which there is a business reason for the disclosure.
5.7. Approvals. The Company shall use commercially reasonable efforts to
obtain all Approvals from Governmental or Regulatory Authorities or under any of
the Contracts or other agreements as may be required in connection with the
Merger so as to preserve all rights of and benefits to the Company thereunder
and Broadcom shall provide the Company with such assistance and information as
is reasonably required to obtain such Approvals.
5.8. FIRPTA Compliance. On or prior to the Closing Date, the Company
shall deliver to Broadcom a properly executed statement in a form reasonably
acceptable to Broadcom for purposes of satisfying Broadcom's obligations under
Treasury Regulation Section 1.1445-2(c)(3).
5.9. Notification of Certain Matters. The Company shall give prompt
notice to Broadcom, and Broadcom shall give prompt notice to the Company, of (a)
the occurrence or non-occurrence of any event, the occurrence or non-occurrence
of which is likely to cause any representation or warranty of the Company or
Broadcom, respectively, contained in this Agreement to be untrue or inaccurate
at or prior to the Closing Date and (b) any failure of the Company or Broadcom,
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 5.9 shall not limit or
otherwise affect any remedies available to the party receiving such notice.
5.10. [Intentionally Omitted]
5.11. [Intentionally Omitted]
5.12. [Intentionally Omitted]
5.13. Additional Documents and Further Assurances; Cooperation. Each
party hereto, at the request of the other party hereto, shall execute and
deliver such other
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instruments and do and perform such other acts and things (including, but not
limited to, all action reasonably necessary to seek and obtain any and all
consents and approvals of any Government or Regulatory Authority or Person
required in connection with the Merger; provided, however, that Broadcom shall
not be obligated to consent to any divestitures or operational limitations or
activities in connection therewith and no party shall be obligated to make a
payment of money as a condition to obtaining any such condition or approval) as
may be necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby. Each party agrees to use
commercially reasonable efforts to cause the conditions to its obligations to
consummate the Merger to be satisfied.
5.14. Indemnification.
(a) Broadcom, the Company and the Surviving Corporation agree that
all rights to indemnification or exculpation now existing in favor of the
employees, agents, directors or officers of the Company (the "Company
Indemnified Parties") as provided in its articles of incorporation or bylaws or
indemnification agreements as in effect on the date of this Agreement shall
continue in full force and effect for a period of not less than six years from
the Closing Date, assuming consummation of the Merger; provided, however, that,
in the event any claim or claims are asserted or made within such six-year
period, all rights to indemnification in respect of any such claim or claims
shall continue to disposition of any and all such claims. Any determination
required to be made with respect to whether a Company Indemnified Party's
conduct complies with the standards set forth in the articles of incorporation
or bylaws or indemnification agreements of the Surviving Corporation or
otherwise shall be made by independent counsel selected by the Surviving
Corporation reasonably satisfactory to the Company Indemnified Party (whose fees
and expenses shall be paid by the Surviving Corporation), which such
determination shall be final and binding on the parties thereto. The Company
hereby represents and warrants to Broadcom that no claim for indemnification has
been made by any director or officer of the Company and, to the knowledge of the
Company, no basis exists for any such claim for indemnification.
(b) With respect to the Company Indemnified Parties, for a period
of six years after the Effective Time, Broadcom shall (to the extent available
on commercially reasonable terms) cause to be maintained in effect officers' and
directors' liability insurance of at least the same coverage and amounts,
containing terms which are no less advantageous to the Company Indemnified
Parties than that provided to equivalent employees, agents, directors or
officers of Broadcom. Such coverage shall also cover acts and omissions
occurring prior to the Effective Time.
5.15. Form S-8. Broadcom shall file a registration statement on Form S-8
for the shares of Broadcom Common Stock issuable with respect to assumed Company
Options promptly after the Effective Time to the extent the shares of Broadcom
Common Stock issuable upon exercise of such Company Options qualify for
registration on Form S-8 and shall use its commercially reasonable efforts to
maintain the effectiveness of the Form S-8 throughout the term of the Company
Options.
5.16. NNM Listing of Additional Shares Application. Broadcom shall, to
the extent required by the rules of the NNM, notify the NNM of the shares of
Broadcom
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Common Stock to be issued, and the shares of Broadcom Common Stock required to
be reserved for issuance, in connection with the Merger, it being understood
that under current NNM and SEC rules, no additional listing application needs to
be filed by Broadcom to cause such authorization.
5.17. Company's Auditors. The Company will use commercially reasonable
efforts to cause its management and its independent auditors to facilitate on a
timely basis (a) the preparation of financial statements (including pro forma
financial statements if required) as required by Broadcom to comply with
applicable SEC regulations, (b) the review of any Company audit or review work
papers, including the examination of selected interim financial statements and
data, (c) the delivery of such representations from the Company's independent
accountants as may be reasonably requested by Broadcom or its accountants, and
(d) the securing of a binding fee commitment (on terms similar to those in place
on the date of this Agreement) with respect to consents and comfort letters
requested by Broadcom after the Closing.
5.18. Termination of 401(k) Plans. Unless Broadcom requests otherwise in
writing, the Board of Directors of the Company shall adopt resolutions
terminating, effective prior to the Closing Date, any Plan which is intended to
meet the requirements of Section 401(k) of the Internal Revenue Code, and which
is sponsored, or contributed to, by the Company or any Subsidiary. At the
Closing, if such a Plan has been adopted or is in existence, the Company shall
provide Broadcom (a) executed resolutions of the Board of Directors of Broadcom
authorizing such termination and (b) an executed amendment to the 401(k) Plan
sufficient to assure compliance with all applicable requirements of the Internal
Revenue Code and regulations thereunder so that the tax-qualified status of the
401(k) Plan will be maintained at the time of termination.
5.19. Takeover Statutes. If any Takeover Statute is or may become
applicable to the transactions contemplated hereby, the Board of Directors of
the Company will grant such approvals and take such actions as are necessary so
that the transactions contemplated by this Agreement and the Ancillary
Agreements may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate the effects of any Takeover
Statute on any of the transactions contemplated hereby.
5.20. [Intentionally Omitted]
5.21. Treatment as Reorganization. Broadcom and the Company shall use
their best efforts to cause the Merger to qualify, and will not take any action
prior to or following the Closing that would prevent the Merger from qualifying,
as a "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code.
5.22. Company Repurchases. The Company will exercise any rights that
mature between the date hereof and the Effective Time to repurchase any
outstanding shares of Company Capital Stock at the price at which such shares
were issued.
5.23. Information Technology Access. In furtherance of the Company's
agreement in Section 5.3 and to facilitate prompt integration following the
Closing of the Company's information technology ("IT") inventory (e.g., voice
and data network services and software
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and hardware, licenses, financial/accounting software, IT budgets, etc.) with
Broadcom's, the Company will provide Broadcom and its Representatives with
reasonable access to the Company's IT inventory, as well as the Company's
personnel responsible for such IT inventory. Because of the substantial lead
time that may be required to order and install new software and hardware to
integrate the Company's IT systems with Broadcom's, and the importance of a
smooth integration of such IT systems promptly after the Closing, the Company
agrees that Broadcom may order, either in Broadcom's name or, if required by the
vendor, the Company's name, any new IT services, hardware and software that
Broadcom believes will be needed at the Company's facilities in order to
integrate Broadcom's and the Company's respective operations following the
Closing. Except to the extent that the Company reasonably believes that such
installation will more than insubstantially disrupt its business, the Company
will cooperate with Broadcom in the installation of such IT systems, hardware
and software prior to and in anticipation of the Closing, including, but not
limited to, providing Broadcom with reasonable access to and use of the
Company's appropriate personnel; provided, however, that any such IT systems may
not be installed by Broadcom employees or consultants without the Company's
consent, which shall not be unreasonably withheld. If required by the vendor, at
Broadcom's request, the Company will place IT systems, hardware and software
orders in the Company's name. For clarity, it is the parties' intent not to
connect any of the ordered services or systems prior to the Closing. Broadcom
and the Company agree to cooperate with each other to minimize any potential
disruption to the Company's business from the IT integration efforts; provided,
however, that Broadcom will not have any liability to the Company for any such
disruption or as may otherwise result from the IT integration efforts, except as
may be directly caused by Broadcom's gross negligence or willful misconduct; and
provided further that in no event will Broadcom have any liability to the
Company for any indirect, incidental, consequential, special or speculative
damages, including, but not limited to, damages for loss of profits or use,
business interruption or loss of goodwill, irrespective of whether such damages
arise under contract, tort, statute or otherwise and whether or not the Company
has given Broadcom advance notice of the possibility of such damages. If the
Closing does not occur, Broadcom will reimburse the Company for its documented
out-of-pocket costs incurred by it in connection with the ordering and
installation of IT services, hardware and software. If Broadcom is so required
to reimburse the Company, Broadcom will own any such hardware and software and
will pay for its removal from Company premises. Broadcom and the Company will
cooperate in the removal of any such hardware or software so as to minimize any
disruption to the Company's business. In addition, if the Closing does not
occur, the Company will cooperate with Broadcom in canceling any orders for IT
services, hardware or software and will otherwise act to minimize the costs
which might be incurred in connection with the IT integration efforts.
5.24. Change of Merger Form. The Company agrees that in the event
Broadcom requests that the transactions contemplated hereby be effected through
a different form of merger (including a reverse triangular or forward triangular
merger) than the form presently contemplated herein, and provided that the
alternative form of merger qualifies (in the opinion of counsel to each of
Broadcom and the Company) as a tax-free reorganization, the Company shall
cooperate with Broadcom in effecting the alternative form of merger and will
take all reasonably necessary action towards such end, including, but not
limited to the execution of any amendments to this Agreement (provided such
amendments relate only to
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the alternative form of merger and any related matters and do not include any
other substantive changes or otherwise have an adverse effect on any of the
Company's shareholders not otherwise agreed between the parties).
