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EXHIBIT 1
EXECUTION COPY
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AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
PMC-SIERRA, INC.,
PENN ACQUISITION CORP.
AND
QUANTUM EFFECT DEVICES, INC.
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TABLE OF CONTENTS
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ARTICLE I THE MERGER...................................................... 1
1.1 The Merger......................................................... 1
1.2 Effective Time; Closing............................................ 1
1.3 Effect of the Merger............................................... 2
1.4 Certificate of Incorporation; Bylaws............................... 2
1.5 Directors and Officers............................................. 2
1.6 Effect on Capital Stock............................................ 2
1.7 Surrender of Certificates.......................................... 3
1.8 No Further Ownership Rights in Company Common Stock................ 4
1.9 Lost, Stolen or Destroyed Certificates............................. 4
1.10 Tax and Accounting Consequences.................................... 5
1.11 Taking of Necessary Action; Further Action......................... 5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY...................... 5
2.1 Organization and Qualification; Subsidiaries....................... 5
2.2 Certificate of Incorporation and Bylaws............................ 5
2.3 Capitalization..................................................... 6
2.4 Authority Relative to this Agreement............................... 7
2.5 No Conflict; Required Filings and Consents......................... 7
2.6 Compliance; Permits................................................ 8
2.7 SEC Filings; Financial Statements.................................. 8
2.8 No Undisclosed Liabilities......................................... 9
2.9 Absence of Certain Changes or Events............................... 9
2.10 Absence of Litigation.............................................. 9
2.11 Employee Benefit Plans............................................. 10
2.12 Registration Statement; Proxy Statement............................ 12
2.13 Restrictions on Business Activities................................ 12
2.14 Title to Property.................................................. 12
2.15 Taxes.............................................................. 12
2.16 Brokers............................................................ 14
2.17 Intellectual Property.............................................. 14
2.18 Agreements, Contracts and Commitments.............................. 16
2.19 Opinion of Financial Advisor....................................... 17
2.20 Board Approval..................................................... 17
2.21 Vote Required...................................................... 17
2.22 Pooling of Interests............................................... 17
2.23 Customers.......................................................... 17
2.24 Labor Matters...................................................... 17
2.25 Environmental Matters.............................................. 17
2.26 Insurance.......................................................... 19
2.27 State Takeover Statutes............................................ 19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB....... 19
3.1 Organization and Qualification; Subsidiaries....................... 19
3.2 Certificate of Incorporation and Bylaws............................ 19
3.3 Capitalization..................................................... 20
3.4 Authority Relative to this Agreement............................... 20
3.5 No Conflict; Required Filings and Consents......................... 20
3.6 SEC Filings; Financial Statements.................................. 21
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3.7 No Undisclosed Liabilities....................................... 21
3.8 Absence of Certain Changes or Events............................. 21
3.9 Absence of Litigation............................................ 22
3.10 Registration Statement; Proxy Statement.......................... 22
3.11 Pooling of Interests............................................. 22
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME.......................... 22
4.1 Conduct of Business by Company................................... 22
4.2 Conduct of Business by Parent.................................... 24
ARTICLE V ADDITIONAL AGREEMENTS......................................... 25
Proxy Statement/Prospectus; Registration Statement; Other
5.1 Filings; Board Recommendations................................... 25
5.2 Meeting of Company Stockholders.................................. 26
5.3 Confidentiality; Access to Information........................... 27
5.4 No Solicitation.................................................. 27
5.5 Public Disclosure................................................ 28
5.6 Commercially Reasonable Efforts; Notification.................... 29
5.7 Third Party Consents............................................. 29
5.8 Stock Options; ESPP; Warrants and Employee Benefits.............. 30
5.9 Form S-8......................................................... 31
5.10 Indemnification.................................................. 31
5.11 Affiliate Agreement.............................................. 32
5.12 Regulatory Filings; Reasonable Efforts........................... 32
5.13 Noncompetition Agreements........................................ 32
5.14 Tax Matters...................................................... 33
5.15 Action by Board of Directors..................................... 33
ARTICLE VI CONDITIONS TO THE MERGER..................................... 33
6.1 Conditions to Obligations of Each Party to Effect the Merger..... 33
6.2 Additional Conditions to Obligation of Company................... 33
Additional Conditions to the Obligations of Parent and Merger
6.3 Sub.............................................................. 34
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER........................... 35
7.1 Termination...................................................... 35
7.2 Notice of Termination; Effect of Termination..................... 36
7.3 Fees and Expenses................................................ 36
7.4 Amendment........................................................ 37
7.5 Extension; Waiver................................................ 37
ARTICLE VIII GENERAL PROVISIONS......................................... 38
8.1 Non-Survival of Representations and Warranties................... 38
8.2 Notices.......................................................... 38
8.3 Interpretation................................................... 39
8.4 Counterparts..................................................... 39
8.5 Entire Agreement; Third Party Beneficiaries...................... 39
8.6 Severability..................................................... 40
8.7 Other Remedies; Specific Performance............................. 40
8.8 Governing Law.................................................... 40
8.9 Rules of Construction............................................ 40
8.10 Assignment....................................................... 40
8.11 Waiver of Jury Trial............................................. 40
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INDEX OF EXHIBITS
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Exhibit A Form of Company Voting Agreement
Exhibit B-1 Form of Company Affiliate Agreement
Exhibit B-2 Form of Parent Affiliate Agreement
Exhibit C Form of Noncompetition Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of July 11, 2000, among PMC-Sierra, Inc., a Delaware
corporation ("Parent"), Penn Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), and Quantum Effect Devices,
Inc., a Delaware corporation ("Company").
Recitals
A. Upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law ("Delaware Law"), Parent,
Merger Sub and Company intend to enter into a business combination transaction.
B. The Board of Directors of Company (i) has determined that the Merger (as
defined in Section 1.1) is consistent with and in furtherance of the long-term
business strategy of Company and fair to, and in the best interests of, Company
and its stockholders, (ii) has approved this Agreement, the Merger and the
other transactions contemplated by this Agreement, and (iii) has determined to
recommend that the stockholders of Company adopt this Agreement.
C. The Boards of Directors of Parent and Merger Sub have approved this
Agreement, the Merger and the other transactions contemplated by this
Agreement.
D. Concurrently with the execution of this Agreement and as a condition and
inducement to Parent's willingness to enter into this Agreement: (1) certain
Company Affiliates (as defined in Section 5.11(a)) are entering into Voting
Agreements in substantially the form attached hereto as Exhibit A (the "Company
Voting Agreements"); (2) certain Company Affiliates are entering into Company
Affiliate Agreements in substantially the form attached hereto as Exhibit B-1
(the "Company Affiliate Agreements"); and (3) certain individuals are entering
into Noncompetition Agreements in substantially the form attached hereto as
Exhibit C (the "Noncompetition Agreements").
E. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
F. It is also intended by the parties hereto that the Merger shall qualify
for accounting treatment as a pooling of interests.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
ARTICLE I
The Merger
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and into
Company (the "Merger"), the separate corporate existence of Merger Sub shall
cease and Company shall continue as the surviving corporation. Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
1.2 Effective Time; Closing. Subject to the provisions of this Agreement,
the parties hereto shall cause the Merger to be consummated by filing a
Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware Law (the "Certificate of
Merger") (the time
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of such filing (or such later time as may be agreed in writing by Company and
Parent and specified in the Certificate of Merger) being the "Effective Time")
as soon as practicable on or after the Closing Date (as herein defined). The
closing of the Merger (the "Closing") shall take place at the offices of Wilson
Sonsini Goodrich & Rosati, Professional Corporation, at a time and date to be
specified by the parties, which shall be no later than the second business day
after the satisfaction or waiver of the conditions set forth in Article VI, or
at such other time, date and location as the parties hereto agree in writing
(the "Closing Date").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of
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 Company and Merger Sub shall vest in the Surviving Corporation,
and all debts, liabilities and duties of Company and Merger Sub shall become
the debts, liabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, subject to the provisions of Section 5.10, the
Certificate of Incorporation of Company shall be amended and restated to be the
same in substance as the Certificate of Incorporation of Merger Sub as in
effect immediately prior to the Effective Time (except that the name of Company
will remain unchanged), and said amended and restated Certificate of
Incorporation shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended.
