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AMENDED AND RESTATED
MERGER AGREEMENT AND
PLAN OF REORGANIZATION
BY AND AMONG
BROADCOM CORPORATION,
SIBYTE, INC.
AND
THE OTHER PARTIES SIGNATORY HERETO
Dated as of December 6, 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........................3
1.4 Articles of Incorporation and Bylaws 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..............................4
(b) Cancellation of Broadcom-Owned and Company-Owned Stock...........4
(c) Capital Stock of Broadcom........................................4
(d) Company Options, Company Warrants and Company Stock Plans........4
1.7 Reservation of Shares...................................................8
1.8 Adjustments to Exchange Ratios..........................................8
1.9 Fractional Shares.......................................................8
1.10 Dissenting Shares.......................................................8
1.11 Exchange Procedures.....................................................9
(a) Broadcom Common Stock............................................9
(b) Exchange Procedures..............................................9
(c) Distributions With Respect to Unexchanged Shares of Company
Capital Stock...................................................10
(d) Transfers of Ownership..........................................10
1.12 No Further Ownership Rights in Company Capital Stock...................11
1.13 Lost, Stolen or Destroyed Certificates.................................11
1.14 Earn-Out...............................................................11
(a) Earn-Outs; Earn-Out Milestones. ...............................11
(b) Illustrative Examples...........................................12
(c) Procedure.......................................................12
(d) Stockholder Agent; Depositary Agent. ..........................13
(e) Company Warrants................................................13
(f) No Assignment of Earn-Out Rights................................13
(g) Release of Earn-Out Escrow......................................14
1.15 Exemption From Registration; California Permit.........................14
1.16 Taking of Necessary Action; Further Action.............................14
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................15
2.1 Organization and Qualification.........................................15
2.2 Authority Relative to this Agreement...................................15
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2.3 Capital Stock..........................................................16
2.4 No Subsidiaries........................................................17
2.5 Directors and Officers.................................................17
2.6 No Conflicts...........................................................18
2.7 Books and Records; Organizational Documents............................18
2.8 Company Financial Statements...........................................18
2.9 Absence of Changes.....................................................19
2.10 No Undisclosed Liabilities.............................................23
2.11 Taxes..................................................................24
2.12 Legal Proceedings......................................................26
2.13 Compliance with Laws and Orders........................................26
2.14 Plans; ERISA...........................................................26
(a) Existence of Plans..............................................26
(b) Present Value of Benefits.......................................27
(c) Penalties; Reportable Events....................................28
(d) Deficiencies; Qualification.....................................28
(e) Acceleration....................................................29
(f) COBRA...........................................................29
(g) Litigation......................................................29
2.15 Real Property..........................................................29
2.16 Tangible Personal Property.............................................30
2.17 Intellectual Property..................................................31
2.18 Contracts..............................................................35
2.19 Insurance..............................................................36
2.20 Affiliate Transactions.................................................36
2.21 Employees; Labor Relations.............................................37
2.22 Environmental Matters..................................................38
2.23 Substantial Suppliers..................................................39
2.24 [Intentionally Omitted]................................................40
2.25 [Intentionally Omitted]................................................40
2.26 Other Negotiations; Brokers; Third Party Expenses......................40
2.27 Banks and Brokerage Accounts...........................................40
2.28 Warranty Obligations...................................................40
2.29 Foreign Corrupt Practices Act..........................................41
2.30 Tax-Free Reorganization................................................41
2.31 Financial Projections/Operating Plan...................................41
2.32 Approvals..............................................................41
2.33 Takeover Statutes......................................................42
2.34 Permit Application; Information Statement..............................42
2.35 No Solicitation. .....................................................43
2.36 Disclosure.............................................................43
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BROADCOM.............................43
3.1 Organization and Qualification.........................................44
3.2 Authority Relative to this Agreement...................................44
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3.3 Issuance of Broadcom Common Stock......................................44
3.4 SEC Documents; Broadcom Financial Statements...........................44
3.5 No Conflicts...........................................................45
3.6 Information to be Supplied by Broadcom.................................46
3.7 Investment Advisors....................................................46
3.8 Tax-Free Reorganization................................................46
3.9 Capitalization.........................................................46
ARTICLE 4 CONDUCT PRIOR TO THE EFFECTIVE TIME....................................46
4.1 Conduct of Business of the Company.....................................46
(a) Charter Documents...............................................47
(b) Dividends; Changes in Capital Stock.............................47
(c) Stock Option Plans..............................................47
(d) Contracts.......................................................48
(e) Issuance of Securities..........................................48
(f) Intellectual Property...........................................48
(g) Exclusive Rights................................................48
(h) Dispositions....................................................48
(i) Indebtedness....................................................48
(j) Leases..........................................................48
(k) Payment of Obligations..........................................48
(l) Capital Expenditures............................................48
(m) Insurance.......................................................48
(n) Termination or Waiver...........................................48
(o) Employee Benefit Plans; New Hires; Pay Increases................49
(p) Severance Arrangements..........................................49
(q) Lawsuits........................................................49
(r) Acquisitions....................................................49
(s) Taxes...........................................................49
(t) Revaluation.....................................................49
(u) Other...........................................................49
4.2 No Solicitation........................................................49
ARTICLE 5 ADDITIONAL AGREEMENTS..................................................50
5.1 Information Statement; Permit Application..............................50
5.2 Stockholder Approval...................................................52
5.3 Access to Information..................................................53
5.4 Confidentiality........................................................53
5.5 Expenses...............................................................53
5.6 Public Disclosure......................................................54
5.7 Approvals..............................................................54
5.8 FIRPTA Compliance......................................................54
5.9 Notification of Certain Matters........................................54
5.10 Company Affiliate Agreements...........................................54
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5.11 Additional Documents and Further Assurances; Cooperation...............55
5.12 Indemnification........................................................55
5.13 Form S-8...............................................................55
5.14 NNM Listing of Additional Shares Application...........................56
5.15 Company's Auditors.....................................................56
5.16 Termination of 401(k) Plans............................................56
5.17 Takeover Statutes......................................................56
5.18 Treatment as Reorganization............................................56
5.19 Company Repurchases....................................................56
5.20 Information Technology Access..........................................56
5.21 Change of Merger Form..................................................57
5.22 Intellectual Property..................................................58
5.23 Delivery of Stock Ledger and Minute Book of the Company................58
5.24 Adjustment of Base Share Number and Earn-Out Share Numbers. ..........58
5.25 Certain Actions Relating to the Holders of Warrants and Preferred
Stock..................................................................59
5.26 Employee Benefits......................................................59
5.27 Capitalization Table...................................................59
ARTICLE 6 CONDITIONS TO THE MERGER...............................................60
6.1 Conditions to Obligations of Each Party to Effect the Merger...........60
(a) Governmental and Regulatory Approvals...........................60
(b) No Injunctions or Regulatory Restraints; Illegality.............60
(c) Tax Opinions....................................................60
(d) Stockholder Approval............................................60
(e) Fairness Hearing and California Permit; Private Placement
Alternative. ..................................................60
(f) Listing of Additional Shares....................................60
6.2 Additional Conditions to Obligations of the Company....................61
(a) Representations and Warranties..................................61
(b) Performance.....................................................61
(c) Officers' Certificates..........................................61
(d) Legal Opinion...................................................61
(e) Tax Representation Letter.......................................61
6.3 Additional Conditions to the Obligations of Broadcom...................61
(a) Representations and Warranties..................................62
(b) Performance.....................................................62
(c) Officers' Certificates..........................................62
(d) Third Party Consents............................................62
(e) Legal Proceedings...............................................62
(f) Legal Opinion...................................................63
(g) Tax Representation Letter.......................................63
(h) Non-Competition Agreements......................................63
(i) Delivery of Agreements..........................................63
(j) Employees.......................................................63
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(k) Limitation on Dissent...........................................64
(l) No Material Adverse Change......................................64
(m) Company Intellectual Property...................................64
(n) Assignment of Intellectual Property.............................64
(o) Stockholder Approval of Certain Payments........................64
(p) Certain Waivers and Actions.....................................65
(q) Termination of 401(k) Plan......................................65
ARTICLE 7 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS;
ESCROW PROVISIONS......................................................65
7.1 Survival of Representations, Warranties, Covenants and Agreements......65
7.2 Escrow Provisions......................................................65
(a) Establishment of the Escrow Fund................................65
(b) Recourse to the Escrow Fund.....................................66
(c) Escrow Period; Distribution of Escrow Fund upon Termination
of Escrow Period................................................67
(d) Protection of Escrow Fund.......................................67
(e) Claims Upon Escrow Fund.........................................68
(f) Objections to Claims............................................68
(g) Resolution of Conflicts; Arbitration............................68
(h) Stockholder Agent of the Stockholders; Power of Attorney........70
(i) Actions of the Stockholder Agent................................70
(j) Third-Party Claims..............................................71
(k) Indemnification for Stockholder Agent...........................71
(l) Depositary Agent's Duties.......................................71
(m) Fees............................................................73
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER......................................73
8.1 Termination............................................................73
8.2 Effect of Termination..................................................75
8.3 Amendment..............................................................75
8.4 Extension; Waiver......................................................75
ARTICLE 9 MISCELLANEOUS PROVISIONS...............................................75
9.1 Notices................................................................75
9.2 Entire Agreement.......................................................78
9.3 Further Assurances; Post-Closing Cooperation...........................78
9.4 Waiver.................................................................78
9.5 Third Party Beneficiaries..............................................78
9.6 No Assignment; Binding Effect..........................................78
9.7 Headings...............................................................78
9.8 Invalid Provisions.....................................................78
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9.9 Governing Law..........................................................79
9.10 WAIVER OF TRIAL BY JURY................................................79
9.11 Construction...........................................................79
9.12 Counterparts...........................................................79
9.13 Specific Performance...................................................79
ARTICLE 10 DEFINITIONS............................................................80
10.1 Definitions............................................................80
10.2 Construction...........................................................94
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AMENDED AND RESTATED
MERGER AGREEMENT AND
PLAN OF REORGANIZATION
This AMENDED AND RESTATED MERGER AGREEMENT AND PLAN OF REORGANIZATION is
made and entered into as of December 6, 2000 (the "Amendment Date"), by and
among BROADCOM CORPORATION, a California corporation ("Broadcom"), and SIBYTE,
INC., a Delaware corporation (the "Company"), and, with respect to Article 7 and
Article 9 only, Leo A. Joseph, as Stockholder 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. Broadcom and the Company and, with respect to Article 7 and Article 9
thereof only, Leo A. Joseph, as Stockholder Agent, and U.S. Stock Transfer
Corporation, as Depositary Agent, have previously entered into that certain
Merger Agreement and Plan of Reorganization (the "Original Agreement") dated as
of November 3, 2000 which provides, among other things, for Broadcom to acquire
the Company pursuant to the merger of the Company with and into Broadcom.
B. Broadcom and the Company and, with respect to Article 7 and Article 9
thereof only, Leo A. Joseph, as Stockholder Agent, and U.S. Stock Transfer
Corporation, as Depositary Agent, desire to amend and restated the Original
Agreement.
C. 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.
D. Prior to the Effective Time, all outstanding shares of Company
Preferred Stock will be converted into outstanding shares of Company Common
Stock.
E. Pursuant to the Merger, among other things, and subject to the terms
and conditions of this Agreement, (i) all of the outstanding shares of Company
Common Stock 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) all 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.
F. As a condition and an inducement to the willingness of Broadcom to
enter into this Agreement, certain stockholders of the Company have entered into
(i) Support Agreements with Broadcom in substantially the form attached hereto
as Exhibit A ("Support
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Agreements") pursuant to which, among other things, such stockholders have
agreed to vote the shares of Company Capital Stock owned by them in favor of the
Merger and to convert, prior to the Effective Time, the shares of Company
Preferred Stock owned by them, if any, into shares of Company Common Stock and
(ii) Company Affiliate Agreements in substantially the form attached hereto as
Exhibit B ("Company Affiliate Agreements").
G. As a condition and a further inducement to Broadcom to enter into this
Agreement, certain employees of the Company have entered into Non-Competition
Agreements substantially in the form attached hereto as Exhibit C (the
"Non-Competition Agreements"), each of which shall become effective at the
Effective Time.
H. 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 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.
I. The Company and Broadcom desire to make certain representations,
warranties, covenants and agreements in connection with the Merger.
J. A portion of the shares of Broadcom Common Stock otherwise issuable 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.
K. An additional portion of the shares of Broadcom Common Stock otherwise
issuable by Broadcom in connection with the Merger or which are issued upon the
exercise of Company Options after the Effective Time 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 1 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 and Delaware Law, 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") is expected to take
place on or about December 10, 2000 and will take place no later than five
Business Days following
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satisfaction or waiver of the conditions set forth in Article 7, 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 an Agreement of Merger (or like instrument),
in substantially the form attached hereto as Exhibit D-1 (the "California
Agreement of Merger"), with the Secretary of State of the State of California,
and the filing of a Certificate of Merger (or like instrument), in substantially
the form attached hereto as Exhibit D-2 (the "Delaware Certificate of Merger"),
with the Secretary of State of the State of Delaware, in each case in accordance
with the relevant provisions of applicable law (the time of acceptance by the
Secretary of State of the State of Delaware of such filing or such later time as
may be agreed to by the parties and set forth in the Delaware Certificate 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 Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of 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.
1.4 Articles of Incorporation and Bylaws 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 bylaws of the
Surviving Corporation.
(b) At the Effective Time, the bylaws of Broadcom, as in effect
immediately prior to the Effective Time, shall be the bylaws of the Surviving
Corporation until thereafter amended as provided by such bylaws, 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 bylaws 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 bylaws 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 (if any) 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
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Company Options, Company Warrants (if any) and Company Stock Purchase Rights
which are then outstanding (other than Company Warrants which by their terms
expire without payment, conversion, adjustment or other consideration at the
Effective Time) shall not exceed 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
Common Stock (assuming conversion of all outstanding shares of Company Preferred
Stock) issued and outstanding immediately prior to the Effective Time (other
than any shares of Company Common 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, at the Effective Time, that number of shares of
Broadcom Common Stock equal to the sum of (i) the Exchange Ratio and (ii) the
Earn-Out Exchange Ratio (subject to Section 1.9 and Section 1.14).