5.25. Intellectual Property. The Company shall give Broadcom prompt
notice that any Person shall have (a) commenced, or shall have notified the
Company that it intends to commence, an Action or Proceeding or (b) provided the
Company with notice, in either case which allege(s) that any of the Company
Intellectual Property presently embodied, or proposed to be embodied, in the
Company's products or utilized in Company-designed or modified development tools
(including standard cells) or design environments infringes or otherwise
violates the intellectual property rights of such Person, is available for
licensing from a potential licensor providing the notice or otherwise alleges
that the Company does not otherwise own or have the right to exploit such
Company Intellectual Property. The Company shall cooperate with Broadcom in
making arrangements, prior to the Closing Date, satisfactory to Broadcom in its
sole discretion to effect the assignment to the Company of all Company
Intellectual Property created by the Company's founders, employees and
consultants, including certain Company Intellectual Property created by the
Company's founders prior to the Company's incorporation, and to obtain the
cooperation of such Persons to complete all appropriate patent filings related
thereto. The Company shall take commercially reasonable actions to maintain,
perfect, preserve or renew the Company Registered Intellectual Property,
including, without limitation, the payment of any registration, maintenance,
renewal fees, annuity fees and taxes or the filing of any documents,
applications or certificates related thereto, and to promptly respond and
prepare to respond to all requests, related to the Company Registered
Intellectual Property, received from Governmental or Regulatory Authorities. At
the Closing, the Company will notify Broadcom of all material actions of which
it is aware which must be taken within the 180 days following the Closing Date
and which are necessary to maintain, perfect, preserve or renew the Company
Registered Intellectual Property, including the payment of any registration,
maintenance, renewal fees, annuity fees and taxes or the filing of any
documents, applications or certificates related thereto.
5.26. Delivery of Stock Ledger and Minute Book of the Company. The
Company shall deliver its stock ledger and minute book to Broadcom at the
Closing.
5.27. Employee Benefit Plans; Employee Matters.
(a) As soon as practicable after the Effective Time (the "Benefits
Date"), Broadcom shall provide, or cause to be provided, employee benefit plans,
programs and arrangements to employees of the Company that are substantially the
same as those made generally available to equivalent employees of Broadcom who
are hired by Broadcom after December 31, 1999. From the Effective Time to the
Benefits Date (which the parties acknowledge may occur on different dates with
respect to different plans, programs or arrangements of the Company), Broadcom
shall to the maximum extent permitted by the terms of its employee benefit
plans, programs and arrangements provide, or cause to be provided, employee
benefits substantially equivalent to the employee benefit plans, programs and
arrangements of the Company provided to employees of the Company as of the date
hereof.
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(b) Broadcom agrees that, after the Closing, the salaries of all
Company employees will be adjusted to make such salaries consistent with the
salaries of other similarly situated Broadcom employees; provided, however, that
no such adjustment will result in any Company employee's salary being reduced
below the salary being paid such employee as of the date of this Agreement (it
being understood that this paragraph is not intended to preclude Broadcom and
any Company employee from agreeing to any arrangement that is acceptable to
them). Such adjustments will occur on each Company employee's respective hiring
anniversary date with the Company. In addition, to the extent any employee of
the Company has accrued but unused vacation time, such obligations with respect
to such accrued vacation time shall be assumed by Broadcom and credited to such
employee.
5.28. Adjustment of Aggregate Share Number. The parties acknowledge that
the Company intends to issue Company Options to new employees of the Company in
the ordinary course of business between the date hereof and the Closing Date.
Broadcom and the Company acknowledge that the Aggregate Share Number will be
increased in accordance with Schedule 5.28(a) as necessary to directly offset
the dilutive effect of grants of Company Options to Company employees newly
hired between the date of this Agreement and the Closing, as well as for certain
issuances pursuant to or contemplated by the Exchange Agreements. The Company
agrees that it will seek Broadcom's prior written approval of any grant of
Company Options to any new employee, which consent shall not be unreasonably
withheld or delayed, subject to Schedule 5.28(b). Notwithstanding anything in
this Section 5.28 to the contrary, no adjustment to the Aggregate Share Number
shall be made for any grant of Company Options by the Company which Broadcom did
not approve in writing. In no event will the Closing be delayed, postponed or
affected if there is a dispute between the Company and Broadcom as to whether
the Aggregate Share Number is required to be increased pursuant to this section.
If any such dispute cannot be resolved before the Closing, such dispute will be
resolved post-Closing by Broadcom and the Stockholder Agent pursuant to the
dispute resolution provisions of this Agreement.
5.29. Additional Loan. In the event the Closing does not occur on or
before August 15, 2000, other than because of a breach of this Agreement by the
Company, Broadcom agrees to loan the Company $4,000,000 on the same terms and
conditions as set forth in that certain promissory note from the Company in
favor of Broadcom dated May 26, 2000.
ARTICLE 6
CONDITIONS TO THE MERGER
6.1. Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) Governmental and Regulatory Approvals. Approvals from any
Governmental or Regulatory Authority (if any) necessary for consummation of the
transactions contemplated hereby shall have been timely obtained; and any
waiting period applicable to the consummation of the Merger under the HSR Act
(other than with respect to
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the receipt of Broadcom Common Stock by a shareholder of the Company) shall have
expired or been terminated.
(b) Securities Law Compliance. Either (a) the Fairness Hearing
shall have been held, and the California Permit (which shall include a finding
of fairness) shall have been issued, or (b) the Registration Statement shall
have been declared effective by the SEC, and no stop order shall be in effect
and no proceeding for that purpose shall have been commenced or, to the
knowledge of Broadcom or the Company, threatened with respect to such
Registration Statement.
(c) No Injunctions or Regulatory Restraints; Illegality. No
temporary restraining order, preliminary or permanent injunction or other Order
issued by any court of competent jurisdiction or Governmental or Regulatory
Authority or other legal or regulatory restraint or prohibition preventing the
consummation of the Merger shall be in effect; nor shall there be any action
taken, or any Law or Order enacted, entered, enforced or deemed applicable to
the Merger or the other transactions contemplated by the terms of this Agreement
that would prohibit the consummation of the Merger or which would permit
consummation of the Merger only if certain divestitures were made or if Broadcom
were to agree to limitations on its business activities or operations.
(d) Tax Opinions. Broadcom and the Company shall each have
received written opinions from their counsel, in form and substance reasonably
satisfactory to each of them, to the effect that the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code.
(e) Shareholder Approval. The Merger shall have been approved by
the requisite votes of the Company's shareholders in accordance with the
California Code.
6.2. Additional Conditions to Obligations of the Company. The
obligations of the Company to consummate the Merger and the other transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, exclusively by the Company:
(a) Representations and Warranties. The representations and
warranties of Broadcom contained in this Agreement shall be accurate in all
respects as of the date of this Agreement and shall be accurate in all respects
as of the Closing Date as if made on and as of the Closing Date (other than
representations and warranties which by their express terms are made solely as
of a specified earlier date, which shall be accurate as of such specified
earlier date), except that any inaccuracies in such representations and
warranties will be disregarded if the circumstances giving rise to all such
inaccuracies (considered collectively) do not constitute, and would not
reasonably be expected to have, a material adverse change on the Business or
Condition of Broadcom; provided, however, that, for purposes of determining the
accuracy of such representations and warranties, all "material adverse change in
the Business or Condition of Broadcom" qualifications and other materiality
qualifications contained in such representations and warranties shall be
disregarded.
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(b) Performance. Broadcom shall have performed and complied with
in all material respects each agreement, covenant and obligation required by
this Agreement to be so performed or complied with by the Broadcom at or before
the Closing.
(c) Officers' Certificates. Broadcom shall have delivered to the
Company a certificate, dated the Closing Date and executed by its President and
Chief Executive Officer, substantially in the form set forth in Exhibit E-1
hereto, and a certificate, dated the Closing Date and executed by the Secretary
of Broadcom, substantially in the form set forth in Exhibit E-2 hereto.
(d) Legal Opinion. The Company shall have received a legal opinion
from Irell & Manella LLP, counsel to Broadcom, in substantially the form set
forth in Exhibit F.
(e) Tax Representation Letter. Broadcom shall have executed and
delivered to Irell & Manella LLP and Latham & Watkins a Tax Representation
Letter in substantially the form attached as Exhibit I.
(f) NNM Listing of Shares. The shares of Broadcom Common Stock to
be issued, and the shares of Broadcom Common Stock required to be reserved for
issuance, in connection with the Merger shall be authorized for listing on the
NNM.
6.3. Additional Conditions to the Obligations of Broadcom. The
obligations of Broadcom to consummate the Merger and the other transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, exclusively by Broadcom:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be accurate in all
respects as of the date of this Agreement and shall be accurate in all respects
as of the Closing Date as if made on and as of the Closing Date (other than
representations and warranties which by their express terms are made solely as
of a specified earlier date, which shall be accurate as of such specified
earlier date), except that any inaccuracies in such representations and
warranties will be disregarded if the circumstances giving rise to all such
inaccuracies (considered collectively) do not constitute, and would not
reasonably be expected to have, a material adverse change on the Business or
Condition of the Company; provided, however, that, for purposes of determining
the accuracy of such representations and warranties, (i) all "material adverse
change in the Business or Condition of the Company" qualifications and other
materiality qualifications contained in such representations and warranties
shall be disregarded and (ii) any update of or modification to the Company
Disclosure Schedule made or purported to have been made after the date of this
Agreement (other than to reflect actions taken by the Company which are not in
violation of the covenants of this Agreement) shall be disregarded; and provided
further that neither of the following, in and of themselves, shall constitute a
material adverse change: (i) changes or effects which are primarily and directly
caused by the execution, delivery or performance of the pre-closing covenants
set forth in this Agreement, and (ii) any material adverse change resulting from
changes in economic conditions in the economy generally (it being understood
that in any
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controversy concerning the applicability of this proviso, the Company shall have
the burden of proof with respect to the elements of the applicable clause).
(b) Performance. The Company shall have performed and complied
with in all material respects each agreement, covenant and obligation required
by this Agreement to be so performed or complied with by the Company on or
before the Closing Date.
(c) Officers' Certificates. The Company shall have delivered to
Broadcom a certificate, dated the Closing Date and executed by the President and
Chief Executive Officer of the Company, substantially in the form set forth in
Exhibit G-1 hereto, and a certificate, dated the Closing Date and executed by
the Secretary of the Company, substantially in the form set forth in Exhibit G-2
hereto.
(d) Third Party Consents. Broadcom shall have been furnished with
evidence satisfactory to it that the Company has obtained the consents,
approvals and waivers listed in Section 2.6 of the Company Disclosure Schedule
(except for such consents, approvals and waivers the failure of which to receive
could not reasonably be expected to have a material adverse effect on the
Business or Condition of the Company).
(e) Threatened Governmental Proceedings. No Governmental or
Regulatory Authority shall have notified either party to this Agreement that
such Governmental or Regulatory Authority intends to commence proceedings to
restrain or prohibit the transactions contemplated hereby or force rescission,
unless such Governmental or Regulatory Authority shall have withdrawn such
notice and abandoned any such proceedings prior to the time which otherwise
would have been the Closing Date.