(b) At the Effective Time, subject to the provisions of Section 5.10, the
Bylaws of Company shall be amended and restated to be the same in substance as
the Bylaws of Merger Sub as in effect immediately prior to the Effective Time,
and such amended and restated Bylaws shall be the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be a combination of (a) all of the directors of Merger Sub
immediately prior to the Effective Time and (b) all of the directors of Company
who are also employees of Company immediately prior to the Effective Time. The
initial officers of the Surviving Corporation shall be the officers of Merger
Sub immediately prior to the Effective Time.
1.6 Effect on Capital Stock. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Parent, Merger Sub, Company or the holders of any of the
following securities, the following shall occur:
(a) Conversion of Company Common Stock. Each share of Common Stock, par
value $0.001 per share, of Company (the "Company Common Stock") issued and
outstanding immediately prior to the Effective Time, other than any share of
Company Common Stock to be canceled and extinguished pursuant to
Section 1.6(b), will be automatically converted (subject to Sections 1.6(e) and
(f)) into 0.385 (the "Exchange Ratio") of a share of Common Stock, par value
$0.001 per share, of Parent (the "Parent Common Stock"). If any shares of
Company Common Stock outstanding immediately prior to the Effective Time are
unvested or are subject to a repurchase option, risk of forfeiture or other
condition under any applicable restricted stock purchase agreement or other
agreement with Company, then the shares of Parent Common Stock issued upon
conversion of such shares of Company Common Stock will also be unvested and
subject to the same repurchase option, risk of forfeiture or other condition,
and the certificates representing such shares of Parent Common Stock may
accordingly be marked with appropriate legends.
(b) Cancellation of Parent-Owned Stock. Each share of Company Common Stock
held by Company or owned by Merger Sub, Parent or any direct or indirect
wholly-owned subsidiary of Company or of Parent immediately prior to the
Effective Time shall be canceled and extinguished without any conversion
thereof.
(c) Stock Options; Employee Stock Purchase Plan. At the Effective Time, all
options to purchase Company Common Stock then outstanding under Company's 1999
Equity Incentive Plan and 1999 Non-Employee Directors' Stock Option Plan
(collectively, the "Company Option Plans"), and the Company
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Option Plans themselves, shall be assumed by Parent in accordance with Section
5.8. At the Effective Time, all purchase rights then outstanding under
Company's 1999 Employee Stock Purchase Plan (the "ESPP"), and the ESPP itself,
shall be assumed by Parent in accordance with Section 5.8.
(d) Capital Stock of Merger Sub. Each share of Common Stock, $0.001 par
value per share, of Merger Sub (the "Merger Sub Common Stock") issued and
outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable share of Common Stock, $0.001 par
value per share, of the Surviving Corporation. Each certificate evidencing
ownership of shares of Merger Sub Common Stock shall evidence ownership of such
shares of capital stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio and any other
applicable numbers or amounts shall be adjusted to reflect appropriately the
effect of any stock split, reverse stock split, stock dividend (including any
dividend or distribution of securities convertible into or exercisable or
exchangeable for Parent Common Stock or Company Common Stock), extraordinary
cash dividend, reorganization, recapitalization, reclassification, combination,
exchange of shares or other like change with respect to Parent Common Stock or
Company Common Stock occurring or having a record date on or after the date
hereof and prior to the Effective Time.
(f) Fractional Shares. No fraction of a share of Parent Common Stock will be
issued by virtue of the Merger, but in lieu thereof each holder of shares of
Company Common Stock who would otherwise be entitled to receive a fraction of a
share of Parent Common Stock (after aggregating all fractional shares of Parent
Common Stock that otherwise would be received by such holder) shall, upon
surrender of such holder's Certificates(s) (as defined in Section 1.7(c))
receive from Parent an amount of cash (rounded to the nearest whole cent),
without interest, equal to the product of (i) such fraction, multiplied by (ii)
the average closing price of one share of Parent Common Stock for the five (5)
most recent days that Parent Common Stock has traded ending on the trading day
immediately prior to the Effective Time, as reported on the Nasdaq National
Market ("Nasdaq").
1.7 Surrender of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Parent shall select a bank
or trust company reasonably acceptable to Company to act as the exchange agent
(the "Exchange Agent") in the Merger.
(b) Parent to Provide Common Stock. Promptly after the Effective Time,
Parent shall make available to the Exchange Agent, for exchange in accordance
with this Article I, the shares of Parent Common Stock issuable pursuant to
Section 1.6(a) in exchange for outstanding shares of Company Common Stock, and
cash in an amount sufficient for payment in lieu of fractional shares pursuant
to Section 1.6(f) and any dividends or distributions to which holders of shares
of Company Common Stock may be entitled pursuant to Section 1.7(d).
(c) Exchange Procedures. As soon as practicable after the Effective Time,
Parent shall cause the Exchange Agent to mail to each holder of record (as of
the Effective Time) of a certificate or certificates, which immediately prior
to the Effective Time represented outstanding shares of Company Common Stock
(the "Certificates") (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 (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Parent Common
Stock pursuant to Section 1.6(a), cash in lieu of any fractional shares
pursuant to Section 1.6(f) and any dividends or other distributions pursuant to
Section 1.7(d). Upon surrender of Certificates for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, the holders of such Certificates
shall be entitled to receive in exchange therefor certificates representing the
number of whole shares of Parent Common Stock into which their shares of
Company Common Stock were converted pursuant to Section 1.6(a), payment in lieu
of fractional shares which such holders have the right to receive pursuant to
Section 1.6(f) and any dividends or other distributions payable
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pursuant to Section 1.7(d), and the Certificates so surrendered shall forthwith
be canceled. Until so surrendered, outstanding Certificates will be deemed,
from and after the Effective Time, to evidence only the ownership of the number
of whole shares of Parent Common Stock into which such shares of Company Common
Stock shall have been so converted (including any voting, notice or other
rights associated with the ownership of such shares of Parent Common Stock
under the Certificate of Incorporation or Bylaws of Parent or under Delaware
Law) and the right to receive an amount in cash in lieu of the issuance of any
fractional shares in accordance with Section 1.6(f) and any dividends or other
distributions payable pursuant to Section 1.7(d).
(d) Distributions With Respect to Unexchanged Shares. Dividends or other
distributions declared or made after the date of this Agreement with respect to
Parent Common Stock with a record date after the Effective Time will be paid to
the holders of any unsurrendered Certificates with respect to the shares of
Parent Common Stock represented thereby when the holders of record of such
Certificates surrender such Certificates.
(e) Transfers of Ownership. If certificates representing shares of Parent
Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the
persons requesting such exchange will have (i) paid to Parent or any agent
designated by it any transfer or other taxes required by reason of the issuance
of certificates representing shares of Parent Common Stock in any name other
than that of the registered holder of the Certificates surrendered, or (ii)
established to the reasonable satisfaction of Parent or any agent designated by
it that such tax has been paid or is not payable.
(f) Required Withholding. Each of the Exchange Agent, Parent and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to
any holder or former holder of Company Common Stock such amounts as may be
required to be deducted or withheld therefrom under the Code or state, local or
foreign law. To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as having been
paid to the person to whom such amounts would otherwise have been paid.
(g) No Liability. Notwithstanding anything to the contrary in this Section
1.7, neither the Exchange Agent, Parent, the Surviving Corporation nor any
party hereto shall be liable to a holder of shares of Parent Common Stock or
Company Common Stock for any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
1.8 No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued in exchange for shares of Company Common Stock in
accordance with the terms hereof (including any cash paid in respect thereof
pursuant to Sections 1.6(f) and 1.7(d)) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such shares of Company Common
Stock. There shall be no further registration of transfers on the records of
the Surviving Corporation 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 I.
1.9 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall issue and pay in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the holder
thereof, certificates representing the shares of Parent Common Stock into which
the shares of Company Common Stock represented by such Certificates were
converted pursuant to Section 1.6(a), cash for fractional shares, if any, as
may be required pursuant to Section 1.6(f) and any dividends or distributions
payable pursuant to Section 1.7(d); provided, however, that the Exchange Agent,
may, in its discretion and as a condition precedent to the issuance of such
certificates representing shares of Parent Common Stock and the payment of cash
and other distributions, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Parent, the Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
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1.10 Tax and Accounting Consequences.
(a) It is intended by the parties hereto that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code. The parties
hereto adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
(b) It is intended by the parties hereto that the Merger shall be treated as
a pooling of interests for accounting purposes.