(b) Cancellation of Broadcom-Owned and Company-Owned Stock. Each
share of Company Common 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, Company Warrants 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 the
provisions set forth below.
(i) Each unexpired and unexercised Company Option, Company
Warrant and Company Stock Purchase Right then outstanding, whether vested or
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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, except
as provided in Section 1.6(d)(iii), 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 any repurchase rights or vesting provisions), provided that (x), with
respect to a Company Option or Company Stock Purchase Right, (A) such Company
Option 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 or Company Stock Purchase Right immediately prior to the
Effective Time (assuming such Company Option or Company Stock Purchase Right
were exercisable in full) multiplied by the sum of the Exchange Ratio and the
Earn-Out Exchange Ratio (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 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 or Company Stock Purchase Right was exercisable
immediately prior to the Effective Time by the sum of the Exchange Ratio and the
Earn-Out Exchange Ratio (rounded up to the nearest whole cent) and (y) with
respect to a Company Warrant, (A) such Company Warrant 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 Warrant immediately prior to the Effective Time (assuming such
Company Warrant were exercisable in full) multiplied by the Exchange Ratio
(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 Warrant shall be equal to the
quotient determined by dividing the exercise price per share of Company Capital
Stock at which such Company Warrant was exercisable immediately prior to the
Effective Time by the Exchange Ratio (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 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. In the event of a final determination that one or more Earn-Out
Milestones shall not be satisfied pursuant to Section 1.14 and thus that the
Earn-Out Exchange Ratio shall not be fully earned, then the number of shares of
Broadcom Common Stock for which a Company Option is exercisable and the exercise
price therefore shall be adjusted proportionately.
(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 1998 Stock
Incentive Plan (the "1998 Company Stock Plan"), the 2000 Key Employee Stock Plan
(the "2000 Company Stock Plan" and together with the 1998 Company 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 (the "Founders
Stock Agreements"), true and
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correct copies of which have been made available by the Company to Broadcom.
Except as provided in Section 1.6(d)(iii), 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 September 5, 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, that the per share repurchase price for the shares of Broadcom Common
Stock that were issued in exchange for Company Restricted Stock 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 sum of
the Exchange Ratio and the Earn-Out Exchange Ratio (rounded to the nearest whole
cent) and subject to an appropriate adjustment if any of the Earn-Out Milestones
are not satisfied).
(iii) The Company agrees to take all actions necessary or
advisable to cause all Company Options, Company Warrants, Company Stock Purchase
Rights and Company Restricted Stock to remain unchanged except (A) for the
conversion into options, warrants or rights to purchase shares of Broadcom
Common Stock as provided for in this Section 1.6(d), (B) that any acceleration
of vesting, continuation of vesting after termination of employment or other
special vesting (whether with the passage of time, upon the occurrence of
certain events or otherwise) that might occur, result from or be related to the
transactions contemplated by this Agreement and the Ancillary Agreements shall
be prevented from occurring through the modification, through an amendment in
substantially the forms of Exhibits E-1 and E-2, as applicable, of the
applicable Company Option, Company Warrant, Company Stock Purchase Right or
Company Restricted Stock (and any employment agreement or other agreement
providing for such acceleration) prior to the date of this Agreement; provided,
however, that the foregoing provisions in clause (B) of this Section 1.6(d)(iii)
shall not apply to Company Options, Company Warrants, Company Stock Purchase
Rights or Company Restricted Stock or such portions of such Company Options,
Company Warrants, Company Stock Purchase Rights or Company Restricted Stock, to
the extent set forth in Section 1.6(d)(iii) of the Company Disclosure Schedule,
and (C) each such Company Option, Company Warrant, Company Stock Purchase Right
or Company Restricted Stock (other than a Permitted Grant) or such portions of
such Company Options, Company Stock Purchase Rights or Company Restricted Stock
that is required to be modified pursuant to the provisions of clause (B) of this
Section 1.6(d)(iii) shall be further modified, through an amendment in
substantially the form of Exhibits E-1 and E-2, as applicable, prior to the
Effective Time to provide for vesting acceleration in the event that the
employment of the holder of such Company Option, Company Stock Purchase Right or
Company Restricted Stock is terminated (x) in the case of employees other than
the Founders, without Cause within the twenty-four (24) months immediately
following the Effective Time and (y) in the case of the Founders is terminated
without cause or is constructively terminated in accordance with Exhibit E-1;
provided in each case that such acceleration of vesting shall only be for the
portion that would have accelerated or continued under the applicable Company
Option, Company Stock Purchase Right or Company Restricted Stock prior to such
modification pursuant to clause (B) of this Section 1.6(d)(iii).
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(iv) The shares of Broadcom Common Stock received upon
exercise of a Company Option after the Effective Time that relate to the
Earn-Out Exchange Ratio and for which an Earn-Out Milestone has not been
satisfied (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 exercise of such Company
Option) shall be held in escrow (each, an "Option Escrow") by Broadcom (or its
nominee) pending satisfaction of such Earn-Out Milestone and shall be released
from such Option Escrow only upon satisfaction of such Earn-Out Milestone by the
applicable Earn-Out Date. Promptly following the final determination of the
amount (if any) of an Earn-Out, the Person who exercised the Company Option
after the Effective Time shall be entitled to receive from such Option Escrow
the number of whole shares of Broadcom Common Stock to which such holder is
entitled as a result of the satisfaction of such Earn-Out Milestone. If it is
finally determined that any portion of an Earn-Out has not been and can not be
satisfied and thus will not be distributed from the Option Escrows or the
Earn-Out Escrow as set forth in Section 1.11 and Section 1.14, then the
appropriate portion of the shares of Broadcom Common Stock held in such Option
Escrow shall be forfeited and shall be released and returned for cancellation to
Broadcom from such Option Escrow. In addition, the shares of Broadcom Common
Stock received upon exercise of a Company Option after the Effective Time that
relate to the Earn-Out Exchange Ratio (A) shall be subject to the same
forfeiture provisions and the same rights of repurchase in favor of the Company
(as assigned pursuant to this Agreement to, and assumed by, Broadcom) as the
other shares acquired upon exercise of such Company Option and (B) shall vest
proportionately with the other shares underlying such Company Option in
accordance with the same vesting schedule applicable to such other shares.
Releases of shares of Broadcom Common Stock from the Option Escrows shall be
performed in a manner consistent with Section 1.14(c).
(v) Any New Shares in respect of Broadcom Common Stock in
the Option Escrows which have not been released from the Option Escrows shall be
added to the Option Escrows. New Shares issued in respect of shares of Broadcom
Common Stock which have been released from the Option Escrows shall not be added
to the Option Escrows but shall be distributed to the record holders thereof.
Cash dividends on Broadcom Common Stock shall not be added to the Option Escrows
but shall be distributed to the record holders of the Broadcom Common Stock on
the record date set for any such dividend. Each stockholder shall have voting
rights with respect to the shares of Broadcom Common Stock contributed to the
Option Escrows by such stockholder (and on any voting securities added to the
Option Escrows in respect of such shares of Broadcom Common Stock).
(vi) Any dispute with respect to the Option Escrows shall
be resolved in a manner consistent with the dispute resolution procedures set
forth in Section 1.14.
(vii) The provisions of Sections 7.2(h), (i) and (k) shall
apply to any acts taken by the Stockholder Agent pursuant to this Section
1.6(d). Any decision, act, consent or instruction of the Stockholder Agent in
connection with this Section 1.6(d) shall constitute a decision of all the
Company stockholders and optionholders and shall be final,
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<PAGE> 15
binding and conclusive upon each of such stockholders and optionholders and
Broadcom (and/or its nominee) in its capacity as holder of the Option Escrows
may rely upon any such decision, act, consent or instruction of the Stockholder
Agent as being the decision, act, consent or instruction of every such holder.
Broadcom and any such nominee are hereby relieved from any liability to any
Person for any acts done by it in accordance with such decision, act, consent or
instruction of the Stockholder Agent. The actions of Broadcom (and/or its
nominee) with respect to, and in its capacity as holder of, the Option Escrows
shall be entitled to the protection set forth (or equivalent to those set forth)
in Section 7.2(l).
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 Ratios. The Exchange Ratio and the Earn-Out
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 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 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 Delaware Law
or the California Code, as applicable, 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 Delaware Law or the
California Code, as applicable.
(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 Delaware Law or 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.
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<PAGE> 16
(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 Delaware Law or 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 Delaware Law or 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 then issuable in
exchange for outstanding shares of Company Capital Stock, together with 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 Escrow Amount; and provided further
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
Early Earn-Out Amount. The portion of the Escrow Amount and the Early Earn-Out
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 pursuant to Section 1.6 by virtue
of ownership of outstanding shares of Company Capital Stock.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time (and in any event within ten (10) Business Days thereafter),
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 to which such holder is entitled pursuant to
Section 1.6 (both with respect to the Exchange Ratio and the Earn-Out Exchange
Ratio), 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, less the number
of shares of Broadcom Common Stock to be deposited in the Earn-Out Escrow on
such holder's behalf
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<PAGE> 17
pursuant to Section 1.14, plus the amount of 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 and Section
1.14, as applicable, Broadcom shall cause to be distributed to the Depositary
Agent (i) a certificate or certificates (in such denominations as may be
requested by the Depositary Agent) representing a number of shares of Broadcom
Common Stock equal, in the aggregate, to the Escrow Amount, and (ii) a
certificate or certificates (in such denominations as may be requested by the
Depositary Agent) representing a number of shares of Broadcom Common Stock
equal, in the aggregate, to the Early Earn-Out Amount, which certificates 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
into the Escrow Fund or the Earn-Out Escrow, as applicable, and, in the case of
the Escrow Fund, shall be available to compensate Broadcom as provided in
Article 7 and, in the case of the Early Earn-Out Amount, shall be subject to
forfeiture and cancellation if the Earn-Out Milestones are not satisfied as
provided in Section 1.14. 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, 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), both with respect to the Exchange Ratio and the Earn-Out
Exchange Ratio, 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.
(d) Transfers of Ownership. If any certificate for shares of
Broadcom Common Stock is to be issued pursuant to this Agreement 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.
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<PAGE> 18
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 Common 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 Common Stock,
and there shall be no further registration of transfers on the records of the
Company of shares of Company Common 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 and cash in lieu of fractional shares 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 Earn-Out.
(a) Earn-Outs; Earn-Out Milestones. Schedule 1.14 sets forth the
four (4) components of the Earn-Out Amount (each an "Earn-Out" and collectively,
the "Earn-Outs"), and the applicable milestone contingencies (each, an "Earn-Out
Milestone" and collectively the "Earn-Out Milestones") that must be satisfied by
the applicable Earn-Out Date in order for such contingencies to be removed and
the shares of Broadcom Common Stock that relate to such Earn-Out to be (i)
released to the stockholders of the Company from the Earn-Out Escrow or the
Option Escrows, as applicable, or (ii) issued directly to the holder of a
Company Option that is exercised after such Earn-Out Milestone is satisfied. As
soon as reasonably practicable after the Effective Time, the Early Earn-Out
Amount, without any act of any stockholder, 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 "Earn-Out Escrow" to be governed by the terms set
forth herein. The portion of the Early Earn-Out Amount contributed into the
Earn-Out Escrow on behalf of each stockholder 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 as a result of the Earn-Out
Exchange Ratio. Except as set forth in Schedule 1.14, no Earn-Out is subject to
increase to make up for any reduction or forfeiture of any other Earn-Out. If an
Earn-Out is satisfied by the applicable Earn-Out Date, an appropriate portion
(based on the portion of the Earn-Out Amount that such Earn-Out represents) of
the shares of Broadcom Common Stock (x) deposited into the Earn-Out Escrow and
the Option Escrows shall be distributed out of the Earn-Out Escrow and the
Option Escrows, as applicable, in accordance with Section 1.14(g) and Section
1.6(d)(iv) and (y) to be issued upon the exercise of a Company Option after such
Earn-Out Milestone
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is satisfied shall be issued directly to the holder of such Company Option upon
such exercise rather than being deposited into an Option Escrow.
(i) Any New Shares in respect of Broadcom Common Stock in
the Earn-Out Escrow which have not been released from the Earn-Out Escrow shall
be added to the Earn-Out Escrow. New Shares issued in respect of shares of
Broadcom Common Stock which have been released from the Earn-Out Escrow shall
not be added to the Earn-Out Escrow but shall be distributed to the record
holders thereof. Cash dividends on Broadcom Common Stock shall not be added to
the Earn-Out Escrow but shall be distributed to the record holders of the
Broadcom Common Stock on the record date set for any such dividend.
(ii) Each stockholder shall have voting rights with respect
to the shares of Broadcom Common Stock contributed to the Earn-Out Escrow by
such stockholder (and on any voting securities added to the Earn-Out Escrow in
respect of such shares of Broadcom Common Stock).
(b) Illustrative Examples. The provisions of this Agreement
relating to the Earn-Outs shall be interpreted and applied in a manner
consistent with the examples set forth in Schedule 1.14.
(c) Procedure.