(f) Legal Opinion. Broadcom shall have received a legal opinion
from Latham & Watkins, legal counsel to the Company, in substantially the form
set forth in Exhibit H.
(g) Tax Representation Letter. The Company shall have executed and
delivered to Irell & Manella LLP and Latham & Watkins a Tax Representation
Letter in substantially the form attached as Exhibit J.
(h) Non-Competition Agreements. Each of the persons listed on
Schedule 6.3(h) shall have executed and delivered to Broadcom a Non-Competition
Agreement and all of the Non-Competition Agreements shall be in full force and
effect.
(i) Support Agreements. The Major Shareholders shall have executed
and delivered to Broadcom a Support Agreement, and no breach of any Support
Agreement shall have occurred or be continuing.
(j) Employees. The employees of the Company set forth on Schedule
6.3(j)(i) shall continue to be employed by the Company at the Closing (and shall
not have given any notice or other indication that they are not willing to be
employed by Broadcom or a Subsidiary of Broadcom (as Broadcom shall designate),
following the Merger). At least 90% of the other engineering and research and
development employees of the Company employed as of the date of this Agreement
(all of whom are listed on Schedule 6.3(j)(ii))
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shall continue to be employed by the Company at the Closing and shall not have
given any notice that they are not willing to be employed by Broadcom or a
Subsidiary of Broadcom (as Broadcom shall designate) following the Merger. No
more than two Company employees who cease to be employed by the Company as a
result of death or bona fide permanent disability will be excluded from the
numerator and the denominator in calculating such percentage.
(k) Limitation on Dissent. Holders of no more than five percent
(5.0%) of the outstanding shares of Company Capital Stock shall have exercised,
nor shall they have any continued right to exercise, appraisal, dissenters' or
similar rights under applicable law with respect to their shares by virtue of
the Merger.
(l) No Material Adverse Change. There shall have occurred no
material adverse change in the Business or Condition of the Company since the
date hereof; provided, however, that neither of the following, in and of
themselves, shall constitute a material adverse change: (i) changes or effects
which are primarily and directly caused by the execution, delivery or
performance of the pre-closing covenants set forth in this Agreement, and (ii)
any material adverse change resulting from changes in economic conditions in the
economy generally (it being understood that in any controversy concerning the
applicability of this proviso, the Company shall have the burden of proof with
respect to the elements of the applicable clause).
(m) [Intentionally Omitted].
(n) Company Intellectual Property. No Person shall have (i)
commenced, or shall have notified either party to this Agreement that it intends
to commence, an Action or Proceeding or (ii) provided the Company with notice,
in either case which allege(s) that any of the Intellectual Property, including
the Company Intellectual Property, presently embodied, or proposed to be
embodied, in the Company's products or utilized in Company-designed or modified
development tools (including standard cells) or design environments infringes or
otherwise violates the intellectual property rights of such Person, is available
for licensing from a potential licensor providing the notice or otherwise
alleges that the Company does not otherwise own or have the right to exploit
such Intellectual Property, including the Company Intellectual Property, unless
such Person shall have withdrawn such notice and abandoned any such Action or
Proceeding prior to the time which otherwise would have been the Closing Date.
(o) Termination of 401(k) Plan. The Company shall have provided to
Broadcom (i) executed resolutions of the Board of Directors of the Company
authorizing the termination and (ii) an executed amendment to any 401(k) Plan
sufficient to assure compliance with all applicable requirements of the Internal
Revenue Code and regulations thereunder so that the tax-qualified status of any
401(k) Plan will be maintained at the time of termination if such Plan has been
adopted or is in existence.
(p) Conversion of Company Indebtedness. The outstanding
convertible Indebtedness of the Company set forth on Schedule 6.3(p) shall have
been converted into shares of Company Common Stock pursuant to the Exchange
Agreements between the holders of such indebtedness and the Company.
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(q) Conversion of Company Series A Preferred Stock. All shares of
Company Series A Preferred Stock shall have been converted into shares of
Company Common Stock, effective no later than immediately prior to the Effective
Time.
(r) Repurchase Agreements. Each of the persons listed on Schedule
6.3(r) shall have executed and delivered to Broadcom a Repurchase Agreement and
all of the Repurchase Agreements shall be in full force and effect.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS; ESCROW PROVISIONS
7.1. Survival of Representations, Warranties, Covenants and Agreements.
Notwithstanding any right of Broadcom or the Company (whether or not exercised)
to investigate the affairs of Broadcom or the Company (whether pursuant to
Section 5.3 or otherwise) or a waiver by Broadcom or the Company of any
condition to Closing set forth in Article 6, each party shall have the right to
rely fully upon the representations, warranties, covenants and agreements of the
other party contained in this Agreement or in any instrument delivered pursuant
to this Agreement. Except for (i) the covenant contained in Section 5.14 (which
shall survive for the period set forth therein) and (ii) Article 7 (which shall
survive until termination of the escrow created thereby and the satisfaction of
any other obligations described therein), all of the representations,
warranties, covenants and agreements of the Company and Broadcom contained in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Merger and continue until first anniversary of the Closing Date (the
"Expiration Date").
7.2. Escrow Provisions.
(a) Establishment of the Escrow Fund. As soon as practicable after
the Effective Time, the Initial Escrow Amount, without any act of any
shareholder, will be deposited with the Depositary Agent (plus a proportionate
share of any additional shares of Broadcom Common Stock as may be issued upon
any stock splits, stock dividends or recapitalizations effected by Broadcom
following the Effective Time), such deposit to constitute the Initial Escrow
Amount portion of the Escrow Fund to be governed by the terms set forth herein.
The portion of the Initial Escrow Amount contributed on behalf of each
shareholder of the Company shall be in proportion to the aggregate number of
shares of Broadcom Common Stock which such holder would otherwise be entitled
under Section 1.6. Upon the exercise of Company Options or Company Warrants
during the Escrow Period, eight percent (8%) of the shares of Broadcom Common
Stock issuable upon exercise of any Company Options and Company Warrants
("Additional Escrow Amount") shall be added and deposited to the Escrow Fund.
Notwithstanding the references in this Agreement to the "escrow" and the Escrow
Fund, the parties acknowledge and agree that the Depositary Agent is acting as a
depository and not as an escrow agent pursuant to this Article 7.
(b) Recourse to the Escrow Fund. The Escrow Fund shall be
available to compensate (and shall, except as otherwise set forth in this
Section 7.2(b), be the sole source of compensation to) Broadcom and its
officers, directors, employees, agents, Affiliates and Associates (collectively,
"Broadcom Indemnitees") for any and all Losses (whether or not
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involving a Third Party Claim), incurred or sustained by Broadcom or any other
Broadcom Indemnitee, directly or indirectly, as a result of any inaccuracy or
breach of any representation, warranty, covenant or agreement of the Company
contained herein or in the Ancillary Agreements or in any instrument delivered
pursuant to this Agreement; provided, however, that Broadcom may not make any
claims against the Escrow Fund unless the aggregate Losses incurred or sustained
exceed $600,000 (at which such time claims may be made for all Losses incurred
or sustained). Broadcom and the Company each acknowledge that such Losses, if
any, would relate to unresolved contingencies existing at the Effective Time,
which if resolved at the Effective Time would have led to a reduction in the
aggregate Merger consideration to be paid to the shareholders of the Company.
The shareholders of the Company shall not have any liability under this
Agreement of any sort whatsoever in excess of the Escrow Fund, except in the
event of fraud or willful misconduct (i.e., a fraudulent breach of a
representation or warranty or an intentional breach of a covenant or agreement,
but excluding a negligent or reckless breach) by the Company of any of its
representations, warranties, agreements or covenants contained in this
Agreement, the Ancillary Agreements or in any Closing certificate required to be
delivered pursuant to this Agreement in connection herewith (it being understood
that in any controversy concerning the applicability of this exception, Broadcom
shall have the burden of proof with respect to the applicability of the
exception). In the event of such a fraudulent or intentional breach, Broadcom
shall have all remedies available at law or in equity (including for tort) with
respect to such breach; provided, however, that, notwithstanding anything to the
contrary contained in this Agreement, in no event shall any shareholder of the
Company have any liability in excess of the Merger consideration received by
such shareholder in connection with the Merger or the proceeds, if any, received
by such shareholder in connection with the disposition of such Merger
consideration.
(c) Escrow Period; Distribution of Escrow Fund upon Termination of
Escrow Period. Subject to the following requirements, the Escrow Fund shall be
in existence immediately following the Effective Time and shall terminate at
5:00 p.m., Pacific Time, on the Expiration Date (the period of time from the
Effective Time through and including the Expiration Date is referred to herein
as the "Escrow Period"); and all shares of Broadcom Common Stock remaining in
the Escrow Fund shall be distributed as set forth in this Section 7.2(c);
provided, however, that the Escrow Period shall not terminate with respect to
such amount (or some portion thereof) that is necessary in the reasonable
judgment of Broadcom, subject to the objection of the Shareholder Agent and the
subsequent mediation and/or litigation of the matter in the manner as provided
in Section 7.2(g) hereof, to satisfy any unsatisfied claims under this Section
7.2 concerning facts and circumstances existing prior to the termination of such
Escrow Period which claims are specified in any Officer's Certificate delivered
to the Depositary Agent prior to termination of such Escrow Period. As soon as
all such claims, if any, have been resolved, the Depositary Agent shall deliver
to the shareholders of the Company the remaining portion of the Escrow Fund not
required to satisfy such claims. Deliveries of shares of Broadcom Common Stock
remaining in the Escrow Fund to the shareholders of the Company pursuant to this
Section 7.2(c) shall be made ratably in proportion to their respective
contributions to the Escrow Fund. Each shareholder of the Company who would
otherwise be entitled to a fraction of a share of Broadcom Common Stock (after
aggregating all fractional shares of Broadcom Common Stock to be received by
such holder) shall be entitled to receive from
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Broadcom an amount of cash (rounded to the nearest whole cent) equal to the
product of (a) such fraction, multiplied by (b) the Closing Price (calculated
for this purpose using the thirty consecutive market trading days commencing on
the thirty fifth market trading day prior to the release of shares). Broadcom
shall use its commercially reasonable efforts to have such shares and cash
delivered within five (5) Business Days after such resolution.
(d) Protection of Escrow Fund.