1.11 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Company and Merger Sub, the officers and directors of Parent
and the Surviving Corporation shall be fully authorized (in the name of Merger
Sub, Company, the Surviving Corporation and otherwise) to take all such
necessary action.
ARTICLE II
Representations and Warranties of Company
Company represents and warrants to Parent and Merger Sub, subject to such
exceptions as are disclosed in writing in the disclosure letter supplied by
Company to Parent dated as of the date hereof (the "Company Schedule"), which
disclosure shall provide an exception to or otherwise qualify the
representations and warranties of Company contained in the section of this
Agreement corresponding by number to such disclosure and the other
representations and warranties herein to the extent such disclosure shall
reasonably appear to be applicable to such other representations or warranties,
as follows:
2.1 Organization and Qualification; Subsidiaries.
(a) Each of Company and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority to own, lease
and operate its assets and properties and to carry on its business as it is now
being conducted.
(b) As of the date hereof, Company has no subsidiaries. Except as set forth
in Section 2.1 of the Company Schedule, neither Company nor any of its
subsidiaries has agreed to make nor is obligated to make nor is bound by any
written or oral agreement, contract, understanding, negotiable instrument,
commitment or undertaking of any nature, in effect as of the date hereof or as
may hereafter be in effect (a "Contract"), under which it may become obligated
to make, any future investment in or capital contribution to any other entity.
Neither Company nor any of its subsidiaries directly or indirectly owns any
equity or similar interest in or any interest convertible, exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business, association or entity other than
the entities identified in the Company SEC Reports (as defined in Section 2.7).
(c) Except as set forth in Section 2.1 of the Company Schedule, Company and
each of its subsidiaries is qualified or licensed to do business as a foreign
corporation, and is in good standing (with respect to jurisdictions which
recognize such concept), under the laws of all jurisdictions where the
character of the properties owned, leased or operated by them or the nature of
their activities requires such qualification or licensing and where the failure
to be so qualified or licensed would have a Material Adverse Effect on Company.
2.2 Certificate of Incorporation and Bylaws. Company has previously
furnished to Parent a complete and correct copy of its Certificate of
Incorporation and Bylaws as amended and in effect as of the date of this
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Agreement (together, the "Company Charter Documents"). Such Company Charter
Documents and equivalent organizational documents of each of its subsidiaries
are in full force and effect. Company is not in violation of any of the
provisions of the Company Charter Documents, and no subsidiary of Company is in
violation of its equivalent organizational documents except where the violation
of any such equivalent organizational documents of a subsidiary of Company
would not, individually or in the aggregate, have a Material Adverse Effect on
Company.
2.3 Capitalization.
(a) The authorized capital stock of Company consists of 100,000,000 shares
of Company Common Stock, $0.001 par value per share, and 10,000,000 shares of
Preferred Stock ("Company Preferred Stock"). As of June 30, 2000: (i)
26,665,217 shares of Company Common Stock were issued and outstanding, all of
which were validly issued, fully paid and nonassessable; (ii) no shares of
Company Common Stock were held by subsidiaries of Company; (iii) 300,000 shares
of Company Common Stock were available for future issuance pursuant to the
ESPP; (iv) 5,374,669 shares of Company Common Stock were reserved for future
issuance upon the exercise of outstanding options to purchase Company Common
Stock under Company's 1999 Equity Incentive Plan; (v) 1,990,364 shares of
Company Common Stock were available for future grant under Company's 1999
Equity Incentive Plan; (vi) no shares of Company Common Stock were reserved for
future issuance upon the exercise of outstanding options to purchase Company
Common Stock under Company's 1999 Non-Employee Directors' Stock Option Plan;
(vii) 356,589 shares of Company Common Stock were available for future grant
under Company's 1999 Non-Employee Directors' Stock Option Plan; and (viii)
97,750 shares of Company Common Stock were reserved for future issuance upon
exercise of outstanding warrants of Company. As of the date hereof, no shares
of Company Preferred Stock were issued or outstanding.
(b) Section 2.3(b) of the Company Schedule sets forth the following
information with respect to outstanding Company Stock Options (as defined in
Section 5.8) as of July 10, 2000: (i) the total number of shares of Company
Common Stock subject to such Company Stock Options (which number is not
exceeded by the number of shares of Company Common Stock subject to Company
Stock Options outstanding on the date of this Agreement); (ii) the average per
share exercise price of such Company Stock Options; and (iii) whether the
exercisability of any Company Stock Option will be accelerated in any way by
the transactions contemplated by this Agreement, and the extent of
acceleration.
(c) Company has made available to Parent accurate and complete copies of all
stock option plans pursuant to which Company has granted such Company Stock
Options that are outstanding as of July 10, 2000 and the form of all stock
option agreements evidencing such Company Stock Options. Section 2.3(c) of the
Company Schedule also has attached to it Company's option schedule, which
schedule sets forth, as of July 10, 2000, with respect to each Company Stock
Option, the name of the holder thereof, the number of shares subject thereto,
and the grant date, exercise price, expiration date and vesting schedule
thereof.
(d) Except as set forth in Section 2.3(d) of the Company Schedule, there are
no commitments or agreements of any character to which Company is bound
obligating Company to accelerate the vesting of any Company Stock Option as a
result of the Merger. All outstanding shares of Company Common Stock, all
outstanding Company Stock Options, and all outstanding shares of capital stock
of each subsidiary of Company have been issued and granted in compliance with
(i) all applicable securities laws and other applicable Legal Requirements (as
defined below) in effect as of the time of grant and issuance and (ii) all
requirements set forth in applicable Contracts by which Company is bound and
which were in effect as of the time of grant and issuance. "Legal Requirements"
means any federal, state, local, municipal, foreign or other law, statute,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, rule, regulation, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any court, administrative agency, commission, governmental or regulatory
authority, domestic or foreign (a "Governmental Entity").
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(e) There are no equity securities, partnership interests or similar
ownership interests of any class of equity security of any subsidiary of
Company, or any security exchangeable or convertible into or exercisable for
such equity securities, partnership interests or similar ownership interests,
issued, reserved for issuance or outstanding, except for securities Company
owns free and clear of all liens, pledges, hypothecations, charges, mortgages,
security interests, encumbrances, claims, options, rights of first refusal,
preemptive rights, community property interests or similar restrictions
(including any restriction on the voting of any security, any restriction on
the transfer of any security or other asset, any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset)
("Encumbrances") directly or indirectly through one or more subsidiaries.
(f) Except as set forth in Section 2.3(a) hereof and Sections 2.3(b), (c),
(f) and (s) of the Company Schedule, as of the date hereof, there are no
subscriptions, options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which Company or any of its
subsidiaries is a party or by which it is bound obligating Company or any of
its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition of, any shares of capital stock, partnership
interests or similar ownership interests of Company or any of its subsidiaries
or obligating Company or any of its subsidiaries to grant, extend, accelerate
the vesting of or enter into any such subscription, option, warrant, equity
security, call, right, commitment or agreement.
(g) As of the date of this Agreement, except as contemplated by this
Agreement and as set forth in Sections 2.3(b), (c), (f) and (g) of the Company
Schedule, there are no registration rights and there is, except for the Company
Voting Agreements, no voting trust, proxy, rights plan, antitakeover plan or
other agreement currently in effect to which Company or any of its subsidiaries
is a party or by which they are bound with respect to any equity security of
any class of Company or with respect to any equity security, partnership
interest or similar ownership interest of any class of any of its subsidiaries.
Stockholders of Company will not be entitled to dissenters' rights under
applicable state law in connection with the Merger.
2.4 Authority Relative to this Agreement. Company has all necessary
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and, subject to the adoption of this
Agreement by holders of a majority of the outstanding shares of Company Common
Stock in accordance with Delaware Law and the Company Charter Documents, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Company and the consummation by Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of Company and no other corporate proceedings on
the part of Company are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby (other than the adoption of this Agreement
by holders of a majority of the outstanding shares of Company Common Stock in
accordance with Delaware Law and the Company Charter Documents). This Agreement
has been duly and validly executed and delivered by Company and, assuming the
due authorization, execution and delivery by Parent and Merger Sub, constitutes
the legal and binding obligation of Company, enforceable against Company in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws of general application affecting the
enforcement of creditors' rights and the exercise by courts of equitable
powers.