(i) No later than ten (10) Business Days following each
Earn-Out Date, Broadcom shall provide to the Stockholder Agent either (i) a
statement that the relevant Earn-Out Milestone set forth in Schedule 1.14 has
been satisfied (in whole or in part) and, if relevant to such determination,
appropriate supporting documentation regarding such Earn-Out Milestone or (ii) a
statement that the relevant Earn-Out Milestone set forth in Schedule 1.14 has
not been satisfied and, if relevant to such determination, appropriate
supporting documentation regarding such Earn-Out Milestone (each, in case of
either clause (i) or (ii), an "Earn-Out Determination"). If the Earn-Out
Determination indicates that the applicable Earn-Out Milestone has been
satisfied in full and that the applicable Earn-Out Share Number pursuant to such
Earn-Out Milestone will be released from the Earn-Out Escrow, or released from
an Option Escrow to Persons who received Broadcom Common Stock upon the exercise
after the Effective Time and prior to the satisfaction of an Earn-Out Milestone
of Company Options that were outstanding immediately prior to the Effective Time
or, in the case of Company Options which have not been exercised as of such
time, reserved for issuance, then no action on the part of the Stockholder Agent
shall be necessary and such Earn-Out Determination shall be deemed final (a
"Final Earn-Out Amount"). In any other case, the Stockholder Agent will notify
Broadcom in writing within five (5) Business Days of receipt of such Earn-Out
Determination whether the Stockholder Agent disputes any such determination,
setting forth in reasonable detail the basis for the dispute (each an "Earn-Out
Dispute Notice"). If the Stockholder Agent does not deliver an Earn-Out Dispute
Notice within five (5) Business Days of receipt of an Earn-Out Determination or
if the Stockholder Agent accepts such amount in writing, such Earn-Out
Determination shall be deemed a Final Earn-Out Amount. In the event an Earn-Out
Dispute Notice is delivered, Broadcom and the Stockholder Agent shall meet
within ten (10) Business Days of the delivery of such Earn-Out Dispute Notice to
attempt to resolve such dispute in good
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faith. If a final resolution of such dispute is reached, the agreed upon amount
shall be deemed to be the Final Earn-Out Amount. If no final resolution is
determined within fifteen (15) Business Days of the delivery of such Earn-Out
Dispute Notice after good faith negotiation, the final determination of a Final
Earn-Out Amount shall be submitted first, to non-binding mediation in accordance
with the Commercial Mediation Rules of the American Arbitration Association and
utilizing a mediator acceptable to both parties, and, if no final resolution of
such dispute is reached within thirty (30) days of appointment of the mediator,
or if the parties cannot agree on a mediator within thirty (30) days, then to
arbitration in accordance with the procedures set forth in Section 7.2(g)(ii)
and (iii). The determination of the arbitrators shall be final, binding and
conclusive upon each Company Stockholder, each holder of Company Options or
Company Stock Purchase Rights, the Stockholder Agent and Broadcom.
(ii) The Stockholder Agent may notify Broadcom in writing
at any time that he believes an Earn-Out Milestone has been satisfied. Broadcom
will cooperate in good faith with the Stockholder Agent to determine whether
such Earn-Out Milestone has been satisfied at such time.
(d) Stockholder Agent; Depositary Agent. The provisions of
Sections 7.2(h), (i) and (k) shall apply to any acts taken by the Stockholder
Agent pursuant to this Section 1.14. Any decision, act, consent or instruction
of the Stockholder Agent in connection with this Section 1.14 shall constitute a
decision of all the Company stockholders and optionholders and shall be final,
binding and conclusive upon each of such stockholders and optionholders and the
Depositary Agent and Broadcom may rely upon any such decision, act, consent or
instruction of the Stockholder Agent as being the decision, act, consent or
instruction of every such holder. The Depositary Agent and Broadcom are hereby
relieved from any liability to any Person for any acts done by it in accordance
with such decision, act, consent or instruction of the Stockholder Agent. The
actions of the Depositary Agent with respect to the Earn-Out Escrow shall be
entitled to the protection set forth (or equivalent to those set forth) in
Section 7.2(l).
(e) Company Warrants. Notwithstanding any other provisions of this
Agreement to the contrary, the holders of Company Warrants shall not have any
right to receive any shares of Broadcom Common Stock on account of the Earn-Out
Exchange Ratio, whether from the Earn-Out Escrow, the Option Escrows, any shares
reserved for issuance in connection with the Earn-Outs or otherwise.
(f) No Assignment of Earn-Out Rights. No interest in any Earn-Out
or any portion thereof, no right to participate, in whole or in part, in any
Earn-Out pursuant to Section 1.14, and no right to receive any distribution of
cash or securities in connection therewith pursuant to Section 1.11 or this
Section 1.14 (from the Earn-Out Escrow, an Option Escrow or otherwise) may be
assigned or transferred to any Person (whether by operation of law, or in
connection with any sale, assignment or other transfer of any shares of Company
Common Stock or Company Options or any Broadcom securities issued in exchange
therefor pursuant to Section 1.6, or otherwise), and any attempt to do so will
be null and void. The Earn-Outs and the provisions of Section 1.11 and Section
1.14 relating to such Earn-Outs are intended solely for the benefit of the
Persons who immediately prior to the Effective Time were holders of Company
Common Stock or Company Options. The
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right (if any) to receive distributions in connection with any Earn-Out shall be
personal to the Persons who immediately prior to the Effective Time were holders
of Company Common Stock and Company Options, and such right shall not (x) attach
to or run with such stock or options or any Broadcom securities issued in
exchange therefor or (y) inure to the benefit of any purchaser, assignee or
other transferee either of such stock or options or such Broadcom securities.
Notwithstanding the foregoing, an interest in an Earn-Out (including in the
Earn-Out Escrow or an Option Escrow) may be assigned or transferred
involuntarily pursuant to will or the laws of intestate succession or pursuant
to a qualified domestic relations order as defined by the Internal Revenue Code.
(g) Release of Earn-Out Escrow. Promptly following the final
determination of the amount (if any) of an Earn-Out, the Person who immediately
prior to the Effective Time was the holder of a Certificate shall be entitled to
receive from the Earn-Out Escrow the number of whole shares of Broadcom Common
Stock (if any) to which such holder is entitled pursuant to this Section 1.14.
Each stockholder 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) on any Earn-Out Date 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. If it is finally determined that any portion of an Earn-Out has
not been earned and cannot be earned as set forth in Schedule 1.14, then the
appropriate portion of the shares of Broadcom Common Stock in the Earn-Out
Escrow shall be forfeited and shall be released and returned for cancellation to
Broadcom from the Earn-Out Escrow.
1.15 Exemption From Registration; California Permit. 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, and the rules
and regulations promulgated by the SEC thereunder (the "Securities Act"), by
reason of Section 3(a)(10) thereof. Subject to the provisions of Section 5.1(c),
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 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 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 Company Stock Purchase
Rights required by this Agreement to be assumed by Broadcom (the "California
Permit") and (ii) to obtain the California Permit as promptly as practicable
thereafter.
1.16 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
Surviving Corporation of any and all Company Intellectual Property
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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 and which is necessary for the conduct of the business
of the Company as currently conducted or proposed to be conducted in the
Operating Plan), 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 stockholders of the Company,
the Company has full corporate power and authority to execute and deliver this
Agreement and the other 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 the 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
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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 (and, in the case of the Ancillary Agreements to which Broadcom
is a party, thereof) 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
30,000,000 shares of Common Stock, $.001 par value per share (the "Company
Common Stock"), of which 13,412,675 shares of Common Stock are issued and
outstanding as of the date hereof, and 6,617,611 shares of Preferred Stock,
$.001 par value per share (the "Company Preferred Stock"). The designation and
status of the Company Preferred Stock is as follows: (i) 450,000 shares are
designated as Series A Preferred Stock (the "Company Series A Preferred Stock"),
all of which are issued and outstanding as of the date hereof, (ii) 2,117,648
shares are designated as Series B Preferred Stock (the "Company Series B
Preferred Stock"), 2,117,647 of which are issued and outstanding as of the date
hereof, (iii) 1,148,546 shares are designated as Series C Preferred Stock (the
"Company Series C Preferred Stock"), all of which are issued and outstanding as
of the date hereof, (iv) 499,880 shares are designated as Series D Preferred
Stock (the "Company Series D Preferred Stock"), 479,880 of which are issued and
outstanding as of the date hereof, and (v) 2,401,537 shares are designated as
Series E Preferred Stock (the "Company Series E Preferred Stock"), 1,919,369 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 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 Purchase Rights, Restricted Stock Purchase Agreement or shares of
Company Restricted Stock or agreements, arrangements or understandings to which
the Company is a party
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<PAGE> 24
(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 share 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 certificate of
incorporation or bylaws of the Company, or any agreement or other arrangement to
which the Company is a party (written or oral) 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) Except as set forth in Section 2.3(f) of the Company
Disclosure Schedule, 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 Stockholder 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 provided to
Broadcom and, except as provided in Section 1.6(d)(iii), 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 provided to Broadcom. Except for the Support Agreements or as
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 any voting trust agreement or proxy. 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.
2.5 Directors and Officers. The names 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.
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<PAGE> 25
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 Agreements 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 certificate of incorporation or bylaws 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; or
(c) except as disclosed in Section 2.6(c) of the Company
Disclosure Schedule, (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 Delaware Certificate of Merger and the California Agreement of
Merger, together with the required officers' 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 (other than immaterial Liens which will not affect any of the
Company Intellectual Property) under or (vii) result in the loss of any material
benefit under, any of the terms, conditions or provisions of any Contract or
License (other than immaterial Licenses which do not relate to or affect any of
the Company Intellectual Property) 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 material respects and have been
maintained in accordance with sound business practices. Such minute books
contain in all material respects a true and complete record of all actions taken
at all meetings and by all written consents in lieu of meetings of the
directors, stockholders 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 certificate of incorporation and bylaws, both as
amended through the date hereof. The Company is not in violation of any
provisions of its certificate of incorporation or bylaws.
2.8 Company Financial Statements. Section 2.8(a) of the Company
Disclosure Schedule sets forth the Company Financials. The Company Financials
delivered to
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<PAGE> 26
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, and, in the
case of the Interim Financial Statements, subject to normal year-end
adjustments, which adjustments will not be material in amount or significance).
The Company Financials present fairly and accurately the financial condition and
operating results of the Company as of the dates and during the periods
indicated therein, subject, in the case of the Interim Financial Statements, to
normal year-end adjustments, which adjustments will not be material in amount or
significance and except that the Interim Financial Statements may not contain
footnotes. Except as set forth in Section 2.8(b) of 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 effect upon 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 effect upon the Business or
Condition of the Company. Since the beginning of its 2000 fiscal year, the
Company has operated its business substantially in accordance with its Operating
Plan (a copy of which has been provided to Broadcom). In addition, without
limiting the generality of the foregoing, except as expressly contemplated by
this Agreement or the Operating Plan 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 (i) outside of the ordinary course of
business consistent with past practice or (ii) involving Liabilities in excess
of one hundred thousand dollars ($100,000), individually, or two hundred fifty
thousand dollars ($250,000), in the aggregate;
(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 material
modification (or agreement to do so) or violation of the terms of, any of the
Contracts and Licenses set forth or described in the Company Disclosure Schedule
(the "Listed Contracts"), except as described therein;
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<PAGE> 27
(f) the Company has not entered into any transaction with any
officer, director, stockholder, Affiliate or Associate of the Company, other
than pursuant to any Contract 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 Listed Contracts;
(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 listed in
Section 2.3(d) of the Company Disclosure Schedule, (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 Audited Financial
Statement Date who are not officers of the Company on terms and in amounts
consistent with past practice, (iii) the amendments contemplated by Section
1.6(d)(iii), or (iv) the Permitted Grants, (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,
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), (C) there have not
been any agreements, arrangements, plans or understandings with respect to any
such modification or amendment; and (D) the Company has not granted any Options
with an exercise price of less than the fair market value of Company Common
Stock on the date the Option was granted (as determined in good faith by the
Company's board of directors).
(k) there has not been any amendment to the Company's certificate
of incorporation or bylaws;
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<PAGE> 28
(l) there has not been any transfer (by way of a License or
otherwise) to any Person of rights to any Company Intellectual Property;
(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
with respect to a Liability in an amount exceeding one hundred thousand dollars
($100,000) individually, or two hundred fifty thousand dollars ($250,000) in the
aggregate, 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 one hundred thousand dollars ($100,000) in the case of any individual
item or two hundred fifty thousand dollars ($250,000) 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 one hundred thousand dollars ($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
one hundred thousand dollars ($100,000);
(q) the Company has not made or agreed to make payment, discharge
or satisfaction, in an amount in excess of one hundred thousand dollars
($100,000), in any one case, or two hundred fifty thousand dollars ($250,000) 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 Financials;
(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 one hundred thousand dollars
($100,000) or issued or sold any debt securities of the Company or guaranteed
any debt securities of others;
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<PAGE> 29
(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
delivered 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 Section 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 of consulting fees or any other
compensation of any current or former officer, director, stockholder, employee,
independent contractor or consultant of the Company (other than increases
pursuant to and disclosed in a Listed Contract);
(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, stockholder, employee or consultant of the Company) to any current or
former officer, director, stockholder, employee, independent contractor or
consultant of the Company;
(w) except for the establishment of salary and other compensation
benefits for newly hired employees pursuant to the terms of offer letters,
copies of which have been provided to Broadcom, 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 or agreed or made any commitment to
pay any discretionary or stay bonus;
(z) to the knowledge of the Company, the Company has not taken or
approved any action, including the acceleration of vesting of any Company
Options, Company Warrants or other rights to acquire shares of Company Capital
Stock, which could reasonably be expected to 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 for bad debts,
contingent liabilities
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<PAGE> 30
or otherwise, respecting capitalization or expense of research and development
expenditures, depreciation or amortization rates or timing of recognition of
income and expense);
(cc) the Company has not commenced or terminated, or made any
change in, any line of business;
(dd) the Company has not failed to renew any material insurance
policy; no material 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;
(ee) 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;
(ff) the Company has taken all action reasonably required to
procure, maintain, renew, extend or enforce any Company Intellectual Property
necessary for the conduct of the business of the Company as currently conducted
or proposed to be conducted in the Operating Plan, including submission of
required documents or fees during the prosecution of patent, trademark or other
applications for Registered Intellectual Property rights;
(gg) 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 one hundred thousand dollars ($100,000).
(hh) 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; and
(ii) 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 Financials (including the notes thereto) or as disclosed in
Section 2.10 of the Company Disclosure Schedule, there are no Liabilities of,
relating to or affecting the Company or any of its Assets and Properties, other
than (a) Liabilities incurred in the ordinary course of business consistent with
past practice or the Operating Plan since the Audited Financial Statement Date
and in accordance with the provisions of this Agreement
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<PAGE> 31
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, or (b)
Third Party Expenses.
2.11 Taxes.
(a) All Tax Returns required to have been filed by or with respect
to the Company or any affiliated, consolidated, combined, unitary or similar
group of which the Company is or was a member (a "Relevant Group") have been
duly and timely filed (including any extensions), and each such Tax Return
correctly and completely reflects Tax liability and all other information
required to be reported thereon. All such Tax Returns are true, complete and
correct in all material respects. All material Taxes due and payable by the
Company or any member of a Relevant Group, whether or not shown on any Tax
Return, or claimed to be due by any Tax Authority, for periods (or portions of
periods) covered by the Company Financials, have been paid or accrued on the
balance sheet included in the Company Financials.