(i) The Depositary Agent shall hold and safeguard the Escrow
Fund during the Escrow Period, shall treat such fund as a trust fund in
accordance with the terms of this Agreement and not as the property of Broadcom
and shall hold and dispose of the Escrow Fund only in accordance with the terms
hereof.
(ii) Any shares of Broadcom Common Stock or other Equity
Equivalents securities issued or distributed by Broadcom ("New Shares") in
respect of Broadcom Common Stock in the Escrow Fund which have not been released
from the Escrow Fund shall be added to the Escrow Fund. New Shares issued in
respect of shares of Broadcom Common Stock which have been released from the
Escrow Fund shall not be added to the Escrow Fund but shall be distributed to
the record holders thereof. Cash dividends on Broadcom Common Stock shall not be
added to the Escrow Fund but shall be distributed to the record holders of the
Broadcom Common Stock on the record date set for any such dividend.
(iii) Each shareholder shall have voting rights with respect
to the shares of Broadcom Common Stock contributed to the Escrow Fund by such
shareholder (and on any voting securities added to the Escrow Fund in respect of
such shares of Broadcom Common Stock).
(e) Claims Upon Escrow Fund.
(i) Upon receipt by the Depositary Agent at any time on or
before the last day of the Escrow Period of a certificate signed by any officer
of Broadcom (an "Officer's Certificate"): (A) stating that Broadcom or another
Broadcom Indemnitee has paid or properly accrued or reasonably anticipates that
it will have to pay or accrue Losses, directly or indirectly, as a result of any
inaccuracy or breach of any representation, warranty, covenant or agreement of
the Company contained in this Agreement or in any of the Ancillary Agreements or
in any Closing certificate delivered by the Company pursuant to this Agreement,
and (B) specifying in reasonable detail the individual items of Losses included
in the amount so stated, the date each such item was paid or properly accrued,
or the basis for such anticipated liability, and the nature of the
misrepresentation, breach of warranty, agreement or covenant to which such item
is related, the Depositary Agent shall, subject to the provisions of Sections
7.2(b) and (f) hereof, deliver to Broadcom out of the Escrow Fund, as promptly
as practicable, shares of Broadcom Common Stock held in the Escrow Fund in an
amount equal to such Losses. Where the basis for a claim upon the Escrow Fund by
Broadcom is that Broadcom reasonably anticipates that it will pay or accrue a
Loss, no payment will be made from the Escrow Fund for such Loss unless and
until such Loss is actually paid or accrued.
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(ii) For the purposes of determining the number of shares of
Broadcom Common Stock to be delivered to Broadcom out of the Escrow Fund
pursuant to Section 7.2(e)(i), the shares of Broadcom Common Stock shall be
valued at the Closing Price.
(f) Objections to Claims. At the time of delivery of any Officer's
Certificate to the Depositary Agent, a duplicate copy of such certificate shall
be delivered to the Shareholder Agent and for a period of 30 days after such
delivery, the Depositary Agent shall make no delivery to Broadcom of any Escrow
Amounts pursuant to Section 7.2(e) hereof unless the Depositary Agent shall have
received written authorization from the Shareholder Agent to make such delivery.
After the expiration of such 30 day period, the Depositary Agent shall make
delivery of shares of Broadcom Common Stock from the Escrow Fund in accordance
with Section 7.2(e) hereof, provided that no such payment or delivery may be
made if the Shareholder Agent shall object in a written statement to the claim
made in the Officer's Certificate, and such statement shall have been delivered
to the Depositary Agent prior to the expiration of such 30 day period.
(g) Resolution of Conflicts; Mediation.
(i) In case the Shareholder Agent shall object in writing to
any claim or claims made in any Officer's Certificate, the Shareholder Agent and
Broadcom shall attempt in good faith to agree upon the rights of the respective
parties with respect to each of such claims. If the Shareholder Agent and
Broadcom should so agree, a memorandum setting forth such agreement shall be
prepared and signed by both parties and shall be furnished to the Depositary
Agent. The Depositary Agent shall be entitled to rely on any such memorandum and
distribute shares of Broadcom Common Stock from the Escrow Fund in accordance
with the terms thereof. The Depositary Agent shall be entitled to rely on any
such instructions and distribute shares of Broadcom Common Stock from the Escrow
Fund in accordance with the terms thereof.
(ii) If no such agreement can be reached after good faith
negotiation, either Broadcom or the Shareholder Agent may demand mediation of
the dispute unless the amount of the damage or loss is at issue in a pending
Action or Proceeding involving a Third Party Claim, in which event mediation
shall not be commenced until such amount is ascertained or both parties agree to
mediation. In any such mediation, Broadcom and the Shareholder Agent agree to
employ a mediator from the American Arbitration Association (the "AAA") to
assist them in reaching resolution of such dispute according to the Commercial
Mediation Rules of the AAA. The mediator shall be a corporate attorney
practicing in Los Angeles or Orange County, California, with at least 15 years
experience in mergers and acquisitions. The fees and expenses of the mediator
shall be shared equally by Broadcom and the Shareholder Agent. If after
reasonable efforts, and over a period of sixty (60) days, the parties are unable
to reach agreement on such dispute utilizing the mediator, any party may elect
to bring suit in any court having jurisdiction under Section 9.9 hereof. The
parties will agree to and seek such protective orders as may be required to
protect and maintain the confidentiality of any proceedings and any and all
confidential information to the greatest extent provided by law.
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(h) Shareholder Agent of the Shareholders; Power of Attorney.
(i) In the event that the Merger is approved by the
shareholders of the Company, effective upon such vote, and without further act
of any shareholder, David Mandel shall be appointed as agent and
attorney-in-fact (the "Shareholder Agent") for each shareholder of the Company
(except such shareholders, if any, as shall have perfected their appraisal or
dissenters' rights under the California Code), for and on behalf of shareholders
of the Company, to give and receive notices and communications, to authorize
delivery to Broadcom of shares of Broadcom Common Stock from the Escrow Fund in
satisfaction of claims by Broadcom, to object to such deliveries, to agree to,
negotiate, enter into settlements and compromises of, and demand mediation and
comply with orders of courts and awards of mediators with respect to such
claims, and to take all actions necessary or appropriate in the judgment of the
Shareholder Agent for the accomplishment of the foregoing. Such agency may be
changed by the shareholders of the Company from time to time upon not less than
30 days prior written notice to Broadcom; provided, however, that the
Shareholder Agent may not be removed unless holders of a two-thirds interest in
the Escrow Fund agree to such removal and to the identity of the substituted
shareholder agent. Any vacancy in the position of Shareholder Agent may be
filled by approval of the holders of a majority in interest of the Escrow Fund.
No bond shall be required of the Shareholder Agent, and the Shareholder Agent
shall not receive compensation for his services. Notices or communications to or
from the Shareholder Agent shall constitute notice to or from each of the
shareholders of the Company.
(ii) The Shareholder Agent shall not incur any liability with
respect to any action taken or suffered by him or omitted hereunder as
Shareholder Agent while acting in good faith and in the exercise of reasonable
judgment. The Shareholder Agent may, in all questions arising hereunder, rely on
the advice of counsel and for anything done, omitted or suffered in good faith
by the Shareholder Agent based on such advice, the Shareholder Agent shall not
be liable to anyone. The Shareholder Agent undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement and no implied
covenants or obligations shall be read into this Agreement against the
Shareholder Agent.
(iii) The Shareholder Agent shall have reasonable access to
information about the Company and the reasonable assistance of the Company's
officers and employees for purposes of performing its duties and exercising its
rights hereunder, provided that the Shareholder Agent shall treat confidentially
and not disclose any nonpublic information from or about the Company to anyone
(except on a need to know basis to individuals who agree in writing to treat
such information confidentially).
(i) Actions of the Shareholder Agent. A decision, act, consent or
instruction of the Shareholder Agent shall constitute a decision of all the
shareholders for whom a portion of the Escrow Amount otherwise issuable to them
are deposited in the Escrow Fund and shall be final, binding and conclusive upon
each of such shareholders, and the Depositary Agent and Broadcom may rely upon
any such decision, act, consent or instruction of the Shareholder Agent as being
the decision, act, consent or instruction of every such shareholder of the
Company. The Depositary Agent and Broadcom are hereby
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relieved from any liability to any person for any acts done by them in
accordance with such decision, act, consent or instruction of the Shareholder
Agent.
(j) Third-Party Claims. In the event Broadcom becomes aware of a
third-party claim (a "Third Party Claim") which Broadcom reasonably expects may
result in a demand against the Escrow Fund, Broadcom shall notify the
Shareholder Agent of such claim, and the Shareholder Agent, as representative
for the shareholders of the Company, shall be entitled, at their expense, to
participate in any defense of such claim. Broadcom shall have the right in its
sole discretion to settle any Third Party Claim; provided, however, that if
Broadcom settles any Third Party Claim without the Shareholder Agent's consent
(which consent shall not be unreasonably withheld or delayed), Broadcom may not
make a claim against the Escrow Fund with respect to the amount of Losses
incurred by Broadcom in such settlement. In the event that the Shareholder Agent
has consented to any such settlement, the Shareholder Agent shall have no power
or authority to object under any provision of this Article 7 to the amount of
any claim by Broadcom against the Escrow Fund with respect to the amount of
Losses incurred by Broadcom in such settlement.
(k) Indemnification for Shareholder Agent. No shareholder of the
Company shall be entitled to receive any shares of Broadcom Common Stock from
the Escrow Fund unless such shareholder shall have agreed (through the execution
and delivery of the letter of transmittal or otherwise) to, severally and not
jointly, on a pro rata basis based on such shareholder's proportionate ownership
interests in the Company, indemnify, defend and hold the Shareholder Agent
harmless from and against any loss, damage, tax, liability and expense that may
be incurred by the Shareholder Agent arising out of or in connection with the
acceptance or administration of the Shareholder Agent's duties, except as caused
by the Shareholder Agent's gross negligence or willful misconduct, including the
legal costs and expenses of defending such Shareholder Agent against any claim
or liability in connection with the performance of the Shareholder Agent's
duties. The Shareholder Agent shall be entitled, but not limited to, such
indemnification from the Escrow prior to any distribution thereof to the
shareholders of the Company, but after any distributions therefrom to Broadcom.
(l) Depositary Agent's Duties.