2.5 No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 2.5(a) of the Company Schedule, the
execution and delivery of this Agreement by Company do not, and the performance
of this Agreement by Company will not, (i) conflict with or violate the Company
Charter Documents or the equivalent organizational documents of any of
Company's subsidiaries, (ii) subject to obtaining the vote of Company's
stockholders in favor of the adoption of this Agreement and to compliance with
the requirements set forth in Section 2.5(b) below, conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to Company or
any of its subsidiaries or by which its or any of their respective properties
is bound or affected, or (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or materially
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impair Company's or any of its subsidiaries' rights or alter the rights or
obligations of any third party against or to Company under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of an Encumbrance on any of the properties or assets of
Company or any of its subsidiaries pursuant to, any material mortgage,
Contract, permit, franchise or other obligation to which Company or any of its
subsidiaries is a party or by which Company or any of its subsidiaries or its
or any of their respective properties are bound or affected (a "Company
Obligation"), except in the case of clause (ii) or clause (iii), to the extent
such conflict, violation, breach, default, impairment or other effect would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Company.
(b) Except as set forth in Section 2.5(b) of the Company Schedule, the
execution and delivery of this Agreement by Company do not, and the performance
of this Agreement by Company shall not, require Company to obtain or make, at
or prior to the Effective Time, any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Entity, except (i)
pursuant to applicable requirements, if any, of the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), state securities laws ("Blue Sky Laws"), the pre-merger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act") and of foreign Governmental Entities and
the rules and regulations thereunder, the rules and regulations of Nasdaq, and
the filing and recordation of the Certificate of Merger as required by Delaware
Law, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not,
individually or in the aggregate, (A) reasonably be expected to have a Material
Adverse Effect on Company or, after the Effective Time, Parent, or (B) prevent
consummation of the Merger or otherwise prevent Company from performing its
material obligations under this Agreement.
2.6 Compliance; Permits.
(a) Neither Company nor any of its subsidiaries is in conflict with, or in
default or violation of, any Legal Requirement or Company Obligation, except
for any conflicts, defaults or violations that (individually or in the
aggregate) would not cause Company to lose any material benefit or incur any
material liability. No investigation or review by any Governmental Entity is
pending or, to the knowledge of Company, being threatened against Company or
its subsidiaries, nor, to Company's knowledge, has any Governmental Entity
indicated to Company in writing an intention to conduct the same, other than,
in each such case, those the outcome of which would not, individually or in the
aggregate, reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of Company or any of its
subsidiaries or the conduct of business by Company or any of its subsidiaries.
(b) Company and its subsidiaries hold all franchises, grants,
authorizations, permits, licenses, variances, exemptions, easements, consents,
certifications, orders and approvals from Governmental Entities which are
material to the operation of the business of Company and its subsidiaries taken
as a whole (collectively, the "Company Permits"). Company and its subsidiaries
are in compliance in all material respects with the terms of the Company
Permits.
2.7 SEC Filings; Financial Statements.
(a) Company has made available to Parent (through reference to documents
filed by EDGAR or otherwise) a correct and complete copy of each report,
schedule, registration statement and definitive proxy statement filed by
Company with the Securities and Exchange Commission ("SEC") since the initial
filing date of the registration statement for Company's initial public offering
(the "Company SEC Reports"), which are all the forms, reports and documents
required to be filed by Company with the SEC since the initial filing date of
the registration statement for Company's initial public offering. The Company
SEC Reports (A) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (B) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a 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. Company does
not have any subsidiaries that are required to file any reports or other
documents with the SEC.
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(b) Each set of financial statements (including, in each case, any related
notes thereto) contained in the Company SEC Reports was prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto and except that unaudited statements do not contain footnotes in
substance or form required by GAAP, as is permitted by Form 10-Q of the
Exchange Act) and each fairly presents in all material respects the financial
position of Company at the respective dates thereof and the results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal adjustments which
were not or are not expected to be material in amount.
(c) Company has previously furnished to Parent a complete and correct copy
of any amendments or modifications, which have not yet been filed with the SEC
but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by Company with the SEC pursuant to
the Securities Act or the Exchange Act.
2.8 No Undisclosed Liabilities. Except as set forth in Section 2.8 of the
Company Schedule, neither Company nor any of its subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise) of a nature required
to be disclosed on a balance sheet or in the related notes to the financial
statements prepared in accordance with GAAP which are, individually or in the
aggregate, material to the business, results of operations, assets or financial
condition of Company and its subsidiaries taken as a whole, except (i)
liabilities disclosed or provided for in Company's unaudited balance sheet as
of March 31, 2000 set forth in the Company SEC Reports or in the related notes,
(ii) liabilities incurred since March 31, 2000 and on or prior to the date
hereof in the ordinary course of business which have not resulted, in the
aggregate, in any material increase in the Company's liabilities from those
disclosed or provided for in Company's unaudited balance sheet as of March 31,
2000 set forth in the Company SEC Reports or in the related notes, or (iii)
liabilities incurred after the date hereof in the ordinary course of business.
2.9 Absence of Certain Changes or Events. Except as set forth in Section 2.9
of the Company Schedule, since March 31, 2000, there has not been (i) any
Material Adverse Effect on Company, (ii) any declaration, setting aside or
payment of any dividend on, or other distribution (whether in cash, stock or
property) in respect of, any of Company's or any of its subsidiaries' capital
stock, or any purchase, redemption or other acquisition by Company of any of
Company's capital stock or any other securities of Company or its subsidiaries
or any options, warrants, calls or rights to acquire any such shares or other
securities except for repurchases from employees following their termination
pursuant to the terms of their pre-existing stock option or purchase
agreements, (iii) any split, combination or reclassification of any of
Company's or any of its subsidiaries' capital stock, (iv) any granting by
Company or any of its subsidiaries of any material increase in compensation or
fringe benefits, except for normal increases of cash compensation in the
ordinary course of business consistent with past practice, or any payment by
Company or any of its subsidiaries of any bonus, except for bonuses made in the
ordinary course of business consistent with past practice, or any granting by
Company or any of its subsidiaries of any increase in severance or termination
pay or any entry by Company or any of its subsidiaries into any currently
effective employment, severance, termination or indemnification agreement or
any agreement the benefits of which would be contingent or the terms of which
would be materially altered upon the consummation of the transactions
contemplated hereby, (v) entry by Company or any of its subsidiaries into any
licensing or other agreement with regard to the acquisition or disposition of
any Intellectual Property (as defined in Section 2.17) other than licenses and
other agreements in the ordinary course of business consistent with past
practice and licenses disclosed in Section 2.17(g) of the Company Schedule,
(vi) any amendment or consent with respect to any licensing agreement filed or
required to be filed by Company with the SEC, (vii) any material change by
Company in its accounting methods, principles or practices, except as required
by concurrent changes in GAAP, or (viii) any material revaluation by Company of
any of its assets, including, without limitation, writing down the value of
capitalized inventory or writing off notes or accounts receivable or any sale
of assets of Company other than in the ordinary course of business.
2.10 Absence of Litigation. Except as specifically disclosed in the Company
SEC Reports, as of the date hereof, there are no material claims, actions,
suits or proceedings pending or, to the knowledge of
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Company, threatened (or, to the knowledge of Company, any governmental or
regulatory investigation pending or threatened) against Company or any of its
subsidiaries or any properties or rights of Company or any of its subsidiaries,
before any Governmental Entity.
2.11 Employee Benefit Plans.
(a) All material employee compensation, incentive, fringe or benefit plans,
programs, policies, commitments or other similar arrangements (whether or not
set forth in a written document and including, without limitation, all
"employee benefit plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) covering any
active employee, former employee, director or consultant of Company, any
subsidiary of Company or any trade or business (whether or not incorporated)
which is a member of a controlled group or which is under common control with
Company within the meaning of Section 414 of the Code (an "ERISA Affiliate") or
(ii) with respect to which Company has material liability as of the date
hereof, and covering any active employee, former employee, director or
consultant of Company, any subsidiary of Company or any ERISA Affiliate are
listed in Section 2.11(a) of the Company Schedule (the "Plans"). Except with
respect to International Employee Plans (as defined in Section 2.11(h) below)
that provide benefits only to the extent required under applicable local laws,
Company has provided or made available to Parent: (i) correct and complete
copies of all documents embodying each Plan including (without limitation) all
amendments thereto, and all related trust documents; (ii) the three (3) most
recent annual reports (Form Series 5500 and all schedules and financial
statements attached thereto), if any, required under ERISA or the Code in
connection with each Plan; (iii) the most recent summary plan description
together with the summary(ies) of material modifications thereto, if any,
required under ERISA with respect to each Plan; (iv) the most recent IRS
determination, opinion, notification and advisory letters; (v) all material
correspondence to or from any governmental agency relating to any Plan; (vi)
all forms of notice and election documents related to COBRA; (vii) all
discrimination tests performed with respect to each Plan for the most recent
three (3) plan years; (viii) the most recent annual actuarial valuations, if
any, prepared for each Plan; (xi) if the Plan is funded, the most recent annual
and periodic accounting of Plan assets; (x) all material administrative service
agreements, group annuity contracts, group insurance contracts and similar
written agreements and contracts relating to each Plan; (xi) all material
communications to employees or former employees relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules which would result in a material liability
under any Plan or proposed Plan; and (xii) all currently effective registration
statements, annual reports (Form 11-K and all attachments thereto) and
prospectuses prepared in connection with any Plan that includes securities
registered under the Securities Act.