(b) The Company has incurred no material liability for Taxes in
the period after the date of the Company Financials. The unpaid 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) or Other Tax set forth on the face of the balance sheet included in
the Company Financials 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 or any member of any Relevant
Group does not file Tax Returns that the Company or such member is or may be
subject to taxation by that jurisdiction.
(d) The Company and each member of any Relevant Group 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 or in
respect of it or any Relevant Group 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 and each
member of any Relevant Group that have been audited or examined by Taxing
Authorities, and indicates those Tax Returns of the Company and each member of
any Relevant Group 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
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assessed against or agreed to by, the Company and each member of any Relevant
Group since the fiscal year ended December 31, 1998.
(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 or any
Relevant Group.
(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 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.
(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 Relevant Group with any corporation other than such a return of
which the Company is the common parent 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) 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) Each material election with respect to income Taxes affecting
the Company are set forth in Section 2.11(o) of the Company Disclosure Schedule.
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<PAGE> 33
(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.
2.12 Legal Proceedings.
(a) Except as set forth in Section 2.12 of the Company Disclosure
Schedule:
(i) there are no Actions or Proceedings pending or, to the
knowledge of the Company, threatened against, relating to or affecting the
Company or any of 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 or any of its Assets
and Properties;
(iii) the Company has not received notice, and does not
otherwise have knowledge of any Orders outstanding against the Company; and
(iv) the Company has not received notice and does not
otherwise have knowledge of any defects, dangerous or substandard conditions in
the products or materials sold, distributed, or currently proposed to be sold or
distributed by the Company that could cause bodily injury, sickness, disease,
death or damage to property, or result in loss of use of property, or any claim,
suit, demand for arbitration or notice seeking damages for bodily injury,
sickness, disease, death, or damage to property, or loss of use of property.
(b) Prior to the execution of this Agreement, the Company has
delivered to Broadcom all responses of counsel for the Company to auditor's
requests for information since the date of incorporation of the Company (July
20, 1998) (the "Incorporation Date") (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 period from the Incorporation Date to the date
hereof.
2.13 Compliance with Laws and Orders. Neither the Company nor any of its
directors, officers, Affiliates, employees or, to its knowledge, agents has
violated in any material respect since the incorporation of the Company, or is
currently in default or violation in any material respect under, any Law or
Order applicable to the Company or any of its Assets and Properties, 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 Date.
2.14 Plans; ERISA.
(a) Existence of Plans. Except as disclosed in Section 2.14(a) of
the Company Disclosure Schedule, (i) neither the Company nor any of its ERISA
Affiliates
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<PAGE> 34
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, (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 Affiliate 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 any Subsidiary or on behalf of any other person,
after the Closing, or (B) which Broadcom, 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, all of which are legally valid
and binding and in full force and effect and there are no defaults thereunder,
(II) the currently effective Summary Plan Description pertaining to each of the
Plans, (III) all 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, 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
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contemplated hereunder, including the termination of any Plan at or prior to the
Closing, shall not result in any such withdrawal or other liability 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,
including 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
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 twenty percent (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.
(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 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 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
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or Sections 302(f) or 4068 of ERISA. The Interim Financial Statements properly
reflect all amounts required to be accrued as liabilities to date under each of
the Plans.
(e) Acceleration. Neither the execution and delivery 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, stockholder, contractor
or consultant (or any of their dependents) of the Company, Broadcom, the
Surviving Corporation, or any of 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, stockholder, contractor, or consultant,
or any of their 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, stockholder, contractor, or
consultant of the Company or any of their dependents. With respect to any
insurance policy which provides, or has provided, funding for benefits under any
Plan, (A) there is and will be no liability of the Company, Broadcom, the
Surviving Corporation or any of their respective Subsidiaries in the nature of a
retroactive or retrospective rate adjustment, loss sharing arrangement, 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,
and (B) no insurance company issuing any such policy is in receivership,
conservatorship, bankruptcy, liquidation, or similar proceeding, and, to the
knowledge of the Company, no such proceedings with respect to any insurer are
imminent.
(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 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 the fiduciaries,
administrators, or trustees of any of the Plans or the Company, any Subsidiary
or any of their respective 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 or Action or
Proceeding.
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
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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
each 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
Section 2.15(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, there is no, and the Company 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) 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 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 improvements on the Leased Real Property (A) comply
with and are operated in accordance with applicable laws (including
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, and such improvements are in all material respects adequate and
suitable for the purposes for which they are presently being used and there are
no condemnation or appropriation proceedings pending or, to the knowledge of the
Company, 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 party(ies), or by
and among any third party(ies), 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 Financials 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,
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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. 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 Intellectual
Property licensed to the Company under any License) and is free and clear of any
Liens. 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, each copyrighted work that is a Company product and each
other work of authorship that the Company otherwise purports to own.
(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
Intellectual Property by operation of law or by valid assignment of any such
rights or (ii) has obtained a License under or to such Intellectual Property.
None of the Company Intellectual Property is subject to any source code escrow
or similar arrangement.
(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 currently conducted or as proposed to be conducted in the Operating
Plan, including 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).
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(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 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 proposed to be conducted in the Operating Plan, including the
Company's design, development, use, import, manufacture and sale of the
products, technology or services (including products, technology or services
currently under development) of the Company does not (i) infringe or
misappropriate the Intellectual Property of any Person, (ii) violate any term or
provision of any License or Contract concerning such Intellectual Property
(including any provision required by or imposed pursuant to 35 U.S.C. Sections
200-212 in any License or Contract to which the Company is a party requiring
that products be manufactured substantially in the United States
("Made-in-America Requirements")), (iii) violate the rights of any Person
(including rights to privacy or publicity), or (iv) 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. Section 2.17(i)(1) of the Company Disclosure
Schedule lists all actions that must be taken by the Company within ninety (90)
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
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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, and the U.S.
Copyright Office, 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 provided by any other Person to the Company subject to a duty of
confidentiality. Without limiting the generality of the foregoing, (i) the
Company has, and enforces, a policy requiring each employee and each consultant
and independent contractor with access to confidential information 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 and
copies of all such agreements have been provided to Broadcom or made available
to Broadcom for review, and (ii) none of the agreements to which the Company is
a party substantially in the form of the "Confidentiality Agreement" attached as
Exhibit 2.17(l)(i) to the Company Disclosure Schedule supersedes, amends or
otherwise modifies any other agreement that (a) is more comprehensive with
respect to the terms dealing with the Company's disclosure of any confidential
information and/or trade secrets to any third party and/or (b) is more
restrictive on a third-party's use or disclosure of such information and/or
trade secrets.
(m) No Company Intellectual Property or product, technology or
service of the Company is subject to any Order, Action or Proceeding or "march
in" rights 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.
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(o) The Company has taken all 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 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, (i) the Company has taken all
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 (ii) the Company has made inquiries of the
suppliers listed in Section 2.23(b) of the Company Disclosure Schedule as to the
status of their Year 2000 efforts and as a result thereof 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 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
"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's products comply in all material respects with
all applicable standards and with the feature specifications and performance
standards set forth in the Company's product data sheets. There are no
outstanding claims (or facts that may reasonably lead to a claim) for breach of
warranties by the Company in connection with the foregoing. All product
performance comparisons heretofore furnished by the Company to customers or
Broadcom are accurate in all material respects as of the dates so furnished
(except that, in the case of product performance comparisons made as of a
specified earlier date, such comparisons shall be accurate as of such specified
earlier date, and, in the case of product performance comparisons superseded by
a subsequent product performance comparison furnished to the customer before the
customer's acquisition of a license on the product covered by the superseded
comparison, the superseding comparison shall be accurate in all material
respects and the superseded comparison shall be disregarded).
(s) The Company has taken all reasonably necessary and appropriate
steps to protect and preserve ownership of Company Intellectual Property. The
Company has secured valid written assignments from all founders, consultants and
employees who
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contributed to the creation or development of the Company Intellectual Property.
None of such agreements or assignments contains exceptions pursuant to which any
founder, employee or consultant claims an interest in any 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 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(s) 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 provided 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 thirty (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 (including engineering and research and development 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, enforceable in accordance with its terms,
and to the knowledge of the Company, 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
in any material respect (or with notice or lapse of time or both, would be in
such 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 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 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
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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
any of 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
or of any threatened termination of, or material premium increase with respect
to, any of such policies. The insurance policies listed in Section 2.19(a) of
the Company Disclosure Schedule, (i) in light of the business, operations and
Assets and Properties of the Company are in amounts and have coverages that are
reasonable and customary for Persons engaged in similar businesses and
operations and having similar Assets and Properties and (ii) are in amounts and
have coverages as required by any Contract to which the Company is a party or by
which any of its Assets and Properties is bound.
(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 (2) years. The Company has not received notice that any insurer under
any policy listed (or required to be listed) in Section 2.19(b) of the Company
Disclosure Schedule 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 or Liabilities
between the Company, on the one hand, and (A) any current or former officer,
director, stockholder, 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, stockholder or Affiliate, on the other
hand, (ii) the Company does not provide or cause to be provided
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any assets, services or facilities to any such current or former officer,
director, stockholder, Affiliate or Associate, (iii) neither the Company nor any
such current or former officer, director, stockholder, 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 indirectly,
any Investment Assets of any such current or former officer, director,
stockholder, 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 stockholders of the
Company, as the case may be, in accordance with Section 144 of Delaware Law.
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) Each Person who is an employee of the Company is employed at
will, and no employee of the Company is represented by a union. Each Person who
is an independent contractor of the Company is properly classified as an
independent contractor for purposes of all employment related Laws and all Laws
concerning the status of independent contractors. Section 2.21(b)(i) of the
Company Disclosure Schedule sets forth, individually and by category, the name
of each officer, employee, independent contractor 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 the Incorporation Date, 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.
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(c) Since the Incorporation Date, 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 could
reasonably be expected to give rise to such complaint or claim. The Company has
complied in all material respects 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 the Incorporation Date, 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 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. Except as disclosed in Section 2.22 of the
Company Disclosure Schedule,
(a) The Company possesses all material Environmental Permits
necessary to or required for the operation of its business. The Company will
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) The Company is in compliance in all material respects with (i)
all terms, conditions and provisions of its Environmental Permits; and (ii) all
Environmental Laws.
(c) Neither the Company nor any predecessor of the Company nor any
entity previously owned by the Company has received any written notice of
alleged, actual or potential responsibility for, or any written inquiry
regarding, (i) any Release or threatened or suspected Release of any Hazardous
Material, or (ii) any violation of Environmental Law.
(d) Neither the Company nor any predecessor of the Company nor any
entity previously owned by the Company has any obligation or liability with
respect to any
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Hazardous Material, including any Release or threatened or suspected Release of
any Hazardous Material, and, to the knowledge of the Company, there have been no
events, facts or circumstances which could reasonably 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.
(f) To the knowledge of the Company, neither the Company, nor any
predecessor of the Company, nor any entity previously owned by the Company, has
transported or arranged for the treatment, storage, handling, disposal or
transportation of any Hazardous Material at or to any location.
(g) No Site is an Environmental Clean-up Site.
(h) 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. Any underground storage tank meets all
1998 upgrade requirements.
(j) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted with respect to any Site in
the possession of the Company or any of its directors, officers or employees
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.
(l) The Company and any predecessors of the Company and any entity
previously owned by the Company have provided all notifications and warnings,
made all reports, and kept and maintained all records required pursuant to
Environmental Laws.
2.23 Substantial Suppliers. Section 2.23(a) 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 complete fiscal year. Except as
disclosed in Section 2.23(b) of the Company Disclosure Schedule, no such
supplier has ceased or materially reduced its sales or provision of services to
the Company since the Incorporation Date, or, to the knowledge of the Company,
has threatened to cease or materially reduce such sales or provision of services
after the date hereof. Except as disclosed in Section 2.23(c) of the Company
Disclosure Schedule, to the knowledge of the Company, no such supplier is
threatened with bankruptcy or insolvency.
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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, any of its stockholders 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.
(a) Section 2.28(a) of the Company Disclosure Schedule sets forth
(i) a list of all forms of written warranties, guarantees and written warranty
policies of the Company in respect of any of the Company's products and
services, which are currently in effect (the "Warranty Obligations"), and the
duration of each such Warranty Obligation, (ii) each of the Warranty Obligations
which is subject to any dispute or, to the knowledge of the Company, threatened
dispute and (iii) the experience of the Company with respect to warranties,
guarantees and warranty policies of or relating to the Company's products and
services. True and correct copies of the Warranty Obligations have been
delivered to Broadcom prior to the execution of this Agreement.
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(b) Except as disclosed in Section 2.28(b) of the Company
Disclosure Schedule, (i) there have not been any material deviations from the
Warranty Obligations, and no salesperson, employee or agent of the Company is
authorized to undertake obligations to any customer or other Person in excess of
such Warranty Obligations and (ii) the balance sheet included in the Interim
Financial Statements reflects adequate reserves for Warranty Obligations. All
products manufactured, designed, licensed, leased, rented or sold by the Company
(A) are and were free from material defects in construction and design and (B)
satisfy any and all Contract or other specifications related thereto to the
extent stated in writing in such Contracts or specifications, in each case, in
all material respects.
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, neither
the Company nor any of its directors, officers or stockholders 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 of this Agreement.
(b) The Company has made available to Broadcom and Broadcom has
reviewed and approved the written budget or other written operating plan for the
balance of 2000 and 2001 (the "Operating Plan"). The Company makes no
representation or warranty regarding its ability to successfully execute the
Operating Plan, except that the Company represents and warrants that the
Operating Plan was prepared in good faith and is based on assumptions believed
by it to be reasonable as of the date of this Agreement.
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 and the Ancillary
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Agreements (other than the filing of the Delaware Certificate of Merger and 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 and the Ancillary Agreements.
(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
there has been no written notice received by the Company of any material
violation or material non-compliance with any such Approvals.