(i) Limitation on Duties of Depositary Agent. The Depositary
Agent shall be obligated only for the performance of such duties as are
specifically set forth herein, and as set forth in any additional written escrow
instructions which the Depositary Agent may receive after the date of this
Agreement which are signed by an officer of Broadcom and the Shareholder Agent,
and may rely and shall be protected in relying or refraining from acting on any
instrument reasonably believed to be genuine and to have been signed or
presented by the proper party or parties. The Depositary Agent shall not be
liable for any act done or omitted hereunder as Depositary Agent while acting in
good faith and in the exercise of reasonable judgment, and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence of such
good faith.
(ii) Compliance with Orders. The Depositary Agent is hereby
expressly authorized to comply with and obey Orders of any court of law or
Governmental or Regulatory Authority, notwithstanding any notices, warnings or
other communications
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from any party or any other person to the contrary. In case the Depositary Agent
obeys or complies with any such Order, the Depositary Agent shall not be liable
to any of the parties hereto or to any other person by reason of such
compliance, notwithstanding any such Order being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction or proper authority.
(iii) Limitations on Liability of Depositary Agent. The
Depositary Agent shall not be liable in any respect on account of (A) the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver this Agreement or any documents or papers
deposited or called for hereunder; or (B) the expiration of any rights under any
statute of limitations with respect to this Agreement or any documents deposited
with the Depositary Agent.
(iv) Good Faith of Depositary Agent. In performing any duties
under the Agreement, the Depositary Agent shall not be liable to any party for
damages, losses, or expenses, except for gross negligence or willful misconduct
on the part of the Depositary Agent. The Depositary Agent shall not incur any
such liability for (A) any act or failure to act made or omitted in good faith,
or (B) any action taken or omitted in reliance upon any instrument, including
any written statement or affidavit provided for in this Agreement that the
Depositary Agent shall in good faith believe to be genuine, nor will the
Depositary Agent be liable or responsible for forgeries, fraud, impersonations
or determining the scope of any representative authority. In addition, the
Depositary Agent may consult with legal counsel in connection with the
Depositary Agent's duties under this Agreement and shall be fully protected in
any act taken, suffered, or permitted by him/her in good faith in accordance
with the advice of counsel. The Depositary Agent is not responsible for
determining and verifying the authority of any person acting or purporting to
act on behalf of any party to this Agreement.
(v) Non-responsibility of Depositary Agent. If any controversy
arises between the parties to this Agreement, or with any other party,
concerning the subject matter of this Agreement, its terms or conditions, the
Depositary Agent will not be required to determine the controversy or to take
any action regarding it. The Depositary Agent may hold all documents and shares
of Broadcom Common Stock and may wait for settlement of any such controversy by
final appropriate legal proceedings or other means as, in the Depositary Agent's
discretion, the Depositary Agent may be required, despite what may be set forth
elsewhere in this Agreement. In such event, the Depositary Agent will not be
liable for any damages. Furthermore, the Depositary Agent may at its option,
file an action of interpleader requiring the parties to answer and litigate any
claims and rights among themselves. The Depositary Agent is authorized to
deposit with the clerk of the court all documents and shares of Broadcom Common
Stock held in escrow, except all costs, expenses, charges and reasonable
attorney fees incurred by the Depositary Agent due to the interpleader action
and which the parties jointly and severally agree to pay. Upon initiating such
action, the Depositary Agent shall be fully released and discharged of and from
all obligations and liability imposed by the terms of this Agreement.
(vi) Indemnification of Depositary Agent. Broadcom and its
successors and assigns agrees to indemnify and hold the Depositary Agent
harmless against any and all Losses incurred by the Depositary Agent in
connection with the performance of
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the Depositary Agent's duties under this Agreement, including but not limited to
any litigation arising from this Agreement or involving its subject matter.
(vii) Resignation of Depositary Agent. The Depositary Agent
may resign at any time upon giving at least thirty (30) days written notice to
the parties; provided, however, that no such resignation shall become effective
until the appointment of a successor depositary agent which shall be
accomplished as follows: the parties shall use their best efforts to mutually
agree on a successor depositary agent within thirty (30) days after receiving
such notice. If the parties fail to agree upon a successor depositary agent
within such time, the Depositary Agent shall have the right to appoint a
successor depositary agent authorized to do business in the State of California.
The successor depositary agent shall execute and deliver an instrument accepting
such appointment and it shall, without further acts, be vested with all the
estates, properties, rights, powers, and duties of the predecessor depositary
agent as if originally named as Depositary Agent. The Depositary Agent shall be
discharged from any further duties and liability under this Agreement.
(m) Fees. All fees of the Depositary Agent for performance of its
duties hereunder shall be paid by Broadcom. In the event that the conditions of
this Agreement are not promptly fulfilled, or if the Depositary Agent renders
any service not provided for in this Agreement, or if the parties request a
substantial modification of its terms, or if any controversy arises, or if the
Depositary Agent is made a party to, or intervenes in, any Action or Proceeding
pertaining to this escrow or its subject matter, the Depositary Agent shall be
reasonably compensated for such extraordinary services and reimbursed for all
costs, attorney's fees, and expenses occasioned by such default, delay,
controversy or Action or Proceeding. Broadcom agrees to pay these sums upon
demand.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1. Termination. Except as provided in Section 8.2 below, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time:
(a) by mutual agreement of the Company and Broadcom;
(b) by Broadcom or the Company if: (i) the Effective Time has not
occurred before 5:00 p.m. (Pacific Time) on September 30, 2000 (provided,
however, that the right to terminate this Agreement under this Section 8.1(b)(i)
shall not be available to any party whose willful failure to fulfill any
obligation hereunder has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date); (ii) there shall be a final
nonappealable order of a federal or state court in effect preventing
consummation of the Merger; or (iii) there shall be any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
Merger by any Governmental or Regulatory Authority that would make consummation
of the Merger illegal;
(c) by Broadcom if there shall be any action taken, or any Law or
Order enacted, promulgated or issued or deemed applicable to the Merger, by any
Governmental or Regulatory Authority, which would: (i) prohibit Broadcom's
ownership or operation of all or any portion of the business of the Company or
(ii) compel Broadcom to dispose of or hold
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separate all or any portion of the Assets and Properties of the Company as a
result of the Merger;
(d) by Broadcom if it is not in material breach of its
representations, warranties, covenants and agreements under this Agreement and
there has been a breach of any representation, warranty, covenant or agreement
contained in this Agreement on the part of the Company and (i) the Company is
not using its reasonable efforts to cure such breach, or has not cured such
breach within thirty (30) days, after notice of such breach to the Company
(provided, however, that, no cure period shall be required for a breach which by
its nature cannot be cured) and (ii) as a result of such breach any of the
conditions set forth in Section 6.1 or Section 6.3, as the case may be, would
not be satisfied prior to the Closing Date;
(e) by the Company if it is not in material breach of its
representations, warranties, covenants and agreements under this Agreement and
there has been a breach of any representation, warranty, covenant or agreement
contained in this Agreement on the part of Broadcom and (i) Broadcom is not
using its reasonable efforts to cure such breach, or has not cured such breach
within thirty (30) days, after notice of such breach to Broadcom (provided,
however, that no cure period shall be required for a breach which by its nature
cannot be cured), and (ii) as a result of such breach any of the conditions set
forth in Section 6.1 or Section 6.2, as the case may be, would not then be
satisfied;
(f) by Broadcom if, if at any time after five days following the
meeting at which the Company's shareholders take the Company Shareholder Action,
holders of more than 5.0% of the outstanding shares of Company Capital Stock
shall have exercised, or have any continued right to exercise, appraisal,
dissenters' or similar rights under applicable law with respect to their shares
by virtue of the Merger;
(g) by Broadcom, if the Merger shall not have been approved by the
requisite votes of the Company's shareholders in accordance with the California
Code;
(h) by Broadcom, if any of the individuals listed on Schedule
6.3(j)(i) cease to be employed by the Company, provided, however, that Broadcom
may exercise this termination right with respect to a particular individual
named in Schedule 6.3(j)(i) only if Broadcom gives the Company written notice of
termination of the Agreement within thirty days after receipt of written notice
from the Company that such individual has ceased to be employed by the Company;
or
(i) by Broadcom, if, at any time, less than 90% of the Company's
other engineering and research and development employees of the Company employed
as of the date of this Agreement (all of whom are listed on Schedule 6.3(j)(ii))
shall cease to be employed by the Company at the Closing.
8.2. Effect of Termination. In the event of a valid termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Broadcom or the
Company, or their respective officers, directors or shareholders or Affiliates
or Associates; provided, however, that each party shall remain liable for any
breaches of this Agreement prior to its termination; and provided
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further that, the provisions of Sections 5.4, 5.5, 8.2, Article 9 and the
applicable definitions set forth in Article 10 of this Agreement shall remain in
full force and effect and survive any termination of this Agreement.
8.3. Amendment. Except as is otherwise required by applicable law after
the shareholders of the Company approve the Merger and this Agreement, this
Agreement may be amended by the parties hereto at any time by execution of an
instrument in writing signed on behalf of each of the parties hereto.
8.4. Extension; Waiver. At any time prior to the Effective Time,
Broadcom and the Company may, to the extent legally allowed, (a) extend the time
for the performance of any of the obligations of the other party hereto, (b)
waive any inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto, and (c) waive
compliance with any of the agreements, covenants or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
8.5. Additional Remedy. In the event that the Merger is not consummated
solely because of Broadcom's breach of this Agreement, then, in addition to the
Company's other rights at law or in equity, the Company may elect to terminate
(i) the Right of First Refusal Agreement between the Company and Broadcom dated
as of April 1, 1999 and (ii) Section 7 of the Restricted Stock Purchase
Agreement and Consulting Services Agreement dated as of April 1, 1999 (with the
effect that any unvested shares of Company Common Stock acquired by Broadcom
pursuant to such agreement may be repurchased by the Company pursuant to the
terms of such agreement).
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1. Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission against
facsimile confirmation or mailed by internationally recognized overnight courier
prepaid, to the parties at the following addresses or facsimile numbers:
If to Broadcom to:
Broadcom Corporation
16215 Alton Parkway
Irvine, California 92619-7013
Facsimile No.: (949) 450-8715
Attn: President and Chief Executive Officer
Attn: General Counsel
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with a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
Facsimile No.: (310) 203-7199
Attn: Andrew W. Gross, Esq.
If to the Company to:
Innovent Systems, Inc.
201 Continental Boulevard, Suite 250
El Segundo, California 90245
Facsimile No.: (310) 640-1668
Attn: President and Chief Executive Officer
with a copy to:
Latham & Watkins
650 Town Center Drive, Suite 2000
Costa Mesa, California 92626-1918
Facsimile No.: (714) 755-8290
Attn: Patrick T. Seaver, Esq.