(b) Each Plan has been maintained and administered in all material respects
in compliance with its terms and with the requirements prescribed by any and
all statutes, orders, rules and regulations, including but not limited to ERISA
and the Code, which are applicable to such Plan. No suit, action or other
litigation (excluding claims for benefits incurred in the ordinary course of
Plan activities) has been brought or, to the knowledge of Company, is
threatened, against or with respect to any Plan. There are no audits, inquiries
or proceedings pending or, to the knowledge of Company, threatened by the
Internal Revenue Service (the "IRS") or the Department of Labor (the "DOL")
with respect to any Plan. All contributions, reserves or premium payments
required to be made or accrued as of the date hereof to the Plans have been
timely made or accrued. Any Plan intended to be qualified under Section 401(a)
of the Code and each related trust intended to qualify under Section 501(a) of
the Code (i) has either obtained a favorable determination, notification,
advisory and/or opinion letter, as applicable, as to its qualified status from
the IRS or still has a remaining period of time under applicable Treasury
Regulations or IRS pronouncements in which to apply for such letter and to make
any amendments necessary to obtain a favorable determination, and (ii)
incorporates or has been amended to incorporate all provisions required to
comply with the Tax Reform Act of 1986 and subsequent legislation to the extent
such amendment or incorporation is required. Company does not have any plan or
commitment to establish any new Plan or to modify any Plan (except to the
extent required by law or to conform any such Plan to the requirements of any
applicable law, in each case as previously disclosed to Parent in writing, or
as
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required by this Agreement). Each Plan can be amended, terminated or otherwise
discontinued after the Effective Time in accordance with its terms, without
liability to Parent, Company or any of its ERISA Affiliates except as otherwise
provided in the Plan (other than ordinary administration expenses and expenses
for benefits accrued but not yet paid).
(c) Neither Company nor any its ERISA Affiliates has at any time ever
maintained, established, sponsored, participated in, or contributed to any plan
subject to Title IV of ERISA or Section 412 of the Code, and at no time has
Company or any of its ERISA Affiliates contributed to or been requested to
contribute to any "multiemployer plan," as such term is defined in ERISA or to
any plan described in Section 413(c) of the Code. Neither Company, any of its
ERISA Affiliates, nor, to the knowledge of Company, any officer or director of
Company or any of ERISA Affiliates is subject to any liability or penalty under
Section 4975 through 4980B of the Code or Title I of ERISA. No "prohibited
transaction," within the meaning of Section 4975 of the Code or Sections 406
and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has
occurred with respect to any Plan which could subject Company or its
subsidiaries to material liabilities.
(d) None of the Plans promises or provides retiree medical or other retiree
welfare benefits to any person except as required by applicable law, and
neither Company nor any of its subsidiaries has represented, promised or
contracted to provide such retiree benefits to any employee, former employee,
director, consultant or other person, except (i) to the extent required by
statute or (ii) for benefits the cost of which are fully paid for by such
person.
(e) Neither Company nor any of its subsidiaries is bound by or subject to
(and none of its respective assets or properties is bound by or subject to) any
arrangement with any labor union. No employee of Company or any of its
subsidiaries is represented by any labor union or covered by any collective
bargaining agreement relating to Company or any of its subsidiaries and, to the
knowledge of Company, no campaign to establish such representation is in
progress. There is no pending or, to the knowledge of Company, threatened labor
dispute involving Company or any of its subsidiaries and any group of its
employees nor has Company or any of its subsidiaries experienced any
significant labor interruptions over the past three (3) years. Company and its
subsidiaries are in compliance in all material respects with all applicable
material foreign, federal, state and local laws, rules and regulations
respecting employment, employment practices, terms and conditions of employment
and wages and hours.
(f) Neither Company nor any of its ERISA Affiliates has, prior to the
Effective Time and in any material respect, violated any of the health
continuation requirements of COBRA, the requirements of the Family Medical
Leave Act of 1993, as amended, the requirements of the Women's Health and
Cancer Rights Act, as amended, the requirements of the Newborns' and Mothers'
Health Protection Act of 1996, as amended, the requirements of the Health
Insurance Portability and Accountability Act of 1996, as amended, or any
similar provisions of state law applicable to employees of Company.
(g) Except as disclosed in Section 2.11(g) of the Company Schedule, neither
the execution and delivery of this Agreement by Company nor the consummation by
Company of the transactions contemplated hereby will (i) result in any payment
(including severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to any stockholder, director or employee of Company or
any of its subsidiaries under any Plan or otherwise, (ii) materially increase
any benefits otherwise payable under any Plan, or (iii) except as required by
the Code, result in the acceleration of the time of payment or vesting of any
such benefits.
(h) Each Plan that has been adopted or maintained by Company or any of its
subsidiaries, whether informally or formally, for the benefit of current or
former employees of Company or any of its subsidiaries outside the United
States ("International Employee Plan") has been established, maintained and
administered in material compliance with its terms and conditions and with the
requirements prescribed by any and all statutory or regulatory laws that are
applicable to such International Employee Plan. No International Employee Plan
has unfunded liabilities that, as of the Effective Time, will not be offset by
insurance or fully accrued. Except as required by law or the terms of any such
plan, no condition exists that would prevent Company or Parent from terminating
or amending any International Employee Plan at any time for any reason.
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2.12 Registration Statement; Proxy Statement. None of the information
supplied or to be supplied by Company for inclusion in: (i) the registration
statement on Form S-4 to be filed with the SEC by Parent in connection with the
issuance of the Parent Common Stock in or as a result of the Merger (the "S-4")
will, at the time the S-4 becomes effective under the Securities Act, 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 are made, not
misleading; and (ii) the proxy statement/prospectus to be filed with the SEC by
Company pursuant to Section 5.1(a) (the "Proxy Statement/Prospectus") will, at
the dates mailed to the stockholders of Company and at the time of the
stockholders' meeting of Company (the "Company Stockholders' Meeting") in
connection with the transactions contemplated hereby, 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 are made, not misleading. The Proxy
Statement/Prospectus will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated by the
SEC thereunder. Notwithstanding the foregoing, Company makes no representation
or warranty with respect to any information supplied by Parent or Merger Sub
which is contained in any of the foregoing documents.
2.13 Restrictions on Business Activities. There is no agreement, commitment,
judgment, injunction, order or decree binding upon Company or its subsidiaries
or to which Company or any of its subsidiaries is a party which has or would
reasonably be expected to have the effect of prohibiting or materially
impairing any current business practice of Company or any of its subsidiaries,
any acquisition of property by Company or any of its subsidiaries or the
conduct of business by Company or any of its subsidiaries as currently
conducted.
2.14 Title to Property. Neither Company nor any of its subsidiaries owns any
material real property. Except as set forth in Section 2.14 of the Company
Schedule, Company and each of its subsidiaries have good title to, or valid
leasehold interests in, all of their material properties and tangible assets,
free and clear of all Encumbrances except liens for taxes or other governmental
charges or levies not yet due and payable and such liens or other imperfections
of title, if any, that do not materially interfere with the ability of Company
to conduct its business as currently conducted. All leases pursuant to which
Company or any of its subsidiaries lease from others material real or personal
property are in full force and effect in accordance with their respective
terms, except where the failure to be in full force and effect would not
reasonably be expected to materially interfere with the ability of Company to
conduct its business as currently conducted. There is not, under any of such
leases, any existing material default or event of default of Company or any of
its subsidiaries or, to Company's knowledge, any other party, except for such
defaults or events of default that would not reasonably be expected to
materially interfere with the ability of Company to conduct its business as
currently conducted.