(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 separately as a class, (ii) a majority of the shares of
Company Preferred Stock outstanding as of the applicable record date, voting
together (on an "as converted to Company Common Stock" basis) as a separate
class, and (iii) a majority of the shares of Company Common Stock and Company
Preferred Stock outstanding as of the applicable record date, voting together
(on an "as converted to Company Common Stock" basis) as a separate 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.
The affirmative vote or consent of the holders of a majority of shares of each
series of Company Preferred Stock outstanding as of the applicable record date
is required to approve the conversion of all outstanding shares of Company
Preferred Stock to Company Common Stock prior to consummation of the Merger.
(e) The shares owned by the Major Stockholders of the Company who
have concurrently herewith entered into Support Agreements constitute (i) a
majority of the outstanding shares of Company Common Stock, (ii) a majority of
the outstanding shares of Company Preferred Stock (on an "as converted to
Company Common Stock" basis), (iii) a majority of the outstanding shares of each
series of Company Preferred Stock, and (iv) a majority of the outstanding shares
of Company Common Stock and Company Preferred Stock (on an "as converted to
Company Common Stock" basis).
2.33 Takeover Statutes. No Takeover Statute applicable to the Company is
applicable to the Merger or the transactions contemplated hereby.
2.34 Permit Application; Information 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 (if deemed necessary by Broadcom in its good faith judgment) the
Company Options to be assumed in the Merger will be qualified under the
California Code (the "Permit Application") shall not
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at the time the Fairness Hearing is held pursuant to Section 25142 of the
California Code and 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 stockholders of the Company in connection with the Company stockholders'
consideration of the Merger (the "Company Stockholder 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 stockholders, at the time of the Company Stockholder 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 Stockholder 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 the Permit Application or the Information Statement.
2.35 No Solicitation. Since September 5, 2000, the Company has not taken
nor has the Company permitted any of the Company's officers, directors,
employees, shareholders, attorneys, investment advisors, agents,
representatives, Affiliates or Associates (collectively, "Representatives") to
(directly or indirectly), take any of the actions prohibited from being taken on
or after the date of this Agreement by Section 4.2 with any Person other than
Broadcom and its designees.
2.36 Disclosure. No representation or warranty made by the Company
contained in this Agreement, and no statement contained in the Company
Disclosure Schedule or in any certificate, list or other writing furnished to
Broadcom pursuant to any provision of this Agreement (including the Company
Financials 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. The Company has provided Broadcom with all of the Contracts and
Licenses and all other material information heretofore requested on behalf of
Broadcom in writing concerning the Company in the possession, custody or control
of the Company.
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:
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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.
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 December 3, 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
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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
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, Broadcom has
no material Liabilities, except for Liabilities and obligations (i) incurred in
the ordinary course of business 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 bylaws 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 Delaware Certificate of Merger and the California Agreement of
Merger, together with the required officers' 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.
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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 stockholders, at the time of the Company
Stockholder 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 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 Stockholder 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, 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 Capitalization. The authorized capital stock of Broadcom consists of
800,000,000 shares of Class A Common Stock, $0.0001 par value per share;
400,000,000 shares of Class B Common Stock, $0.0001 par value per share; and
10,000,000 shares of Preferred Stock, $0.0001 par value per share, of which
139,875,215 shares of Class A Common Stock, 85,669,378 shares of Class B Common
Stock and no shares of Preferred Stock were issued and outstanding as of the
close of business on September 30, 2000.
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 Operating Plan provided
prior to the date of this Agreement to Broadcom (including continuing to hire
new employees at a rate at least at the levels provided in the Operating Plan)
(any material deviations from, or material modifications to, the Operating Plan
shall be required to be
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approved in advance by Broadcom), 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 all commercially reasonable efforts and institute all policies
required 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, knowingly 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 (other than actions contemplated by the Operating Plan) 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 contemplated by the Operating Plan or 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:
(a) Charter Documents: cause or permit any amendments to its
certificate 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 in Section 1.6(d)(iii)
of the Company Disclosure Schedule, accelerate, amend or change the period of
exercisability or vesting of options or other rights 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); grant
any additional Company Options (other than Permitted Grants), grant any Company
Option which permits early exercise or provide loans or any other source of
financing to facilitate early exercise of any previously issued Company Option;
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(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 one hundred thousand
dollars ($100,000) and which are not otherwise material to the business of the
Company;
(e) Issuance of Securities: 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 outstanding as of September 5, 2000, and grants to existing employees
or employees hired after the date of this Agreement with the approval of
Broadcom;
(f) Intellectual Property: dispose of, license or transfer to any
person or entity any rights to any Company 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 in any material respect 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 Financials;
(l) Capital Expenditures: make any capital expenditures, capital
additions or capital improvements except in accordance with the Company's
Operating Plan;
(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;
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(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, employee, 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;
(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 standard 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 Section 4.1(a) through Section 4.1(t) above, or any
other action that would prevent the Company from performing, or cause the
Company not to perform, its covenants and agreements hereunder.
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, the
Company will not take (and since September 5, 2000 inclusive has not taken), nor
will the Company (and since September 5, 2000 inclusive has not permitted)
permit any of the Company's 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, 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, indication of
interest 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 not customarily disclosed consistent with the
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Company's past practices with respect to the Company or any of its Subsidiaries
(whether such Subsidiaries are in existence on the date hereof or are hereafter
organized) to any Person, other than Broadcom, relating to (or which the Company
believes or should reasonably know would be used for the purpose of formulating
an offer, indication of interest 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 Subsidiary is in existence on the
date hereof or is hereafter organized), (c) agree to, or 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 Subsidiary is in
existence on the date hereof or is 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 is 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. It shall not be a
breach of this Section 4.2 if the Company or its Representatives receive
inquiries regarding any Business Combination; provided that the Company complies
with the notice provisions of this Section 4.2 and the Company and its
Representatives comply with the confidentiality obligations of the
Confidentiality Agreement and the Company and any of its Representatives respond
to such inquiries by refusing to discuss the matter further with such third
party or by indicating, consistent with their obligations under Section 4.2
hereof and the Confidentiality Agreement, that neither the Representative nor
the Company may discuss the matter. In addition to the foregoing, if the Company
receives prior to the Effective Time or the termination of this Agreement any
offer, indication of interest 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, such notice to include the identity of the Person or Persons
making such offer, indication of interest or proposal, and will keep Broadcom
apprised on a current basis of the status of any such offer, indication of
interest 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 second
preceding 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 consideration to be paid to the stockholders of the
Company in the Merger or (ii) a failure to induce Broadcom to enter into this
Agreement.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Information Statement; Permit Application.
(a) As soon as reasonably practicable after the execution of this
Agreement, the Company shall prepare, with the full cooperation of Broadcom, the
Information Statement for the stockholders of the Company to approve this
Agreement, the
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California Agreement of Merger and the transactions contemplated hereby.
Broadcom and the Company shall each use commercially reasonable 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
stockholders 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 stockholders 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 reasonably 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 and completion 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 it is determined by Broadcom, following
consultation with the Company, that the California Permit cannot be obtained, or
cannot reasonably be expected to be obtained, in time to permit the Closing to
occur on or before January 15, 2001 then Broadcom and the Company shall use
commercially reasonable efforts to effect the issuance of the shares of Broadcom
Common Stock to be issued pursuant to Section 1.6
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in a private placement pursuant to Section 4(2) of the Securities Act on terms
and conditions that are reasonably satisfactory to Broadcom and the Company. The
parties hereto acknowledge and agree that in such event: (i) as a condition to
effecting such issuance as a private placement pursuant to Section 4(2) of the
Securities Act, Broadcom shall be entitled to obtain from each stockholder of
the Company a Stockholder Certificate in the form attached hereto as Exhibit F
(or such other form as shall be reasonably satisfactory to Broadcom) (the
"Stockholder Certificate") and that Broadcom will be relying upon the
representations made by each stockholder of the Company in the applicable
Stockholder Certificate in connection with the issuance of Broadcom Common Stock
to such stockholder, (ii) at the Closing, Broadcom shall execute and deliver a
backup registration rights agreement (the "Backup Registration Rights
Agreement") granting Form S-3 registration rights with respect to the shares
subject to terms, condition, limitations, blackout periods and postponement
rights (as reasonably requested by Broadcom to accommodate other potential
acquisitions and significant corporate developments) reasonably acceptable to
the parties; (iii) the shares of Broadcom Common Stock so issued pursuant to
Section 1.6 will not be registered under the Securities Act and will constitute
"restricted securities" within the meaning of the Securities Act; and (iv) the
certificates representing the shares of Broadcom Common Stock shall bear
appropriate legends to identify such privately placed shares as being restricted
under the Securities Act, to comply with applicable state securities laws and,
if applicable, to notice the restrictions on transfer of such shares.
5.2 Stockholder Approval. As soon as reasonably 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 stockholders and shall
use commercially reasonable efforts to take all other action necessary in
accordance with Delaware Law and its certificate of incorporation and bylaws to
convene a meeting of the stockholders of the Company or to secure the written
consent of its stockholders ("Company Stockholder Action") within ten (10) days
of the issuance of the California Permit. The Company shall submit this
Agreement and the Agreement of Merger to its stockholders 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 stockholders reject it. The Company shall consult with
Broadcom regarding the date of the Company Stockholder Action and shall not
postpone or adjourn (other than for the absence of a quorum) any meeting of the
stockholders 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 stockholders 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 written consent of
stockholders required to effect the Merger. The Company shall establish a record
date for determining the stockholders of the Company entitled to vote or consent
in connection with the Company Stockholder Action that is as early as possible
after the date of this Agreement. The materials submitted to the stockholders 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 stockholders approve the
Merger and this Agreement and the transactions contemplated hereby and approve
and execute such other documents as may be
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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 stockholders and (d) 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.
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 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 it 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
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 (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, counsel and other Representatives.
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 fees and expenses of legal counsel, accountants,
financial advisors, auditors and tax advisors, which such approvals will not be
unreasonably withheld, and the
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Company shall not pay any such Third Party Expenses that have not been so
approved. The Company may pay at the Closing any Third Party Expenses that have
been approved by Broadcom, provided that the Company provides Broadcom with
detailed back-up documentation for such Third Party Expenses at least ten days
prior to the Closing and provides Broadcom with a meaningful opportunity to
discuss such documentation and expenses with the Company and the service
provider.
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. Broadcom and the Company agree to consult with each other as to the
contents of the public disclosure prior to its release. Notwithstanding the
foregoing, (a) Broadcom and the Company shall be permitted to disclose the
existence of this Agreement to their customers, suppliers and sales
representatives with whom they have non-disclosure agreements that apply to such
disclosure (or the other party otherwise agrees to such disclosure) and, except
as prohibited by Section 4.2, for which there is a business reason for the
disclosure and (b) pursuant to Section 4.2, the Company may, in general terms
only, in response to inquiries from third parties concerning any Competing
Proposed Transaction, respond that the Company is under a contractual obligation
not to discuss such matters.
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 (all of which Approvals are set forth in the Company Disclosure Schedule)
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 Company Affiliate Agreements. Section 5.10 of the Company Disclosure
Schedule sets forth those persons who, in the Company's reasonable judgment
following consultation with legal counsel and accounting advisors, are or may be
"affiliates" of the
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Company within the meaning of Rule 145 under the Securities Act (the "Company
Affiliates"). The Company shall provide Broadcom such information and documents
as Broadcom shall reasonably request for purposes of reviewing such list. The
Company shall use its commercially reasonable efforts to deliver or cause to be
delivered to Broadcom on or prior to the Closing from each of the Company
Affiliates, an executed Company Affiliate Agreement. The Company agrees that if
any Person would have been a Company Affiliate had such Person been a
stockholder of the Company as of the date of this Agreement, the Company shall
cause such person to execute and deliver to the Company a Company Affiliate
Agreement promptly upon such Person attaining such status.
5.11 Additional Documents and Further Assurances; Cooperation. Each party
hereto, at the request of the other party hereto, shall execute and deliver such
other instruments and do and perform such other acts and things (including all
action reasonably necessary to seek and obtain any and all consents, waivers and
approvals of any Governmental 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 consent, waiver 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 set
forth in Article 6 to be satisfied, where the satisfaction of such conditions
depends on action or forbearance from action by such party.
5.12 Indemnification. 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 certificate 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 four (4) years from and after
the Closing Date, assuming the consummation of the Merger; provided, however,
that, in the event any claim or claims are asserted or made within such four (4)
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 certificate 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.
5.13 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 (and in any event within fifteen (15)
Business Days
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thereafter) to the extent the shares of Broadcom Common Stock issuable upon
exercise of such Company Options qualify for registration on Form S-8.
5.14 NNM Listing of Additional Shares Application. Prior to the Effective
Time, Broadcom shall, to the extent required by the rules of the NNM, notify the
NNM of 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, to the effect that such shares may be traded on the NNM immediately
after the Effective Time (subject to compliance with Rule 145 under the
Securities Act).
5.15 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 and (c) the delivery of such representations from the Company's independent
accountants as may be reasonably requested by Broadcom or its accountants.
5.16 Termination of 401(k) Plans. Unless Broadcom requests otherwise in
writing, the board of directors of the Company shall adopt resolutions
terminating, effective as of the day 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, the Company shall provide Broadcom (a) executed
resolutions of the board of directors of the Company 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.
5.17 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.
5.18 Treatment as Reorganization. Neither Broadcom nor the Company shall
take any action prior to or following the Closing that would cause the Merger to
fail to qualify as a "reorganization" within the meaning of Section 368(a) of
the Internal Revenue Code.
5.19 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 .
5.20 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
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. 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
providing Broadcom with reasonable access to and use of the Company's
appropriate personnel. 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
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, other than
because of the Company's breach of the Merger Agreement, Broadcom will reimburse
the Company for its reasonable and 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.
5.21 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 is in any event intended to qualify as a tax-free
reorganization, and the Company reasonably determines that it is expected to so
qualify, the Company shall cooperate with Broadcom in effecting the alternative
form of merger and will take all reasonably necessary action towards such end,
including the execution of any amendments to this Agreement (provided that such
amendments relate only to the alternative form of merger and any related matters
and do not include any other substantive changes not otherwise agreed between
the parties).