All such notices, requests and other communications will (a) if delivered
personally to the address as provided in this Section 9.1, be deemed given upon
delivery, (b) if delivered by facsimile transmission to the facsimile number as
provided for in this Section 9.1, be deemed given upon facsimile confirmation,
and (c) if delivered by overnight courier to the address as provided in this
Section 9.1, be deemed given on the earlier of the first Business Day following
the date sent by such overnight courier or upon receipt (in each case regardless
of whether such notice, request or other communication is received by any other
Person to whom a copy of such notice is to be delivered pursuant to this Section
9.1). Any party from time to time may change its address, facsimile number or
other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
9.2. Entire Agreement. This Agreement and the Exhibits and Schedules
hereto, including the Company Disclosure Schedule and the Broadcom Disclosure
Schedule, 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, except for the Confidentiality Agreement, which shall continue in full
force and effect and shall survive any termination of this Agreement or the
Closing in accordance with its terms.
9.3. Further Assurances; Post-Closing Cooperation. At any time or from
time to time after the Closing, the parties shall execute and deliver to the
other party such other documents and instruments, provide such materials and
information and take such other actions as the other party may reasonably
request to consummate the transactions
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contemplated by this Agreement and otherwise to cause the other party to fulfill
its obligations under this Agreement and the transactions contemplated hereby.
Each party agrees to use commercially reasonable efforts to cause the conditions
to its obligations to consummate the Merger to be satisfied.
9.4. Waiver. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
9.5. Third Party Beneficiaries. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights, and this Agreement does not
confer any such rights, upon any other Person other than any Person entitled to
indemnity under Section 5.14 or Article 7.
9.6. No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned (by operation of law or
otherwise) by any party without the prior written consent of the other party and
any attempt to do so will be void. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the
parties hereto and their respective successors and assigns.
9.7. Headings. The headings and table of contents used in this Agreement
have been inserted for convenience of reference only and do not define or limit
the provisions hereof.
9.8. Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
9.9. Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of California,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of California or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
California. Each of the parties hereto hereby submits to the exclusive
jurisdiction of the United States District Courts in the Central and Southern
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Districts of California and the Superior Courts of the State of California
located in Los Angeles and Orange County, California for purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. Each of the parties hereto waives any objection which it
may now or hereafter have to personal jurisdiction, to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
9.10. Mediation. In the event there is any controversy, dispute or claim
between the parties to this Agreement, including any claim arising out of, in
connection with, or in relation to the interpretation, performance or breach of
this Agreement which cannot be resolved by the parties, the parties agree to
employ a mediator from the American Arbitration Association (the "AAA") to
assist them in reaching resolution of such controversy, dispute or claim
according to the Commercial Mediation Rules of the AAA. The mediator shall be a
corporate attorney practicing in Los Angeles or Orange County, California, with
at least 15 years experience in mergers and acquisitions. The fees and expenses
of the mediator shall be shared equally by the parties to such mediation. If
after reasonable efforts, and over a period of sixty (60) days, the parties are
unable to reach agreement on such dispute utilizing the mediator, any party may
elect to bring suit in any court having jurisdiction under Section 9.9 hereof.
9.11. WAIVER OF TRIAL BY JURY. IN ANY ACTION OR PROCEEDING ARISING
HEREFROM, THE PARTIES HERETO CONSENT TO TRIAL WITHOUT A JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER OR
THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION OR PROCEEDING.
9.12. Construction. The parties hereto agree that this Agreement is the
product of negotiation between sophisticated parties and individuals, all of
whom were represented by counsel, and each of whom had an opportunity to
participate in and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto but rather shall be given a
fair and reasonable construction without regard to the rule of contra
preferentum.
9.13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
9.14. Specific Performance. 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 agreed that the parties shall be entitled to 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.
ARTICLE 10
DEFINITIONS
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10.1. Definitions. As used in this Agreement, the following defined
terms shall have the meanings indicated below:
"Actions or Proceedings" means any action, suit, complaint,
petition, investigation, proceeding, arbitration, litigation or Governmental or
Regulatory Authority investigation, audit or other proceeding, whether civil or
criminal, in law or in equity, or before any arbitrator or Governmental
Regulatory Authority.
"Additional Escrow Amount" has the meaning ascribed to it in
Section 7.2(a).
"Affiliate" means, as applied to any Person, (a) any other Person
directly or indirectly controlling, controlled by or under common control with,
that Person, (b) any other Person that owns or controls (i) 10% or more of any
class of equity securities of that Person or any of its Affiliates or (ii) 10%
or more of any class of equity securities (including any equity securities
issuable upon the exercise of any option or convertible security) of that Person
or any of its Affiliates, or (c) as to a corporation, each director and officer
thereof, and as to a partnership, each general partner thereof, and as to a
limited liability company, each managing member or similarly authorized person
thereof. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by", and "under
common control with") as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through ownership of voting securities or
by contract or otherwise.
"Aggregate Common Number" means the aggregate number of shares of
Company Common Stock outstanding immediately prior to the Effective Time
(including all shares of Company Common Stock issued or issuable upon conversion
of all shares of Company Preferred Stock which participate with the Company
Common Stock in the Merger and upon exercise, conversion or exchange in full of
all unvested and vested Company Options, Company Warrants and Company Stock
Purchase Rights which are not exercised, converted, exchanged or expired as of
the Effective Time).
"Aggregate Share Number" means 3,057,690 shares of Broadcom Common
Stock, subject to adjustment pursuant to Section 1.8 and Section 5.28.
"Agreement" means this Merger Agreement and Plan of
Reorganization, including (unless the context otherwise requires) the Exhibits
and the Disclosure Schedules and the Closing certificates delivered in
connection herewith, as the same may be amended or supplemented from time to
time in accordance with the terms hereof.
"Ancillary Agreements" has the meaning ascribed to it in Section
2.2.
"Approval" means any approval, authorization, consent, permit,
qualification or registration, or any waiver of any of the foregoing, required
to be obtained from or made with, or any notice, statement or other
communication required to be filed with or delivered to, any Governmental or
Regulatory Authority or any other Person.
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"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, operated, owned, licensed or leased by such Person, including
cash, cash equivalents, Investment Assets, accounts and notes receivable,
chattel paper, documents, instruments, general intangibles, real estate,
equipment, inventory, goods and Intellectual Property.
"Associate" means, with respect to any Person, any corporation or
other business organization of which such Person is an officer or partner or is
the beneficial owner, directly or indirectly, of ten percent (10%) or more of
any class of equity securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.
"Audited Financial Statement Date" means December 31, 1999.
"Books and Records" means all files, documents, instruments,
papers, books and records of the Company relating to the Business or Condition
of the Company, including financial statements, internal reports, Tax Returns
and related work papers and letters from accountants, budgets, pricing
guidelines, ledgers, journals, deeds, title policies, minute books, stock
certificates and books, stock transfer ledgers, Contracts, Licenses, customer
lists, computer files and programs (including data processing files and
records), retrieval programs, operating data and plans and environmental studies
and plans.
"Broadcom" has the meaning ascribed to it in the forepart of this
Agreement.
"Broadcom Common Stock" has the meaning ascribed to it in Recital
B to this Agreement.
"Broadcom Disclosure Schedule" has the meaning ascribed to it in
the forepart of Article 3.
"Broadcom Financial Statements" has the meaning ascribed to it in
Section 3.4.
"Broadcom Indemnitee" has the meaning ascribed to it in Section
7.2(b).
"Business Combination" means, with respect to any Person, (a) any
merger, consolidation, share exchange reorganization or other business
combination transaction to which such Person is a party, (b) any sale, dividend,
split or other disposition of any capital stock or other equity interests of
such Person (except for issuances of common stock upon conversion of preferred
stock outstanding on the date hereof or upon the exercise of options or warrants
outstanding on the date hereof or issued in accordance with the covenants of
this Agreement), (c) any tender offer (including a self tender), exchange offer,
recapitalization, restructuring, liquidation, dissolution or similar or
extraordinary transaction, (d) any sale, dividend or other disposition of all or
a material or significant portion of the Assets and Properties of such Person
(including by way of exclusive license or joint venture formation)
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or (e) the entering into of any agreement or understanding, the granting of any
rights or options, or the acquiescence of such Person, with respect to any of
the foregoing.
"Business Day" means a day other than Saturday, Sunday or any day
on which banks located in the State of California are authorized or obligated to
close.
"Business or Condition of Broadcom" means the business, financial
condition, results of operations, or Assets and Properties of Broadcom and its
Subsidiaries, in the aggregate.
"Business or Condition of the Company" means the business,
financial condition, results of operations, or Assets and Properties of the
Company.
"California Agreement of Merger" has the meaning ascribed to it in
Section 1.2.
"California Code" means the California Corporations Code and all
amendments and additions thereto.
"California Permit" has the meaning ascribed to it in Section
1.14.
"Certificates" has the meaning ascribed to it in Section 1.11(b).
"Closing" means the closing of the transactions contemplated by
Section 1.2.
"Closing Date" has the meaning ascribed to it in Section 1.2.
"Closing Price" means the average closing sales price of Broadcom
Common Stock as traded on the NNM and reported by the Wall Street Journal, for
the thirty (30) consecutive market trading days commencing on the thirty second
market trading day prior to the Closing Date and ending on (inclusive) the third
market trading day prior to the Closing Date.
"COBRA" has the meaning ascribed to it in Section 2.14(f).
"Company" has the meaning ascribed to it in the forepart of this
Agreement.
"Company Capital Stock" means the Company Common Stock and the
Company Preferred Stock.
"Company Common Stock" has the meaning ascribed to it in Section
2.3(a).
"Company Disclosure Schedule" has the meaning ascribed to it in
the forepart of Article 2.
"Company Financial Statements" means the audited consolidated
balance sheets of the Company as of each of the fiscal years ended December 31,
1998 through December 31, 1999, respectively, and the related audited
consolidated statements of operations, shareholders' equity and cash flows for
each of the fiscal years then ended, in
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each case, including the notes thereto and the unqualified report of the
Company's independent accountants with respect thereto.
"Company Indemnified Party" has the meaning ascribed to it in
Section 5.14.
"Company Intellectual Property" shall mean any Intellectual
Property that (a) is owned by; (b) is licensed to; (c) was developed or created
by or for the Company or (d) is used in or necessary for the conduct of the
business of the Company as presently or heretofore conducted or as proposed to
be conducted in the Company's 2000 Operating Plan, including any such
Intellectual Property created by any of the Company's founders, employees or
consultants and including any such Intellectual Property created by any of the
Company's founders prior to the creation of the Company.