2.15 Taxes.
(a) Definition of Taxes. For the purposes of this Agreement, "Tax" or
"Taxes" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed
with respect to such amounts and any obligations under any agreements or
arrangements with any other person with respect to such amounts and including
any liability for Taxes of a predecessor entity.
(b) Tax Returns and Audits.
(i) Company and each of its subsidiaries have timely filed all federal,
state, local and foreign returns, estimates, forms, information statements and
reports ("Returns") relating to Taxes required to be filed by Company and each
of its subsidiaries with any Tax authority, except such Returns which are not,
individually or in the aggregate, material to Company. Company and each of its
subsidiaries have paid all Taxes shown to be due on such Returns.
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(ii) Company and each of its subsidiaries as of the Effective Time will have
withheld with respect to its employees all federal and state income Taxes,
Taxes pursuant to the Federal Insurance Contribution Act, Taxes pursuant to the
Federal Unemployment Tax Act and other Taxes required to be withheld, except
such Taxes which are not, individually or in the aggregate, material to
Company.
(iii) Neither Company nor any of its subsidiaries has been delinquent in the
payment of any material Tax. There is no material Tax deficiency outstanding,
proposed or assessed against Company or any of its subsidiaries. Neither
Company nor any of its subsidiaries has executed any unexpired waiver of any
statute of limitations on or extension of any period for the assessment or
collection of any Tax.
(iv) Except as set forth in Section 2.15(b) of the Company Schedule, no
audit or other examination of any Return of Company or any of its subsidiaries
by any Tax authority is presently in progress, nor has Company or any of its
subsidiaries been notified of any request for such an audit or other
examination.
(v) No adjustment relating to any Returns filed or required to be filed by
Company or any of its subsidiaries has been proposed in writing, formally or
informally, by any Tax authority to Company or any of its subsidiaries or any
representative thereof.
(vi) Neither Company nor any of its subsidiaries has any liability for any
material unpaid Taxes (whether or not shown to be done on any Return) which has
not been accrued for or reserved on Company's balance sheet dated March 31,
2000 in accordance with GAAP, whether asserted or unasserted, contingent or
otherwise, which is material to Company, other than any liability for unpaid
Taxes that may have accrued since April 1, 2000 in connection with the
operation of the business of Company and its subsidiaries in the ordinary
course. There are no liens with respect to Taxes on any of the assets of
Company or any of its subsidiaries, other than liens which are not individually
or in the aggregate material, or customary liens for current Taxes not yet due
and payable.
(vii) There is no contract, agreement, plan or arrangement to which Company
or any of its subsidiaries is a party as of the date of this Agreement,
including but not limited to the provisions of this Agreement, that,
individually or collectively, should give rise to the payment of any amount
that would not be deductible pursuant to Sections 280G, 404 or 162(m) of the
Code. There is no contract, agreement, plan or arrangement to which Company or
any of its subsidiaries is a party or by which it is bound to compensate any
individual for excise taxes paid pursuant to Section 4999 of the Code.
(viii) Neither Company nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by Company or any of its subsidiaries.
(ix) Except as set forth in Section 2.15(b) of the Company Schedule, neither
Company nor any of its subsidiaries is party to or has any obligation under any
tax-sharing, tax indemnity or tax allocation agreement or arrangement.
(x) None of Company's or its subsidiaries' assets are tax exempt use
property within the meaning of Section 168(h) of the Code.
(xi) Neither Company nor any of its subsidiaries has constituted either a
"distributing corporation" or a "controlled corporation" in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (x) in
the two years prior to the date of this Agreement or (y) in a distribution
which could otherwise constitute part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code) in conjunction
with the Merger.
(xii) Company and each of its subsidiaries are in full compliance with all
terms and conditions of any Tax exemptions, Tax holiday or other Tax reduction
agreement or order of a territorial or foreign government and
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the consummation of the Merger will not have any adverse effect on the
continued validity and effectiveness of any such Tax exemptions, Tax holiday or
other Tax reduction agreement or order.
2.16 Brokers. Except for fees payable to Morgan Stanley & Co. Incorporated
pursuant to an engagement letter dated June 21, 2000, a copy of which has been
provided to Parent, Company has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders fees or agent's commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
2.17 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"Intellectual Property" shall mean any or all of the following and all
worldwide common law and statutory rights in, arising out of, or associated
therewith: (i) patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof ("Patents"); (ii) inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know how, technology, technical data and customer
lists, and all documentation relating to any of the foregoing; (iii)
copyrights, copyright registrations and applications therefor, and all
other rights corresponding thereto throughout the world; (iv) domain names,
uniform resource locators ("URLs") and other names and locators associated
with the Internet ("Domain Names"); (v) industrial designs and any
registrations and applications therefor; (vi) trade names, logos, common
law trademarks and service marks, trademark and service mark registrations
and applications therefor; (vii) all databases and data collections and all
rights therein; (viii) all moral and economic rights of authors and
inventors, however denominated; and (ix) any similar or equivalent rights
to any of the foregoing (as applicable).
"Company Intellectual Property" shall mean any Intellectual Property that
is owned by, or exclusively licensed to, Company and its subsidiaries.
"Registered Intellectual Property" means all Intellectual Property that is
the subject of an application, certificate, filing, registration or other
document issued, filed with, or recorded by any private, state, government
or other legal authority and that has not been abandoned or allowed to
lapse.
"Company Registered Intellectual Property" means all of the Registered
Intellectual Property owned by, or filed in the name of, Company or any of
its subsidiaries.
(a) Section 2.17(a) of the Company Schedule is a complete and accurate list
of all Company Registered Intellectual Property which specifies the
jurisdictions in which each such item of Company Registered Intellectual
Property has been issued or registered and lists any proceedings or actions
before any court or tribunal (including the United States Patent and Trademark
Office (the "PTO") or equivalent authority anywhere in the world) related to
any of the Company Registered Intellectual Property.
(b) Except as set forth in Section 2.17(b) of the Company Schedule, no
Company Intellectual Property or product or service offering of Company or any
of its subsidiaries (a "Company Product") is subject to any proceeding or
outstanding decree, order, judgment, contract, license, agreement, or
stipulation restricting in any manner by its terms the use, transfer, or
licensing thereof by Company or any of its subsidiaries, or which materially
and adversely affects the validity or enforceability of such Company
Intellectual Property.
(c) Each material item of Company Registered Intellectual Property is, to
the knowledge of Company, valid and subsisting. All necessary registration,
maintenance and renewal fees currently due in connection with such Company
Registered Intellectual Property have been made. All necessary documents,
recordations 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 Company Registered
Intellectual Property.
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(d) Except as set forth in Section 2.17(d) of the Company Schedule, Company
owns and has good title to or has all necessary licenses to each material item
of Company Intellectual Property free of any Encumbrance (excluding rights of
licensors and non-exclusive licenses and related restrictions granted in the
ordinary course). In this paragraph the term "Encumbrance" excludes
infringement of Company Intellectual Property by third parties.
(e) To the extent that any Intellectual Property that has been developed or
created independently by a third party or jointly with a third party for
Company or any of its subsidiaries is used by Company or is incorporated into
any Company Products, Company has a written agreement with such third party
with respect thereto and Company thereby either (i) has obtained ownership of,
and is the exclusive owner of, or (ii) has obtained a perpetual, non-terminable
license to all such Intellectual Property.
(f) Except as set forth in Section 2.17(f) of the Company Schedule, neither
Company nor any of its subsidiaries has transferred ownership of, or granted
any exclusive license with respect to, any Intellectual Property that is
material Company Intellectual Property, to any third party, or knowingly
permitted Company's rights in such material Company Intellectual Property to
lapse or enter the public domain.
(g) Section 2.17(g) of the Company Schedule lists all material contracts,
licenses and agreements to which Company or any of its subsidiaries is a party:
(i) with respect to Company Intellectual Property licensed or transferred to
any third party (other than end-user licenses in the ordinary course); or (ii)
pursuant to which a third party has licensed or transferred any Intellectual
Property to Company or any of its subsidiaries.