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5.22 Intellectual Property. The Company shall give Broadcom prompt notice
that any Person shall have (a) commenced, or shall have notified the Company in
writing that it intends to commence, an Action or Proceeding or (b) provided the
Company with written 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
any development tools (including standard cells) or design environments designed
or modified by the Company 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. 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 Intellectual
Property created by the Company's founders, employees and consultants in the
course of providing services to the Company, including Intellectual Property
created by the Company's founders prior to the Company's incorporation and which
is necessary for the operation of the business of the Company as currently
conducted or proposed to be conducted in the Operating Plan, 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 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 which must be taken within the ninety (90) 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.
5.23 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.
5.24 Adjustment of Base Share Number and Earn-Out Share Numbers. 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 Base
Share Number and the Earn-Out Amount will be increased in accordance with
Schedule 5.24(a) as necessary to offset the dilutive effect of grants of Company
Options to newly hired Company employees between the date hereof and the Closing
to the extent that such new hires and grants of Company Options are approved by
Broadcom. The Company shall notify Broadcom of grants of Company Options made to
newly-hired employees and shall provide Broadcom with such information as
Broadcom shall request in order for Broadcom to determine whether an increase in
the Base Share Number and the Earn-Out Amount is required in connection with
such grant. The Base Share Number and the Earn-Out Amount will be increased
pursuant to this Section 5.24 only if Broadcom and the Company agree in writing
to such increase. In no event will the Closing be delayed, postponed or affected
if there is a dispute between the
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Company and Broadcom as to whether the Base Share Number and the Earn-Out Amount
are 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.
5.25 Certain Actions Relating to the Holders of Warrants and Preferred
Stock. The Company shall take all requisite commercially reasonable efforts (a)
to cause all Company Warrants (if any) that would otherwise be outstanding and
exercisable at or immediately prior to the Effective Time to be exercised in
full, by means of a cash exercise (and not by means of net exercise), for shares
of Company Capital Stock prior to the Effective Time (and thereafter converted,
as applicable, into shares of Company Common Stock), and to cause the cash
exercise price therefor to be paid to the Company; and (b) to cause the holders
of all outstanding Company Warrants (if any) to execute and deliver to the
Company waivers of notice with respect to the notice that would otherwise be
applicable to the Merger.
5.26 Employee Benefits. On or as soon as practicable following the
Closing Date, as determined by Broadcom, continuing employees of the Company
("Continuing Employees") shall be eligible to participate in those benefit plans
maintained for similarly situated employees of Broadcom (or in substantially
similar programs), on substantially the same terms applicable to similarly
situated employees of Broadcom. Each Continuing Employee shall be given credit,
for purposes of any service requirements for participation or vesting, for his
or her period of service with the Company credited under a similar plan prior to
the Closing Date, subject to appropriate break in service rules and any
limitations contained in any applicable plan; provided, however, that no such
prior service credit shall apply with respect to the vesting schedule of any
options or other similar incentive awards granted by Broadcom to the Continuing
Employees. Each such employee shall, with respect to any Broadcom plan which has
co-payment, deductible or other co-insurance features, receive credit for any
amounts such individual has paid to date in the plan year of the Closing Date
under comparable plans or programs maintained by the Company prior to the
Closing Date, subject to limitations contained in any applicable plan. Each
Continuing Employee and eligible dependent who, at the Closing Date, was
participating in an employee group health plan maintained by the Company shall
not be excluded from Broadcom's employee group health plan or limited in
coverage thereunder by reason of any waiting period restriction or pre-existing
condition limitation, subject to any limitation contained in any applicable
plan. As a condition to employment with Broadcom, each Continuing Employee shall
be required to execute Broadcom's standard form of employee proprietary
information and inventions agreement.
5.27 Capitalization Table. The Company shall deliver to Broadcom prior to
the Closing Date a capitalization table for the Company as of the Closing Date
in a form acceptable to Broadcom.
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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, except for any
such approvals the failure of which to obtain would not have a material adverse
effect on the Business or Condition of Broadcom or the Company; and any waiting
period applicable to the consummation of the Merger under the HSR Act (other
than with respect to the receipt of Broadcom Common Stock by a stockholder of
the Company) shall have expired or been terminated.
(b) 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.
(c) Tax Opinions. Broadcom and the Company shall each have
received written opinions from its outside legal counsel, in form and substance
reasonably satisfactory to the receiving party, to the effect that the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code.
(d) Stockholder Approval. The Merger shall have been approved by
the requisite votes of the Company's stockholders in accordance with Delaware
Law.
(e) Fairness Hearing and California Permit; Private Placement
Alternative. The fairness hearing shall have been held by the Commissioner of
Corporations of the State of California and the California Permit shall have
been issued by the State of California. In the alternative, each of the
stockholders of the Company shall have delivered an executed copy of the
Stockholder Certificate, and Broadcom shall be reasonably satisfied that the
shares of Broadcom Common Stock to be issued in connection with the Merger
pursuant to Section 1.6(a) are issuable without registration pursuant to Section
4(2) of the Securities Act and SEC rules and regulations promulgated thereunder.
(f) Listing of Additional Shares. If required by applicable Nasdaq
rules, 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 have been authorized for listing on the NNM upon official
notice of issuance.
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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 qualifications and
exceptions referring to a "material adverse change in the Business or Condition
of Broadcom" or a "material adverse effect on the Business or Condition of
Broadcom" and other materiality qualifications and materiality exceptions
contained in such representations and warranties shall be disregarded; and
provided, further, that none of the following, in and of themselves, either
alone or in combination, shall constitute a material adverse change (it being
understood that Broadcom shall have the burden of proof in applying this
exception): (x) changes or effects which are primarily and directly caused by
the execution and delivery of this Agreement or the performance of the
pre-closing covenants set forth in this Agreement or (y) any material adverse
change resulting from changes in economic conditions in the economy generally or
the semiconductor industry generally.
(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 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 G-1
hereto, and a certificate, dated the Closing Date and executed by the Secretary
of Broadcom, substantially in the form set forth in Exhibit G-2 hereto.
(d) Legal Opinion. The Company shall have received a legal opinion
from Irell & Manella LLP, counsel to Broadcom, as to the matters set forth in
Exhibit H.
(e) Tax Representation Letter. Broadcom shall have executed and
delivered to Irell & Manella LLP and Pillsbury Madison & Sutro LLP a Tax
Representation Letter in substantially the form attached as Exhibit I.
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:
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(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 qualifications and
exceptions referring to a "material adverse change in the Business or Condition
of the Company" and other materiality qualifications and exceptions 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 none of the following, in and
of themselves, either alone or in combination, shall constitute a material
adverse change (it being understood that the Company shall have the burden of
proof in applying this exception): (x) changes or effects which are primarily
and directly caused by the execution and delivery of this Agreement or the
performance of the pre-closing covenants set forth in this Agreement or (y) any
material adverse change resulting from changes in economic conditions in the
economy generally or the semiconductor industry generally.
(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, and shall have performed and complied with in all
respects the agreement and obligation set forth in Section 1.6(d)(iii)(B) of
this Agreement.
(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 J-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 J-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 (or required to be listed) in Section 2.6 of the
Company Disclosure Schedule (except for such consents, approvals and waivers the
absence of which, in the aggregate, could not reasonably be expected to have a
material adverse effect on the Company), and that all such consents, approvals
and waivers are in full force and effect.
(e) Legal 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
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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 Pillsbury Madison & Sutro LLP, legal counsel to the Company, as to the
matters set forth in Exhibit K.
(g) Tax Representation Letter. The Company shall have executed and
delivered to Irell & Manella LLP and Pillsbury Madison & Sutro LLP a Tax
Representation Letter in substantially the form attached as Exhibit L.
(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) Delivery of Agreements.
(i) Each Company Affiliate shall have executed and
delivered to Broadcom a Company Affiliate Agreement, and no breach of any
Company Affiliate Agreement shall have occurred or be continuing.
(ii) Each of the Major Stockholders shall have executed and
delivered to Broadcom a Support Agreement, and no breach of any Support
Agreement shall have occurred or be continuing.
(iii) Each of the Founders shall have executed and
delivered to Broadcom the Vesting Amendment Agreement in the form attached as
Exhibit E-1.
(j) Employees. The employees of the Company set forth on Schedule
6.3(j) 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 or do not
intend to be employed by Broadcom or a Subsidiary of Broadcom (as Broadcom shall
designate), following the Merger or that they are not willing or do not intend
to execute and deliver to Broadcom Broadcom's standard form of Confidentiality
and Invention Assignment Agreement and associated schedules and statements
without amendment or modification thereto in any substantive respect (a
particular employee shall be excluded if, as of the Closing, such employee shall
not have been offered employment by Broadcom or one of its Subsidiaries at at
least the same base salary that such employee received from the Company as of
the date of this Agreement or another salary acceptable to such employee). At
least ninety percent (90%) of the engineering and research and development
employees of the Company (excluding the employees identified on Schedule 6.3(j))
employed as of the date of this Agreement 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 or do not intend to be employed by Broadcom or a
Subsidiary of Broadcom (as Broadcom shall designate) following the Merger or to
execute and deliver to Broadcom Broadcom's standard forms of Confidentiality and
Invention Assignment Agreement and associated schedules and statements without
amendment or modification thereto in any substantive respect. Any one (but not
more than one) Company employee who ceases to be employed by the Company as
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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 four percent
(4.0%) of the outstanding shares of Company Capital Stock, on an "as if
converted to Company Common Stock" basis, 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
September 5, 2000; provided, however, that none of the following, in and of
themselves, either alone or in combination, shall constitute a material adverse
change (it being understood that the Company shall have the burden of proof in
applying this exception): (x) changes or effects which are primarily and
directly caused by the execution and delivery of this Agreement or the
performance of the pre-closing covenants set forth in this Agreement or (y) any
material adverse change resulting from changes in economic conditions in the
economy generally or the semiconductor industry generally.
(m) 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 development tools (including
standard cells) or design environments designed or modified by the Company,
infringes or otherwise violates the intellectual property rights of such Person,
or 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;
provided, however, that such Action or Proceeding is deemed in good faith by
Broadcom to constitute, or to be reasonably likely to result in, a material
adverse change in the Business or Condition of the Company.
(n) Assignment of Intellectual Property. Arrangements satisfactory
to Broadcom in its reasonable discretion shall have been made to effect the
assignment to the Company of all Intellectual Property created by the Company's
founders, employees and consultants, including Intellectual Property created by
the Company's founders prior to the Company's incorporation which is necessary
for the operation of the business of the Company as currently conducted or
proposed to be conducted in the Operating Plan, and to obtain the full
cooperation of such Persons to complete and prosecute all appropriate U.S. and
foreign patent filings related thereto.
(o) Stockholder Approval of Certain Payments. Any agreements or
arrangements that are reasonably likely to result in the payment of any amount
that would not be deductible by reason of Section 280G of the Internal Revenue
Code shall have been approved by such number of stockholders of the Company as
is required by the terms of Section 280G(b)(5)(B) and shall be obtained in a
manner that satisfies all applicable
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requirements of such Section 280G(b)(5)(B) and the proposed Treasury regulations
thereunder, including Q-7 of Section 1.280G-1 of such proposed regulations.
(p) Certain Waivers and Actions. (i) All outstanding Company
Warrants (if any) that would otherwise be outstanding and exercisable at or
immediately prior to the Closing shall have been exercised in full, by means of
a cash exercise (and not by net exercise), for shares of Company Capital Stock
prior to the Closing (and thereafter converted, as applicable, into shares of
Company Common Stock) and the cash exercise price therefor shall have been
received by the Company; (ii) the holders of all outstanding Company Warrants
shall have executed and delivered to the Company waivers of notice with respect
to the notice that would otherwise be applicable to the Merger; and (iii) the
holders of all outstanding Company Options, Company Stock Purchase Rights and
Company Restricted Stock shall have executed and delivered to the Company
waivers of any acceleration of vesting (whether with the passage of time, upon
the occurrence of certain events or otherwise) that might occur, result from or
be related to the transactions contemplated by this Agreement and the Ancillary
Agreements.
(q) 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.
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 5.12 (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 the eighteen (18) month anniversary of the
Closing Date (the "Expiration Date").
7.2 Escrow Provisions.
(a) Establishment of the Escrow Fund. As soon as reasonably
practicable after the Effective Time, the Escrow Amount, without any act of any
stockholder, 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
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recapitalizations effected by Broadcom following the Effective Time), such
deposit to constitute the "Escrow Fund" to be governed by the terms set forth
herein. The portion of the Escrow Amount contributed on behalf of each
stockholder 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. 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 depositary 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 Broadcom and its officers, directors, employees, agents,
Affiliates and Associates (collectively, the "Broadcom Indemnitees") for any and
all Losses (whether or not involving a Third Party Claim), incurred or sustained
by Broadcom or any other Broadcom Indemnitee as a result of any inaccuracy in or
breach (or any claim by any third party alleging, constituting or involving an
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, except in the
case of claims for Losses resulting from a breach, violation or inaccuracy in or
omission from any of the representations and warranties of the Company set forth
in Section 2.3 or the related sections of the Company Disclosure Schedule,
Broadcom may not make any claims against the Escrow Fund unless the aggregate
Losses incurred or sustained exceed two million three hundred thousand dollars
($2,300,000) (at which such time claims may be made for all Losses incurred or
sustained). The dollar threshold set forth in the immediately preceding proviso
shall not apply to Losses resulting from any breach, violation or inaccuracy in
or omission from any of the representations and warranties of the Company set
forth in Section 2.3 or the related sections of the Company Disclosure Schedule,
which shall be recoverable without respect to any threshold amount. 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 stockholders of the Company. The stockholders of
the Company shall not have any liability under this Agreement of any sort
whatsoever in excess of the Escrow Fund, and the Escrow Fund shall be the sole
and exclusive remedy of Broadcom, except in the case of either fraud or willful
misconduct (i.e., an intentional breach of a representation, warranty, 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 other instrument or document
required to be delivered pursuant to this Agreement in connection herewith. In
the event of such a fraudulent or willful 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, except in the event that such stockholder induced
or participated in such fraud or willful misconduct, in no event shall any
stockholder of the Company have any liability (i) in excess of the stockholder's
pro rata share of such liability or (ii) in excess of the Merger consideration
received by such stockholder in connection with the Merger or the proceeds, if
any, received by such stockholder in connection with the disposition of such
Merger consideration.