"Company Option(s)" means any Option to purchase Company Capital
Stock, excluding the Company Preferred Stock and the Company Warrants.
"Company Preferred Stock" has the meaning ascribed to it in
Section 2.3(a).
"Company Registered Intellectual Property" means all Registered
Intellectual Property owned by, filed in the name of, assigned to or applied for
by, the Company.
"Company Restricted Stock" means shares of Company Capital Stock
purchased pursuant to an exercise of a Company Stock Purchase Right which are
subject to a repurchase option by the Company.
"Company Series A Preferred Stock" has the meaning set forth in
2.3(a).
"Company Shareholder Action" has the meaning ascribed to it in
Section 2.35.
"Company Stock Plans" has the meaning ascribed to it in Section
1.6(d)(ii).
"Company Stock Purchase Right" means a right to purchase Company
Restricted Stock granted pursuant to the Company Stock Plans or otherwise.
"Company Warrants" means all of the warrants to purchase Company
Capital Stock listed on Section 2.3(d) of the Company Disclosure Schedule.
"Competing Proposed Transaction" has the meaning ascribed to it in
Section 4.2.
"Confidentiality Agreement" has the meaning ascribed to it in
Section 5.4.
"Contract" means any material contract, agreement or other
business arrangement (whether oral or written) including:
(1) any distributor, sales, advertising, agency or
manufacturer's representative contract;
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(2) any continuing contract for the purchase of materials,
supplies, equipment or services involving in the case of any such
contract more than fifty thousand dollars ($50,000) annually or one
hundred thousand dollars ($100,000) over the life of the contract;
(3) any contract that expires or may be renewed at the option
of any person other than the Company so as to expire more than one year
after the date of this Agreement;
(4) any trust indenture, mortgage, promissory note, loan
agreement or other contract for the borrowing of money, any currency
exchange, commodities or other hedging arrangement or any leasing
transaction of the type required to be capitalized in accordance with
generally accepted accounting principles;
(5) any contract for capital expenditures in excess of one
hundred thousand dollars ($100,000) in the aggregate;
(6) any contract limiting the freedom of the Company to engage
in any line of business or to compete with any other Person or any
confidentiality, secrecy or non-disclosure contract;
(7) any contract pursuant to which the Company is a lessor of
any machinery, equipment, motor vehicles, office furniture, fixtures or
other personal property;
(8) any contract with any person with whom the Company does
not deal at arm's length;
(9) any contract that is not terminable by the Company upon 30
days (or less) notice by the Company without penalty or obligation to
make payments based on such termination and which (i) requires payments
by the Company in excess of $50,000 (either alone or pursuant to a
series of related contracts), or (ii) requires the Company to provide
services to any Person after the Closing; or
(10) any agreement of guarantee, support, indemnification,
assumption or endorsement of, or any similar commitment with respect to,
the obligations, liabilities (whether accrued, absolute, contingent or
otherwise) or indebtedness of any other Person.
"Depositary Agent" means U.S. Stock Transfer Corporation (or other
institution acceptable to Broadcom and the Shareholder Agent).
"Disclosure Schedules" means the Company Disclosure Schedule and
the Broadcom Disclosure Schedule.
"Dissenting Shares" has the meaning ascribed to it in Section 1.10
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"Effective Time" has the meaning ascribed to it in Section 1.2.
"Environment" means air, surface water, ground water, or land,
including land surface or subsurface, and any receptors such as persons,
wildlife, fish, biota or other natural resources.
"Environmental Clean-up Site" means any location which is listed
or proposed for listing on the National Priorities List, the Comprehensive
Environmental Response, Compensation and Liability Information System, or on any
similar state list of sites relating to investigation or cleanup, or which is
the subject of any pending or threatened action, suit, proceeding, or
investigation related to or arising from any location at which there has been a
Release or threatened or suspected Release of a Hazardous Material.
"Environmental Law" means any federal, state, local or foreign
environmental, health and safety or other Law relating to of Hazardous
Materials, including without limitation the Comprehensive, Environmental
Response Compensation and Liability Act, the Clean Air Act, the Federal Water
Pollution Control Act, the Solid Waste Disposal Act, the Federal Insecticide,
Fungicide and Rodenticide Act, and the California Safe Drinking Water and Toxic
Enforcement Act.
"Environmental Permit" means any permit, license, approval,
consent or authorization required under or in connection with any Environmental
Law and includes without limitation any and all orders, consent orders or
binding agreements issued by or entered into with a Governmental or Regulatory
Authority.
"Equity Equivalents" means securities (including Options to
purchase any shares of Company Capital Stock) which, by their terms, are or may
be exercisable, convertible or exchangeable for or into common stock, preferred
stock or other securities at the election of the holder thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" has the meaning ascribed to in the definition of
Plan in this Section 10.
"Escrow Fund" means the sum of (i) the Initial Escrow Amount and
(ii) the Additional Escrow Amount (as such amount may be increased from time to
time during the Escrow Period upon exercise of Company Options and Company
Warrants assumed by Broadcom as provided in Section 7.2(a)).
"Escrow Period" has the meaning ascribed to it in Section 7.2(c).
"Estimated Third Party Expenses" has the meaning ascribed to it in
Section 2.26.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
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"Exchange Agent" means U.S. Stock Transfer Corporation.
"Exchange Agreement" means a Stock Exchange Agreement in
substantially the form attached hereto as Exhibit L.
"Exchange Ratio" means the quotient obtained by dividing (a) the
Aggregate Share Number by (b) the Aggregate Common Number.
"Expiration Date" has the meaning ascribed to it in Section 7.1.
"Fairness Hearing" has the meaning ascribed to it in Section 1.14.
"GAAP" means generally accepted accounting principles in the
United States, as in effect from time to time.
"Good Faith Consultation" means consultation with a Person's
independent accountants following disclosure in good faith to such accountants
of all facts requested by such accountants or which the specified Person
otherwise had reason to believe would be relevant to such accountants'
assessment.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, bureau, board, commission, department, official
or other instrumentality of the United States, any foreign country or any
domestic or foreign state, county, city or other political subdivision, and
shall include any stock exchange, quotation service and the National Association
of Securities Dealers.
"Hazardous Material" means (a) any chemical, material, substance
or waste including, containing or constituting petroleum or petroleum products,
solvents (including chlorinated solvents), nuclear or radioactive materials,
asbestos in any form that is or could become friable, radon, lead-based paint,
urea formaldehyde foam insulation or polychlorinated biphenyls, (b) any
chemicals, materials, substances or wastes which are now defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants" or words of similar import under any
Environmental Law; or (c) any other chemical, material, substance or waste which
is regulated by any Governmental or Regulatory Authority or which could
constitute a nuisance.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"Income Tax" means any income, alternative or add-on minimum tax,
gross income, gross receipts, franchise (to the extent based on income),
profits, including estimated taxes relating to any of the foregoing, or other
similar tax or other like assessment or charge of similar kind whatsoever,
excluding any Other Tax, together with any interest and any penalty, addition to
tax or additional amount imposed by any Taxing Authority responsible for the
imposition of any such Tax (domestic or foreign).
"Indebtedness" of any Person means all obligations of such Person
(a) for borrowed money, (b) evidenced by notes, bonds, debentures or similar
instruments, (c) for
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the deferred purchase price of goods or services (other than trade payables or
accruals incurred in the ordinary course of business), (d) under capital leases
and (e) in the nature of guarantees of the obligations described in clauses (a)
through (d) above of any other Person.
"Information Statement" has the meaning ascribed to it in Section
2.35.
"Initial Escrow Amount" means the number of shares of Broadcom
Common Stock obtained by multiplying (x) the aggregate number of shares of
Broadcom Common Stock issuable by Broadcom at the Effective Time to holders of
Company Capital Stock in accordance with Section 1.6(a) by (y) 0.08. The shares
deposited with the Depositary Agent shall, to the extent possible, be shares
that are not subject to any repurchase rights.
"Intellectual Property" means all trademarks and trademark rights,
trade names and trade name rights, service marks and service mark rights,
service names and service name rights, patents and patent rights, utility models
and utility model rights, copyrights, mask work rights, brand names, trade
dress, product designs, product packaging, business and product names, logos,
slogans, rights of publicity, trade secrets, inventions (whether patentable or
not), invention disclosures, improvements, processes, formulae, industrial
models, processes, designs, specifications, technology, methodologies, computer
software (including all source code and object code), firmware, development
tools, flow charts, annotations, all Web addresses, sites and domain names, all
data bases and data collections and all rights therein, any other confidential
and proprietary right or information, whether or not subject to statutory
registration, and all related technical information, manufacturing, engineering
and technical drawings, know-how and all pending applications for and
registrations of patents, utility models, trademarks, service marks and
copyrights, and the right to sue for past infringement, if any, in connection
with any of the foregoing, and all documents, disks, records, files and other
media on which any of the foregoing is stored.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"Investment Assets" means all debentures, notes and other
evidences of Indebtedness, stocks, securities (including rights to purchase and
securities convertible into or exchangeable for other securities), interests in
joint ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by the Company.
"IRS" means the United States Internal Revenue Service or any
successor entity.
"IT" has the meaning ascribed to it in Section 5.23.
"Law" or "Laws" means any law, statute, order, decree, consent
decree, judgment, rule, regulation, ordinance or other pronouncement having the
effect of law whether in the United States, any foreign country, or any domestic
or foreign state, county, city or other political subdivision or of any
Governmental or Regulatory Authority.
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"Leased Real Property(ies)" has the meaning ascribed to it in
Section 2.15(a).
"Liabilities" means all Indebtedness, obligations and other
liabilities of a Person, whether absolute, accrued, contingent (or based upon
any contingency), known or unknown, fixed or otherwise, or whether due or to
become due.
"License" means any Contract that grants a Person the right to use
or otherwise enjoy the benefits of any Intellectual Property (including without
limitation any covenants not to sue with respect to any Intellectual Property).
"Liens" means any mortgage, pledge, assessment, security interest,
lease, lien, easement, license, covenant, condition, restriction, adverse claim,
levy, charge, option, equity, adverse claim or restriction or other encumbrance
of any kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing, except for any restrictions on transfer
generally arising under any applicable federal or state securities law.