(h) Except as set forth in Section 2.17(h) of the Company Schedule, all
contracts, licenses and agreements listed in Section 2.17(g) of the Company
Schedule are in full force and effect. The consummation of the transactions
contemplated by this Agreement will neither violate nor result in the breach,
modification, cancellation, termination or suspension ("Termination") of such
contracts, licenses and agreements by their terms. Each of Company and its
subsidiaries is in material compliance with any such contracts, licenses and
agreements. To the knowledge of Company, all other parties to such contracts,
licenses and agreements are in compliance with, and have not materially
breached any term of, such contracts, licenses and agreements, which breach has
not been cured. Following the Closing Date, the Surviving Corporation will be
permitted to exercise all of Company's rights under such contracts, licenses
and agreements by their terms to the same extent Company and its subsidiaries
would have been able to had the transactions contemplated by this Agreement not
occurred and without the payment of any additional amounts or consideration
other than ongoing fees, royalties or payments which Company would otherwise be
required to pay. There is no provision in any of Company's contracts or
agreements which, as a result of this Agreement and the transactions
contemplated by this Agreement, requires Parent or Merger Sub to (i) grant to
any third party any right to or with respect to any material Intellectual
Property owned by, or licensed to, either of them, (ii) be bound by, or subject
to, any non-compete or other material restriction on the operation or scope of
their respective businesses, or (iii) be obligated to pay any royalties or
other material amounts to any third party in excess of those payable by Parent
or Merger Sub, respectively, prior to the Closing.
(i) To Company's knowledge, Company's and its subsidiaries' design,
development, manufacture, distribution, reproduction, marketing or sale of the
products of Company and its subsidiaries has not infringed or misappropriated
and does not infringe or misappropriate the Intellectual Property of any third
party, and does not constitute unfair competition or trade practices under the
laws of any jurisdiction.
(j) Neither Company nor any of its subsidiaries has received written notice
from any third party that the operation of the business of Company or any of
its subsidiaries or any act, product or service of Company or any of its
subsidiaries, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the laws
of any jurisdiction.
(k) To the knowledge of Company, no person has infringed or misappropriated
or is infringing or misappropriating any Company Intellectual Property.
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(l) Company and each of its subsidiaries has taken reasonable steps to
protect Company's and its subsidiaries' rights in Company's confidential
information and trade secrets that it wishes to protect or any trade secrets or
confidential information of third parties provided to Company or any of its
subsidiaries. Each of Company and its subsidiaries has a policy requiring each
employee and contractor to execute a proprietary information/confidentiality
agreement substantially in the form provided to Parent. All current and former
employees and contractors of Company and any of its subsidiaries have executed
such an agreement, except where the failure to do so would not be reasonably
expected to have a Material Adverse Effect on Company.
2.18 Agreements, Contracts and Commitments. As of the date of this
Agreement, except as set forth in Section 2.17(g) or Section 2.18 of the
Company Schedule, neither Company nor any of its subsidiaries is a party to or
is bound by:
(a) any written employment or consulting agreement, contract or commitment
with any officer or employee of Company currently earning an annual salary in
excess of $150,000 or member of Company's Board of Directors, other than those
that are terminable by Company or any of its subsidiaries on no more than
thirty (30) days' notice without material liability or financial obligation to
Company;
(b) any material agreement of indemnification or any guaranty other than any
agreement of indemnification entered into in connection with the sale of
products or license of technology in the ordinary course of business;
(c) any material agreement, contract or commitment containing any covenant
limiting in any material respect the right of Company or any of its
subsidiaries to engage in any line of business or to compete with any person or
granting any exclusive distribution rights;
(d) any agreement, contract or commitment relating to the disposition or
acquisition by Company or any of its subsidiaries after the date of this
Agreement of a material amount of assets not in the ordinary course of business
or pursuant to which Company or any of its subsidiaries has any material
ownership interest in any corporation, partnership, joint venture or other
business enterprise other than Company's subsidiaries;
(e) any dealer, distributor, joint marketing or development agreement under
which Company or any of its subsidiaries have continuing material obligations
to jointly market any product, technology or service and which may not be
canceled without material penalty upon notice of ninety (90) days or less, or
any material agreement pursuant to which Company or any of its subsidiaries
have continuing material obligations to jointly develop any intellectual
property that will not be owned, in whole or in part, by Company or any of its
subsidiaries and which may not be canceled without material penalty upon notice
of ninety (90) days or less;
(f) any agreement, contract or commitment to license any third party to
manufacture or reproduce any Company product, service or technology or any
agreement, contract or commitment to sell or distribute any Company products,
service or technology except agreements with distributors or sales
representatives in the normal course of business cancelable without material
penalty upon notice of ninety (90) days or less and substantially in the form
previously provided to Parent;
(g) any mortgages, indentures, guarantees, loans or credit agreements,
security agreements or other agreements or instruments relating to the
borrowing of money by Company or extension of credit (other than customer
accounts receivable owing to Company created in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms);
(h) any material settlement agreement under which Company has ongoing
obligations;
(i) any other agreement, contract or commitment that calls for the payment
or receipt by Company of $3,000,000 or more; or
(j) any other agreement, contract or commitment that is of the nature
required to be filed by Company as an exhibit to a Report on Form 10-K under
the Exchange Act.
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Neither Company nor any of its subsidiaries, nor to Company's knowledge any
other party to a Company Contract (as defined below), is in material breach,
violation or default under a Company Contract. Neither Company nor any of its
subsidiaries has received written notice within the last twelve months that it
has breached, violated or defaulted under, any of the material terms or
conditions of any of the agreements, contracts or commitments to which Company
or any of its subsidiaries is a party or by which it is bound that are required
to be disclosed in the Company Schedule pursuant to this Section 2.18 (any such
agreement, contract or commitment, a "Company Contract" in such a manner as
would permit any other party to cancel or terminate any such Company Contract,
or would permit any other party to seek material damages or other remedies (for
any or all of such breaches, violations or defaults, in the aggregate).
2.19 Opinion of Financial Advisor. Company has been advised by its financial
advisor, Morgan Stanley & Co. Incorporated, that in its opinion, as of the date
of this Agreement, the Exchange Ratio is fair to the holders of shares of
Company Common Stock from a financial point of view, and Company shall provide
to Parent a copy of the written confirmation of such opinion as soon as
available.
2.20 Board Approval. The Board of Directors of Company has, as of the date
of this Agreement, (i) approved, subject to stockholder adoption of this
Agreement, this Agreement and the Merger and other transactions contemplated
hereby, (ii) determined that the Merger is consistent with the long-term
business strategy of Company and is in the best interests of the stockholders
of Company and is on terms that are fair to such stockholders and (iii)
determined to recommend that the stockholders of Company adopt this Agreement.
2.21 Vote Required. The affirmative vote of holders of a majority of the
outstanding shares of Company Common Stock entitled to vote with respect to the
Merger is the only vote of the holders of any class or series of Company's
capital stock necessary to adopt this Agreement.
2.22 Pooling of Interests. To its knowledge, based on consultation with its
independent accountants, Company believes that neither Company nor any of its
directors, officers or affiliates has taken any action which will interfere
with Parent's ability to account for the Merger as a pooling of interests.
2.23 Customers. Section 2.23 of the Company Schedule lists the Company's ten
largest customers based on revenues during the twelve-month period ended June
30, 2000 and specifies the amounts invoiced (in the aggregate) to each such
customer in such period. As of the date hereof, Company has not received any
written communication indicating that any of such customers intends to cease
doing business with Company or materially alter the amount of business that
such customer currently conducts with Company. Company has made available to
Parent true and correct copies of any contracts Company may have with its top
ten customers.
2.24 Labor Matters. No work stoppage or labor strike against Company is
pending or, to Company's knowledge, threatened or reasonably anticipated.
Company does not know of any activities or proceedings of any labor union to
organize any employees. Except as set forth in Section 2.24 of the Company
Schedule, there are no actions, suits, claims, labor disputes or grievances
pending, or, to the knowledge of Company, threatened or reasonably anticipated
relating to any labor, safety or discrimination matters involving any Employee,
including, without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, result in any material liability to Company. Neither
Company nor any of its subsidiaries has engaged in any unfair labor practices
within the meaning of the National Labor Relations Act. Except as set forth in
Section 2.24 of the Company Schedule, Company is not presently, nor has it been
in the past, a party to, or bound by, any collective bargaining agreement or
union contract with respect to Employees and no collective bargaining agreement
is being negotiated by Company.