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(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 Stockholder Agent and the
subsequent arbitration of the matter in the manner as provided in Section
7.2(g), 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
unsatisfied claims, if any, have been resolved, the Depositary Agent shall
deliver to the stockholders of the Company the remaining portion of the Escrow
Fund not required to satisfy such unsatisfied claims. Deliveries of shares of
Broadcom Common Stock remaining in the Escrow Fund to the stockholders 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 stockholder 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 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. 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 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 stockholder shall have voting rights with
respect to the shares of Broadcom Common Stock contributed to the Escrow Fund by
such stockholder (and on any voting securities added to the Escrow Fund in
respect of such shares of Broadcom Common Stock).
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(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 (or any claim by any third party alleging, constituting or
involving an 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 instrument or agreement delivered 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
Section 7.2(f), 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.
(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 Stockholder Agent and the other Persons set forth in Section
9.1 hereof, and for a period of thirty (30) days after such delivery, the
Depositary Agent shall make no delivery to Broadcom of any Escrow Amount
pursuant to Section 7.2(e) unless the Depositary Agent shall have received
written authorization from the Stockholder Agent to make such delivery. After
the expiration of such thirty (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), provided that no such payment or delivery may be made if
the Stockholder 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 thirty (30) day period.
(g) Resolution of Conflicts; Arbitration.
(i) In case the Stockholder Agent shall object in writing
to any claim or claims made in any Officer's Certificate, the Stockholder 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 Stockholder 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
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on any such memorandum 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 Stockholder Agent may demand arbitration 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 arbitration
shall not be commenced until such amount is ascertained or both parties agree to
arbitration; and in either event the matter shall be settled by arbitration
conducted by three arbitrators, one selected by Broadcom and one selected by the
Stockholder Agent, and the two arbitrators selected by Broadcom and the
Stockholder Agent shall select a third arbitrator. The arbitrators shall set a
limited time period and establish procedures designed to reduce the cost and
time for discovery of information relating to any dispute while allowing the
parties an opportunity, adequate as determined in the sole judgment of the
arbitrators, to discover relevant information from the opposing parties about
the subject matter of the dispute. The arbitrators shall rule upon motions to
compel, limit or allow discovery as they shall deem appropriate given the nature
and extent of the disputed claim. The arbitrators shall also have the authority
to impose sanctions, including attorneys' fees and other costs incurred by the
parties, to the same extent as a court of law or equity, should the arbitrators
determine that discovery was sought without substantial justification or that
discovery was refused or objected to by a party without substantial
justification. The decision of a majority of the three arbitrators as to the
validity and amount of any claim in such Officer's Certificate shall be binding
and conclusive upon the parties to this Agreement, and notwithstanding anything
in Section 7.2(f), the Depositary Agent shall be entitled to act in accordance
with such decision and make or withhold payments out of the Escrow Fund in
accordance therewith. Such decision shall be written and shall be supported by
written findings of fact and conclusions regarding the dispute which shall set
forth the award, judgment, decree or order awarded by the arbitrators.
(iii) Judgment upon any award rendered by the arbitrators
may be entered in any court having competent jurisdiction. Any such arbitration
shall be held in the city and county of Los Angeles, California under the
commercial rules of arbitration then in effect of the American Arbitration
Association. For purposes of this Section 7.2(g), (i) in any arbitration
hereunder in which any claim or the amount thereof stated in the Officer's
Certificate is at issue, Broadcom shall be deemed to be the Non-Prevailing Party
in the event that the arbitrators award Broadcom less than the sum of one-half
of the disputed amount of any Losses plus any amounts not in dispute; otherwise,
the stockholders of the Company as represented by the Stockholder Agent shall be
deemed to be the Non-Prevailing Party and (ii) in any arbitration hereunder in
which an Earn-Out is in dispute, Broadcom shall be deemed to be the
Non-Prevailing Party in the event that the arbitrators determine that more than
the sum of one-half of the disputed amount of any Earn-Out Determination plus
any amounts not in dispute have been earned pursuant to the disputed Earn-Out;
otherwise, the stockholders of the Company, as represented by the Stockholder
Agent, shall be deemed to be the Non-Prevailing Party. The Non-Prevailing Party
to an arbitration shall pay its own expenses, the fees of each arbitrator, the
administrative costs of the arbitration and the expenses, including reasonable
attorneys' fees and costs, incurred by the other party to the arbitration.
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(h) Stockholder Agent of the Stockholders; Power of Attorney.
(i) In the event that the Merger is approved by the
stockholders of the Company, effective upon such vote, and without further act
of any stockholder, Leo A. Joseph shall be appointed as Agent and
attorney-in-fact (the "Stockholder Agent") for each stockholder of the Company
(except such stockholders, if any, as shall have perfected their appraisal or
dissenters' rights under Delaware Law or the California Code, as applicable),
for and on behalf of stockholders 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 arbitration and comply with orders of courts and
awards of arbitrators with respect to such claims, and to take all actions
necessary or appropriate in the judgment of the Stockholder Agent for the
accomplishment of the foregoing. Such agency may be changed by the stockholders
of the Company from time to time upon not less than thirty (30) days prior
written notice to Broadcom; provided, however, that the Stockholder Agent may
not be removed unless holders of at least a two-thirds interest in the Escrow
Fund agree to such removal and to the identity of the substituted Stockholder
Agent. Any vacancy in the position of Stockholder 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 Stockholder Agent, and the Stockholder Agent shall not
receive compensation for his services. Notices or communications to or from the
Stockholder Agent pursuant to Section 9.1 hereof shall constitute notice to or
from each of the stockholders of the Company.
(ii) The Stockholder 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 Stockholder 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 Stockholder Agent based on such advice, the Stockholder Agent shall not
be liable to anyone. The Stockholder 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
Stockholder Agent.
(iii) The Stockholder 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 Stockholder 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 Stockholder Agent. A decision, act, consent or
instruction of the Stockholder Agent shall constitute a decision of all the
stockholders 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 stockholders, and the Depositary Agent and Broadcom may rely upon
any such decision, act, consent or instruction of the Stockholder Agent as being
the decision, act, consent or instruction of every such stockholder 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 Stockholder
Agent. The Stockholder Agent hereby agrees to perform its obligations and be
bound by the terms and provisions of Section 1.6, Section 1.11 and Section 1.14
relating to the Stockholder 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
Stockholder Agent of such claim, and the Stockholder Agent, as representative
for the stockholders 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 Stockholder 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 Stockholder Agent
has consented to any such settlement, the Stockholder 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 Stockholder Agent. The stockholders of the
Company shall, severally and not jointly, on a pro rata basis based on their
proportionate ownership interests in the Company, indemnify, defend and hold the
Stockholder Agent harmless from and against any loss, damage, tax, liability and
expense that may be incurred by the Stockholder Agent arising out of or in
connection with the acceptance or administration of the Stockholder Agent's
duties, except as caused by the Stockholder Agent's gross negligence or willful
misconduct, including the legal costs and expenses of defending such Stockholder
Agent against any claim or liability in connection with the performance of the
Stockholder Agent's duties. The Stockholder Agent shall be entitled, but not
limited, to such indemnification from the Escrow prior to any distribution
thereof to the stockholders 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 (including as set forth in Article 1), 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 Stockholder 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 from any party or any other Person to the contrary. In case
the Depositary Agent obeys or
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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 or it 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 reasonable 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.
(n) When used in this Section 7.2, the phrase "stockholders of the
Company" means any holders of Company Common Stock at the Effective Time.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. Except as provided in Section 8.2, 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 February 28, 2001 (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;
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(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 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 be satisfied
as of the Closing Date;
(f) by Broadcom if, if at any time after five (5) days following
the meeting or written consent at which the Company's stockholders take the
Company Stockholder Action, holders of more than four percent (4.0%) of the
outstanding shares of Company Capital Stock (determined on an "as if converted
to Company Common Stock" basis) 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 or consents, as applicable, of the Company's stockholders in
accordance with Delaware Law at any meeting (or any adjournment thereof)
convened for the purpose of taking a vote with respect to the Merger or, in any
solicitation of stockholder written consents with respect to the Merger, within
twenty (20) days after the record date established for determining the
stockholders of the Company entitled to consent;
(h) by Broadcom, if any of the individuals listed on Schedule
6.3(j) 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) only if Broadcom gives the Company written notice of termination
of the Agreement within fifteen (15) Business Days after receipt of written
notice from the Company that such individual has ceased to be employed by the
Company; and provided, further, that if Broadcom does not exercise this
termination right within fifteen (15) Business Days after receipt of written
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notice from the Company, then the condition set forth in Section 6.3(j) shall be
deemed waived with respect to the applicable individual; or
(i) by Broadcom, if, at any time, less than ninety percent (90%)
of the Company's engineering and research and development employees of the
Company employed as of the date of this Agreement (exclusive of those listed on
Schedule 6.3(j)) shall cease to be employed by the Company at the Closing or if
more than ten percent (10%) of such employees shall 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;
provided, however, that Broadcom may exercise this termination right only if
Broadcom gives the Company written notice of termination of the Agreement within
ten (10) Business Days after receipt of written notice from the Company that
such employees have ceased to be employed by the Company; and provided, further,
that if Broadcom does not exercise this termination right within ten (10)
Business Days after receipt of written notice from the Company, then the
condition set forth in Section 6.3(j) shall be deemed waived as to the relevant
individuals.
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 stockholders or Affiliates
or Associates; provided, however, that each party shall remain liable for any
breaches of this Agreement prior to its termination; and provided further that,
the provisions of Sections 5.4, 5.5 and 8.2, Article 9 (exclusive of Section
9.3) and the applicable definitions set forth in Article 10 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 stockholders 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; provided,
however, that the consent of the Stockholder Agent and the Depositary Agent
shall not be required in connection with any amendment to this Agreement that
does not affect the rights and obligations of the Stockholder Agent or the
Depositary Agent, as applicable.
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.
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
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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
and
Broadcom Corporation
16215 Alton Parkway
Irvine, California 92619-7013
Facsimile No.: (949) 450-8715
Attn: General Counsel
with a copy (which shall not constitute notice) 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:
SiByte, Inc.
2805 Bowers Avenue
Santa Clara, California 95051
Facsimile No.: (408) 805-6601
Attn: President and Chief Executive Officer
and
Daniel Dobberpuhl
491 Middle Court
Menlo Park, California 94025
Facsimile No.: (650) 324-8576
with a copy (which shall not constitute notice) to:
Pillsbury Madison & Sutro LLP
2550 Hanover Street
Palo Alto, California 94304
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Facsimile No.: (650) 233-4545
Attn: Stanley F. Pierson, Esq.
If to the Stockholder Agent:
Leo A. Joseph
925 Moreno Avenue
Palo Alto, California 94025
Facsimile No.: (650) 213-8502
with a copy (which shall not constitute notice) to each of:
S. Atiq Raza
Raza Foundries
3080 North First Street
San Jose, California 95134
Facsimile No.: (408) 432-8552
Daniel Dobberpuhl
491 Middle Court
Menlo Park, California 94025
Facsimile No.: (650) 324-8576
Pillsbury Madison & Sutro LLP
2550 Hanover Street
Palo Alto, California 94304
Facsimile No.: (650) 233-4545
Attn: Stanley F. Pierson, Esq.
If to the Depository Agent:
U.S. Stock Transfer Corporation
1745 Gardena Avenue
Glendale, California 91204-2991
Facsimile No.: (818) 502-0674
Attn: Richard C. Brown, Vice President
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
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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 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 5.12 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
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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. This Agreement, the Ancillary Agreements and any other
closing documents 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; provided, however, that the
Merger shall be governed by Delaware Law.
9.10 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.
9.11 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
proferentem.
9.12 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. The Depositary Agent may
execute this Agreement following the date hereof and prior to the Closing, and
such later execution, if so executed after the date hereof, shall not affect the
binding nature of this Agreement as of the date hereof between the other
signatories hereto.
9.13 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. Except where this Agreement specifically provides for arbitration, 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.
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ARTICLE 10
DEFINITIONS
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 or
Regulatory Authority.
"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) ten percent (10%) or
more of any class of equity securities of that Person or any of its Affiliates
or (ii) ten percent (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 executive 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 (including officers), and as to
any other entity, each Person exercising similar authority to those of a
director or officer of a corporation. 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 which are (or would be) 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 and upon
exercise, conversion or exchange in full of all unvested and vested Company
Options, Company Warrants and Company Stock Purchase Rights which remain
outstanding and are not exercised, converted, exchanged or expired as of the
Effective Time).
"Aggregate Net Exercise Amount" means that number of shares, if
any, of Broadcom Common Stock equal to (a) the aggregate exercise price of all
Company Warrants (if any) exercised after the date hereof through (and
including) the Effective Time pursuant to the net exercise provisions of such
Company Warrants, divided by (b) the Closing Price.
"Aggregate Share Number" means the sum of the Base Share Number
and the Earn-Out Amount.
"Agreement" means this Merger Agreement and Plan of
Reorganization, including (unless the context otherwise requires) the Exhibits
and the Disclosure Schedules and the certificates and instruments delivered in
connection herewith, or incorporated by
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reference, 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.
"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.
"Audited 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, stockholders' equity and cash flows for
each of the fiscal years then ended, in each case, including the notes thereto
together with the notes thereto and the unqualified report of the Company's
independent accountants with respect thereto.
"Auditor" has the meaning ascribed thereto in Section 1.14(b).
"Backup Registration Rights Agreement" has the meaning ascribed to
it in Section 5.1(c).
"Base Share Number" means 7,437,858 shares of Broadcom Common
Stock, minus the Aggregate Net Exercise Amount and subject to adjustment
pursuant to Section 1.8 and Section 5.24.
"Books and Records" means all files, documents, instruments,
papers, books and records 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
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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
C 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 Indemnitees" 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, but excluding
non-exclusive licenses in connection with the sale of Company products in the
ordinary course of business consistent with past practice) 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, condition
(financial or otherwise), results of operations, internal development effort
prospects or Assets and Properties of Broadcom and its Subsidiaries, considered
in the aggregate.
"Business or Condition of the Company" means the business,
condition (financial or otherwise), results of operations, internal development
effort prospects for the SB1250, SB1400 and SB1125 products 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
1.15.