"Loss(es)" means any and all damages, fines, fees, Taxes,
penalties, deficiencies, losses and expenses, including actual interest paid or
accrued, reasonable out-of-pocket expenses of investigation, court costs,
reasonable fees and expenses of attorneys, accountants and other experts or
other expenses of litigation or other proceedings or of any claim, default or
assessment (such fees and expenses to include all fees and expenses, including
fees and expenses of attorneys, incurred in connection with (a) the
investigation or defense of any Third Party Claims or (b) asserting or disputing
any rights under this Agreement against any party hereto or otherwise), net of
any insurance proceeds actually received (without any adverse effect on the
premiums paid for such insurance) or proceeds received by virtue of third party
indemnification.
"Major Shareholders" means the shareholders of the Company listed
on Schedule 10.1.
"Merger" has the meaning ascribed to it in Recital A to this
Agreement.
"NASD" means the National Association of Securities Dealers, Inc.
"New Shares" has the meaning ascribed to it in Section 7.2(d)(ii).
"NNM" means the distinct tier of The Nasdaq Stock Market referred
to as the Nasdaq National Market.
"Non-Competition Agreement" has the meaning ascribed to it in
Recital D.
"Officer's Certificate" has the meaning ascribed to it in Section
7.2(e)(i).
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract (other
than the Company Series A Preferred Stock) that gives the right to (a) purchase
or otherwise receive or be issued any shares of capital stock or other equity
interests of such Person or any security of any kind convertible into or
exchangeable or exercisable for any shares of capital stock or other
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equity interests of such Person or (b) receive any benefits or rights similar to
any rights enjoyed by or accruing to the holder of shares of capital stock or
other equity interests of such Person, including any rights to participate in
the equity, income or election of directors or officers of such Person.
"Order" means any writ, judgment, decree, injunction or similar
order of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Other Tax" means any sales, use, ad valorem, business license,
franchise (to the extent not based on income), withholding, payroll, employment,
excise, stamp, transfer, recording, occupation, premium, property, value added,
custom duty, severance, windfall profit or license tax, governmental fee or
other similar assessment or charge, together with any interest and any penalty,
addition to tax or additional amount imposed by any Taxing Authority responsible
for the imposition of any such tax (domestic or foreign).
"PBGC" means the Pension Benefit Guaranty Corporation established
under ERISA.
"Permit" means any license, permit, franchise or authorization.
"Permit Application" has the meaning ascribed to it in Section
2.35.
"Person" means any natural person, corporation, general
partnership, limited partnership, limited liability company or partnership,
proprietorship, other business organization, trust, union, association or
Governmental or Regulatory Authority.
"Plan" mean (a) each of the "employee benefit plans" (as such term
is defined in Section 3(3) of ERISA, of which any of the Company or any member
of the same controlled group of businesses as the Company within the meaning of
Section 4001(a)(14) of ERISA (an "ERISA Affiliate") is or ever was a sponsor or
participating employer or as to which the Company or any of its ERISA Affiliates
makes contributions or is required to make contributions, and (b) any similar
employment, severance or other arrangement or policy of any of the Company or
any of its ERISA Affiliates (whether written or oral) providing for health,
life, vision or dental insurance coverage (including self-insured arrangements),
workers' compensation, disability benefits, supplemental unemployment benefits,
vacation benefits or retirement benefits, fringe benefits, or for profit
sharing, deferred compensation, bonuses, stock options, stock appreciation or
other forms of incentive compensation or post-retirement insurance, compensation
or benefits (other than the Company Stock Plans, Company Options, Company
Warrants, Company Stock Purchase Rights, Restricted Stock Purchase Agreements
and Company Restricted Stock).
"Proxy Statement/Prospectus" has the meaning ascribed to it in
Section 2.35.
"PTO" means the United States Patent and Trademark Office.
"Registered Intellectual Property" shall mean all United States,
international and foreign: (a) patents and patent applications (including
provisional applications); (b) registered trademarks and
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servicemarks, applications to register trademarks and servicemarks,
intent-to-use applications, other registrations or applications to trademarks or
servicemarks, or trademarks or servicemarks in which common law rights are owned
or otherwise controlled; (c) registered copyrights and applications for
copyright registration; (d) any mask work registrations and applications to
register mask works; and (e) any other Intellectual Property that is the subject
of an application, certificate, filing, registration or other document issued
by, filed with, or recorded by, any state, government or other public legal
authority.
"Registration Statement" has the meaning ascribed to it in Section
1.14.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of a
Hazardous Material into the Environment.
"Representatives" has the meaning ascribed to it in Section 4.2.
"Repurchase Agreement" has the meaning ascribed to it in Recital C
to this Agreement.
"Restricted Stock Purchase Agreement" means a Restricted Stock
Purchase Agreement in one of the forms attached to the Company Stock Plans
pursuant to which the Company has sold Company Restricted Stock or issued
Company Stock Purchase Rights or as may otherwise been entered into by the
Company prior to the date of this Agreement.
"SEC" means the Securities and Exchange Commission or any
successor entity.
"SEC Documents" means, with respect to any Person, each report,
schedule, form, statement or other document filed or required to be filed with
the SEC by such Person pursuant to Section 13(a) of the Exchange Act.
"Securities Act" has the meaning ascribed to it in Section 1.14.
"Shareholder Agent" has the meaning ascribed to it in Section
7.2(h)(i).
"Site" means any of the real properties currently or previously
owned, leased, occupied, used or operated by the Company, any predecessors of
the Company, or any entities previously owned by the Company, including all
soil, subsoil, surface waters and groundwater.
"Subsidiary" means any Person in which the Company or Broadcom, as
the context requires, directly or indirectly through Subsidiaries or otherwise,
beneficially owns at least 50% of either the equity interest in, or the voting
control of, such Person, whether or not existing on the date hereof.
"Support Agreement" has the meaning ascribed to it in Recital C to
this Agreement.
"Surviving Corporation" has the meaning ascribed to it in Section
1.1.
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"Takeover Statute" means a "fair price," "moratorium," "control
share acquisition" or other similar antitakeover statute or regulation enacted
under state or federal laws in the United States.
"Tax" or "Taxes" means Income Taxes and/or Other Taxes, as the
context requires.
"Tax Laws" means the Internal Revenue Code, federal, state,
county, local or foreign laws relating to Taxes and any regulations or official
administrative pronouncements released thereunder.
"Tax Returns" means any return, report, information return,
schedule, certificate, statement or other document (including any related or
supporting information) filed or required to be filed with, or, where none is
required to be filed with a Taxing Authority, the statement or other document
issued by, a Taxing Authority in connection with any Tax.
"Taxing Authority" means any governmental agency, board, bureau,
body, department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Tax.
"Third Party Claim" has the meaning ascribed to it in Section
7.2(j).
"Third Party Expenses" has the meaning ascribed to it in Section
5.5.
"Warranty Obligations" has the meaning ascribed to it in Section
2.28.
10.2. Construction.
(a) Unless the context of this Agreement otherwise requires, (i)
words of any gender include each other gender, (ii) words using the singular or
plural number also include the plural or singular number, respectively, (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement as a whole and not to any particular Article, Section or
other subdivision, (iv) the terms "Article" or "Section" or other subdivision
refer to the specified Article, Section or other subdivision of the body of this
Agreement, (v) the phrases "ordinary course of business" and "ordinary course of
business consistent with past practice" refer to the business and practice of
the Company, (vi) the words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation," and (vii) when a
reference is made in this Agreement to Exhibits, such reference shall be to an
Exhibit to this Agreement unless otherwise indicated. All accounting terms used
herein and not expressly defined herein shall have the meanings given to them
under GAAP. The term "party" or "parties" when used herein refer to Broadcom, on
the one hand, and the Company, on the other.
(b) When used herein, the phrase "to the knowledge of" any Person,
"to the best knowledge of" any Person, "known to" any Person or any similar
phrase, means (i) with respect to any Person who is an individual, the actual
knowledge of such Person, (ii) with respect to the Company, the actual knowledge
of Ahmadreza Rofougaran, Maryam
81
<PAGE> 89
Rofougaran, William T. Colleran and Kevin Cadieux, (iii) with respect to
Broadcom, the actual knowledge of Henry T. Nicholas, III, Ph.D., Henry Samueli,
Willam J. Ruehle and David A. Dull, and (iv) in the case of each of (i), (ii)
and (iii), the knowledge of facts that such individuals should have after due
inquiry. For this purpose, "due inquiry" means inquiry of and consultation with
the officers of such Person and other individuals that have a similar position
or have similar powers and duties as the officers of such Person, and the
advisors, including legal counsel and outside auditors, who in each case are the
principal persons responsible for such matters as of the date hereof.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 90
IN WITNESS WHEREOF, Broadcom and the Company, and with respect to
Section 7.2 only, the Shareholder Agent and the Depositary Agent, have caused
this Agreement to be signed by their duly authorized representatives, all as of
the date first written above.
INNOVENT SYSTEMS, INC. BROADCOM CORPORATION
By:/s/ WILLIAM T. COLLERAN /s/ HENRY SAMUELI
-------------------------- -----------------
William T. Colleran, Ph.D. Henry Samueli, Ph.D.
President and Chief Executive Officer Vice President of Research &
Development, Chief Technical
Officer and Co-Chairman
U.S. STOCK TRANSFER CORPORATION,
AS DEPOSITARY AGENT SHAREHOLDER AGENT
By:/s/ RICHARD BROWN /s/ DAVID MANDEL
-------------------------- -----------------
Richard Brown David Mandel
Vice President
<PAGE> 91
MERGER AGREEMENT AND
PLAN OF REORGANIZATION
BY AND BETWEEN
BROADCOM CORPORATION
AND
INNOVENT SYSTEMS, INC.
Dated as of June 10, 2000
Exhibit A: Support Agreement
Exhibit B: Non-Competition Agreement
Exhibit C: Agreement of Merger
Exhibit D: [Intentionally Omitted]
Exhibit E1: Broadcom Officer's Certificate
Exhibit E2: Broadcom Secretary's Certificate
Exhibit F: Broadcom Counsel Legal Opinion
Exhibit G1: Innovent Officer's Certificate
Exhibit G2: Innovent Secretary's Certificate
Exhibit H: Opinion of Innovent Counsel
Exhibit I: Broadcom Tax Representation Letter
Exhibit J: Innovent Tax Representation Letter
Exhibit K: Stock Repurchase Agreement
Exhibit L: Exchange Agreements
Broadcom Corporation agrees to furnish supplementally a copy of any of the
foregoing exhibits to the SEC upon request.