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"Cause" means (a) conviction (whether by plea of guilty or nolo
contendere or otherwise) of the employee in a court of law of any felony or of
any crime involving dishonesty; (b) participation by the employee in any fraud
against the Company, the Surviving Corporation or any of their respective
Subsidiaries; (c) willful violation of specific and lawful directions from an
officer of the Business Unit that includes the operations of the Company or the
Surviving Corporation or, if applicable, any of its Subsidiaries or excessive
absenteeism which continues after an officer of the Business Unit that includes
the operations of the Company or the Surviving Corporation or, if applicable,
any of its Subsidiaries has provided employee with written notice of the
violation or absenteeism and given the employee a period of thirty (30) days
following the receipt of notice to correct the violation or absenteeism problem;
(d) a material, non-curable breach by the employee of the provisions of such
employee's non-competition, non-disclosure or proprietary information and
inventions agreements with the Company or the Surviving Corporation or, if
applicable, any of its Subsidiaries; or (e) unsatisfactory performance of job
duties, which is not corrected or continues after an officer of the Business
Unit that includes the operations of the Company or the Surviving Corporation
or, if applicable, any of its Subsidiaries has provided the employee with
written notice and given the employee a period of thirty (30) days following
receipt of the notice to correct the breach.
"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
(32nd) market trading day prior to the Closing Date and ending on (inclusive)
the third (3rd) 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 Affiliate Agreement" has the meaning ascribed to it in
Recital C to this Agreement.
"Company Affiliates" has the meaning ascribed to it in Section
5.10.
"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" means the schedules delivered to
Broadcom by or on behalf of the Company, containing all lists, descriptions,
exceptions and other information and materials as are required to be included
therein in connection with the representations and warranties made by the
Company in Article 2 or otherwise.
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"Company Financials" means the Audited Financial Statements and
the Interim Financial Statements.
"Company Indemnified Party" has the meaning ascribed to it in
Section 5.12.
"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 Operating Plan, including any Intellectual Property created
by any of the Company's founders, employees, independent contractors or
consultants for or on behalf of the Company and including any Intellectual
Property created by any of the Company's founders prior to the creation of the
Company and which is necessary for the operation of the Company's business as
presently conducted or proposed to be conducted in the Operating Plan.
"Company Option(s)" means any Option to purchase Company Capital
Stock, excluding the Company Preferred Stock and the Company Warrants (if any).
"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 ascribed to it
in Section 2.3(a).
"Company Series B Preferred Stock" has the meaning ascribed to it
in Section 2.3(a).
"Company Series C Preferred Stock" has the meaning ascribed to it
in Section 2.3.
"Company Series D Preferred Stock" has the meaning ascribed to it
in Section 2.3.
"Company Series E Preferred Stock" has the meaning ascribed to it
in Section 2.3.
"Company Stock Plans" has the meaning ascribed to it in Section
1.6(c)(iv).
"Company Stock Purchase Right" means a right to purchase Company
Restricted Stock granted pursuant to the Company Stock Plans or otherwise.
"Company Stockholder Action" has the meaning ascribed to it in
Section 2.34.
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"Company Warrants" means any and all warrants to purchase Company
Capital Stock, including the warrants listed in Section 2.3 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.
"Continuing Employee" has the meaning ascribed to it in Section
5.26.
"Contract" means any contract, agreement or other business
arrangement (whether oral or written) including:
(i) any distributor, sales, advertising, agency or
manufacturer's representative contract;
(ii) any continuing contract for the purchase of
materials, supplies, equipment or services involving in the case of any
such contract more than one hundred thousand dollars ($100,000) over the
life of the contract;
(iii) any contract that expires or may be renewed at
the option of any person other than the Company or Broadcom, as the
context requires, so as to expire more than one (1) year after the date
of this Agreement;
(iv) 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
GAAP;
(v) any contract for capital expenditures in excess
of one hundred thousand dollars ($100,000) in the aggregate;
(vi) any contract limiting the freedom of the
Company or Broadcom, as the context requires, to engage in any line of
business or to compete with any other Person or any confidentiality,
secrecy or non-disclosure contract;
(vii) any contract pursuant to which the Company or
Broadcom, as the context requires, is a lessor of any machinery,
equipment, motor vehicles, office furniture, fixtures or other personal
property in excess of one hundred thousand dollars ($100,000);
(viii) any contract with any person with whom the
Company or Broadcom, as the context requires, does not deal at
arm's-length;
(ix) any contract that is not terminable by the
Company or Broadcom, as the context requires, upon thirty (30) days (or
less) notice by the Company or Broadcom, as the context requires, without
penalty or obligation to make payments based on such termination and
which (i) requires payments by the
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Company or Broadcom, as the context requires, in excess of one hundred
thousand dollars ($100,000) (either alone or pursuant to a series of
related contracts), or (ii) requires the Company or Broadcom, as the
context requires, to provide services to any Person after the Closing; or
(x) 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.
"Delaware Law" means the Delaware General Corporation Law and all
amendments and additions thereto.
"Delaware Certificate of Merger" has the meaning set forth in
Section 1.2.
"Depositary Agent" means U.S. Stock Transfer Corporation (or other
institution acceptable to Broadcom and the Stockholder 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(a).
"Early Earn-Out Amount" means a number of shares of Broadcom
Common Stock equal to the product of (i) the number of shares of Company Common
Stock outstanding as of immediately prior to the Effective Time (assuming the
conversion in full of all outstanding shares of Company Preferred Stock)
multiplied by (ii) the Earn-Out Exchange Ratio.
"Earn-Out" and "Earn-Outs" have the meaning ascribed to them in
Section 1.14(a).
"Earn-Out Amount" means 3,730,786 shares of Broadcom Common Stock,
subject to adjustment pursuant to Section 1.8 and Section 5.24.
"Earn-Out Date" means the last date as of which a particular
Earn-Out Milestone must be satisfied pursuant to Schedule 1.14 or, if such
Earn-Out Milestone is satisfied earlier, the date that such Earn-Out Milestone
is actually satisfied (subject in each case to Schedule 1.14).
"Earn-Out Determination" has the meaning set forth in Section
1.14(c).
"Earn-Out Dispute Notice" has the meaning ascribed to it in
Section 1.14(c).
"Earn-Out Escrow" means the escrow established by the terms of
this Agreement to hold the Early Earn-Out Amount pending satisfaction of the
Earn-Out Milestones.
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"Earn-Out Exchange Ratio" means the quotient obtained by dividing
(i) the Earn-Out Amount by (ii) the Aggregate Common Number (excluding the
aggregate number of shares of Company Common Stock issuable upon the exercise
for cash of any Company Warrants that are outstanding as of the Effective Time).
"Earn-Out Milestone" has the meaning ascribed to it in Section
1.14(a).
"Effective Time" has the meaning ascribed to it in Section 1.2.
"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, in each case in existence as of
the Closing Date, relating to Hazardous Materials, including 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 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 it in the definition
of Plan in this Section 10.
"Escrow Amount" means the sum of (i) 900,000 shares of Broadcom
Common Stock plus (ii) the product of (x) any increase in the Aggregate Share
Number pursuant to Section 5.24 hereof (and, in the case of both clauses (i) and
(ii), subject to adjustment pursuant to Section 1.8) multiplied by (y) 0.10. The
shares deposited with the Depositary Agent in the Escrow Fund shall, to the
extent possible, be shares that are not subject to any repurchase rights.
"Escrow Fund" has the meaning ascribed to it in Section 7.2(a).
"Escrow Period" has the meaning ascribed to it in Section 7.2(c).
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"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.
"Exchange Agent" means U.S. Stock Transfer Corporation.
"Exchange Ratio" means the quotient obtained by dividing (a) the
Base 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 1.15.
"Final Earn-Out Amount" has the meaning ascribed to it in Section
1.14(c).
"Financial Statement Date" means July 31, 2000.
"Founders" means Daniel Dobberpuhl, Leo A. Joseph and Amarjit
Gill.
"Founders Stock Agreements" has the meaning ascribed to it in
Section 1.6(d)(ii).
"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 NASD.
"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.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
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"Income Tax" means (a) any income, alternative or add-on minimum
tax, gross income, gross receipts, franchise, 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); or (b) any liability of a Person for the payment of any taxes,
interest, penalty, addition to tax or like additional amount resulting from the
application of Treas. Reg. Section 1.1502-6 or comparable provisions of any
Taxing Authority in respect of a Tax Return of a Relevant Group or any Contract.
"Incorporation Date" has the meaning ascribed to it in Section
2.12(b).
"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 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
2.34.
"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.
"Interim Financial Statements" means the unaudited balance sheet
of the Company as of July 31, 2000, and the related unaudited statement of
operations and statement of cash flows for the seven (7) month period ended on
such date.
"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
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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 5.20.
"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.
"Lease Documents" has the meaning ascribed to it in Section
2.15(d).
"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 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.
"Listed Contracts" has the meaning ascribed to it in Section
2.9(e).
"Loss(es)" means any and all damages, fines, fees, Taxes,
penalties, deficiencies, losses (including lost profits or diminution in value)
and expenses, including interest, reasonable 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 reasonable 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.
"Made-in-America Requirements" has the meaning ascribed to it in
Section 2.17(h).
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"Major Stockholders" means the Company stockholders listed in
Section 10.1 of the Company Disclosure Schedule.
"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 to this Agreement.
"Non-Prevailing Party" has the meaning ascribed to in in Section
7.2(g).
"Officer's Certificate" has the meaning ascribed to it in Section
7.2(e)(i).
"Operating Plan" has the meaning ascribed to it in Section
2.31(b).
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract (other
than the Company 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 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.
"Option Escrow" has the meaning ascribed to it in Section
1.6(d)(iv).
"Order" means any writ, judgment, decree, injunction or similar
order of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Original Agreement" has the meaning ascribed to it in Recital A.
"Other Tax" means any sales, use, ad valorem, business license,
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.
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"Permit Application" has the meaning ascribed to it in Section
2.34.
"Permitted Grants" means grants of Company Options in the ordinary
course of business, consistent in amount and terms with the Company's past
practice, to (i) existing Company employees and (ii) Company employees hired by
the Company after the date of this Agreement.
"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, any
Subsidiary, or any member of the same controlled group of businesses as the
Company or any Subsidiary of 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 Subsidiary of the
Company or any of their 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, any Subsidiary of the Company or
any of their 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.
"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 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.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of a
Hazardous Material into the environment.
"Relevant Group" has the meaning ascribed to it in Section
2.11(a).
"Representatives" has the meaning ascribed to it in Section 2.36.
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"Restricted Stock Purchase Agreement" means (i) a Restricted Stock
Purchase Agreement in the form attached to the Company Stock Plans pursuant to
which the Company has sold Company Restricted Stock or issued Company Stock
Purchase Rights, (ii) the Founders Stock Agreements or (iii) any similar
Contract as may otherwise have 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 1.15.
"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.
"Stockholder Agent" has the meaning ascribed to it in Section
7.2(h)(i).
"Stockholder Certificate" has the meaning ascribed to it in
Section 5.1(c).
"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 fifty percent (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.
"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, including Section 203 of the
Delaware Law.
"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
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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 and the neuter, (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. When used herein, the terms
"party" and "parties" refer to Broadcom, on the one hand, and the Company, on
the other, and the terms "third party" or "third parties" refers to Persons
other than Broadcom or the Company.
(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 any other Person, the actual
knowledge of the directors and officers of such Person and other individuals
that have a similar position or have similar powers and duties as the officers
and directors of such Person, and (iii) in the case of each of (i) and (ii), the
knowledge of facts that such individuals should have after due inquiry. For this
purpose, "due inquiry" with respect to any matter means inquiry of and
consultations with (A) the directors and officers of such Person and other
individuals that have a similar position or have similar powers and duties as
such officers and directors, and (B) other employees of and the advisors to such
Person, including legal counsel and outside auditors, who have principal
responsibility for the matter in question or are otherwise likely to have
information relevant to the matter.
(c) All references herein to the "date hereof" and the "date of
this Agreement" (or any similar phrase) shall mean November 3, 2000, the date of
the Original Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Broadcom and the Company, and with respect to Article
7 and Article 9 only, the Stockholder 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.
SIBYTE, INC. BROADCOM CORPORATION
By:/s/ DANIEL DOBBERPUHL By:/s/ HENRY T. NICHOLAS
--------------------------------- --------------------------------
Daniel Dobberpuhl Henry T. Nicholas, III, Ph.D.
President and Chief Executive Officer President and Chief Executive
Officer
U.S. STOCK TRANSFER CORPORATION,
AS DEPOSITARY AGENT STOCKHOLDER AGENT
By:/s/ RICHARD C. BROWN /s/ LEO A. JOSEPH
--------------------------------- -----------------------------------
Richard C. Brown Leo A. Joseph
Vice President
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<PAGE> 103
AMENDED AND RESTATED
MERGER AGREEMENT AND
PLAN OF REORGANIZATION
BY AND AMONG
BROADCOM CORPORATION,
SIBYTE, INC.
AND
THE OTHER PARTIES SIGNATORY HERETO
Dated as of December 6, 2000
<TABLE>
<S> <C>
Exhibit A Form of Support Agreement
Exhibit B Form of Affiliate Agreement
Exhibit C Form of Non-Competition Agreement
Exhibit D-1 Form of California Agreement of Merger
Exhibit D-2 Form of Delaware Certificate of Merger
Exhibit E-1 Form of Vesting Amendment Agreement [Founders]
Exhibit E-2 Form of Vesting Amendment Agreement [Non-Founders]
Exhibit F Form of Stockholder Certificate
Exhibit G-1 Form of Broadcom Officers' Certificate
Exhibit G-2 Form of Broadcom Secretary's Certificate
Exhibit H Form of Broadcom Counsel Legal Opinion
Exhibit I Form of Broadcom Tax Representation Letter
Exhibit J-1 Form of Company Officers' Certificate
Exhibit J-2 Form of Company Secretary's Certificate
Exhibit K Form of Company Counsel Legal Opinion
Exhibit L Form of Company Tax Representation Letter
</TABLE>
Broadcom Corporation agrees to furnish supplementally a copy of any of
the foregoing exhibits to the SEC upon request.