2.25 Environmental Matters. Company: (i) has obtained all applicable
permits, licenses and other authorizations that are required under
Environmental Laws the absence of which would have a Material Adverse Effect on
Company and all such permits are valid and in full force and effect; (ii) is in
compliance in
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all material respects with all material terms and conditions of such required
permits, licenses and authorizations, and also is in compliance in all material
respects with all other material limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in such laws or contained in any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder; (iii) as of the date hereof, has no knowledge of and has
not received written notice of any environmental event, condition,
circumstance, activity, practice, incident, action or plan that is reasonably
likely to materially interfere with the continued conduct of Company's business
activities, or prevent continued compliance in all material respects with
Environmental Laws, or that would give rise to any material common law or
statutory liability, or otherwise form the basis of any material Environmental
Claim with respect to Company, or any person or entity whose liability for any
Environmental Claim Company has retained or assumed either contractually or by
operation of law; (iv) has not disposed of, released, discharged or emitted any
Hazardous Materials into the soil or groundwater at any properties owned or
leased at any time by Company, or at any other property, or exposed any
employee or other individual to any Hazardous Materials or condition in such a
manner as would result in any material liability or result in any material
corrective or remedial action obligation; (v) has not assumed liabilities of
any person or entity either contractually or by operation of law for any
release or discharge of any Hazardous Materials into the soil or groundwater,
or any exposure to an employee or other individual to any Hazardous Materials
which has caused or could reasonably be expected to cause an adverse health
effect to any such employee or other individual; (vi) has taken all actions
necessary under Environmental Laws to register any products or materials
required to be registered by Company (or any of its agents) thereunder; (vii)
has conducted its business in substantial compliance with all applicable
Environmental Laws; and (viii) has transferred or released Hazardous Materials
only to those Disposal Sites set forth in Section 2.25 of the Company Schedule,
and no action, proceeding, liability or claim exists or is threatened against
any Disposal Site or against Company with respect to any transfer or release of
any Hazardous Materials which could reasonably be expected to subject Company
to material liability. To Company's knowledge, no Hazardous Materials are
present in, on or under any properties owned, leased or used at any time
(including both land and improvements thereon) by Company, and no reasonable
likelihood exists that any Hazardous Materials will come to be present in, on
or under any properties owned, leased, operated, occupied or used at any time
(including both land and improvements thereon) by Company, or were present on
any other property at the time it ceased to be owned, leased, operated,
occupied, or used by Company, in each case so as to give rise to any material
liability or corrective or remedial obligation of Company under any
Environmental Laws. Company has delivered to Parent or made available for
inspection by Parent and its agents, representatives and employees all records
in Company's possession relating to compliance with Environmental Laws,
environmental audits and environmental assessments of any property owned,
leased, occupied or used by Company or any entity whose liability for any
Environmental Claim Company has retained or assumed either contractually or by
operation of law. Company has complied in all material respects with all
environmental disclosure obligations imposed by applicable law with respect to
this transaction. Section 2.25 of the Company Schedule accurately describes all
of the permits required under Environmental Laws currently held by Company.
Company has no knowledge of any circumstance that exists which could cause any
permit required under Environmental Laws to be revoked, modified or rendered
non-renewable upon payment of the permit fee. For the purposes of this Section
2.25, "Environmental Claim" means any notice, claim, act, cause of action or
investigation by any person (including any governmental agency) alleging
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries or penalties) arising out of, based on or resulting
from (i) the presence, or release into the environment, of any Hazardous
Materials or (ii) any violation, or alleged violation, of any Environmental
Laws. "Environmental Laws" means all Federal, state, local and foreign laws and
regulations relating to pollution of the environment (including ambient air,
surface water, ground water, land surface or subsurface strata) or the
protection of human health and worker safety, including, without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials. "Hazardous Materials" means chemicals,
pollutants, contaminants, wastes, toxic substances, radioactive and biological
materials, asbestos-containing materials, hazardous substances, petroleum and
petroleum products or
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any fraction thereof, excluding, however, Hazardous Materials contained in
products typically used for office and janitorial purposes properly and safely
maintained in accordance with Environmental Laws. "Disposal Site" means a
landfill, disposal agent, waste hauler or recycler of Hazardous Materials.
2.26 Insurance. Company has provided to Parent the insurance policies and
fidelity bonds covering the assets, business, equipment, properties,
operations, employees, officers and directors of Company and its subsidiaries
(collectively, the "Insurance Policies"). There is no material claim by Company
or any of its subsidiaries pending under any of the material Insurance Policies
as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds.
2.27 State Takeover Statutes. The Board of Directors of Company has taken
all actions so that the restrictions contained in Section 203 of the Delaware
Law applicable to a "business combination" (as defined in such Section 203)
will not apply to the execution, delivery or performance of this Agreement or
to the consummation of the Merger or the other transactions contemplated by
this Agreement. To the knowledge of Company, no other state takeover statute is
applicable to the Merger or the other transactions contemplated hereby.
ARTICLE III
Representations and Warranties of Parent and Merger Sub
Parent and Merger Sub jointly and severally represent and warrant to
Company, subject to such exceptions as are disclosed in writing in the
disclosure letter supplied by Parent to Company dated as of the date hereof
(the "Parent Schedule"), which disclosure shall provide an exception to or
otherwise qualify the representations and warranties of Parent and Merger Sub
contained in the section of this Agreement corresponding by number to such
disclosure and the other representations and warranties herein to the extent
such disclosure shall reasonably appear to be applicable to such other
representations or warranties, as follows:
3.1 Organization and Qualification; Subsidiaries.
(a) Each of Parent and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority to own, lease
and operate its assets and properties and to carry on its business as it is now
being conducted.
(b) Parent has no material subsidiaries except for the corporations
identified in the Parent SEC Reports (as hereinafter defined). Neither Parent
nor any of its subsidiaries has agreed nor is obligated to make nor is bound by
any Contract under which it may become obligated to make, any future investment
in or capital contribution to any other entity. Neither Parent nor any of its
subsidiaries directly or indirectly owns any equity or similar interest in or
any interest convertible, exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business, association or entity other than the entities identified in the
Parent SEC Reports and Parent's limited partnership or limited liability
company interests in venture capital funds. Neither Parent nor any of its
subsidiaries directly or indirectly owns, beneficially or of record, any shares
of Company Common Stock or other equity interest in Company other than pursuant
to this Agreement and the Company Voting Agreements.
(c) Parent and each of its subsidiaries is qualified or licensed to do
business as a foreign corporation, and is in good standing (with respect to
jurisdictions which recognize such concept), under the laws of all
jurisdictions where the character of the properties owned, leased or operated
by them or the nature of their activities requires such qualification or
licensing and where the failure to be so qualified or licensed would have a
Material Adverse Effect on Parent.
3.2 Certificate of Incorporation and Bylaws. Parent has previously furnished
to Company complete and correct copies of its Certificate of Incorporation and
Bylaws as amended and in effect as of the date of this
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Agreement (together, the "Parent Charter Documents"). Such Parent Charter
Documents and equivalent organizational documents of each of its subsidiaries
are in full force and effect. Parent is not in violation of any of the
provisions of the Parent Charter Documents, and no subsidiary of Parent is in
violation of any of its equivalent organizational documents except where the
violation of any such equivalent organizational documents of a subsidiary of
Parent would not, individually or in the aggregate, have a Material Adverse
Effect on Parent.
3.3 Capitalization. As of the date of this Agreement, the authorized capital
stock of Parent consists of (i) 900,000,000 shares of Parent Common Stock, par
value $0.001 per share, and (ii) 5,000,000 shares of Preferred Stock, par value
$0.001 per share ("Parent Preferred Stock"). At the close of business on June
26, 2000, 146,148,415 shares of Parent Common Stock were issued and
outstanding. As of the date hereof, no shares of Parent Preferred Stock were
issued or outstanding. The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, $0.001 par value per share, all of which, as of
the date hereof, are issued and outstanding. All of the outstanding shares of
Parent's and Merger Sub's respective capital stock have been duly authorized
and validly issued and are fully paid and nonassessable. The shares of Parent
Common Stock to be issued pursuant to the Merger will be, duly authorized,
validly issued, fully paid and nonassessable. All of the outstanding shares of
capital stock (other than directors' qualifying shares) of each of Parent's
subsidiaries is duly authorized, validly issued, fully paid and nonassessable
and all such shares (other than directors' qualifying shares) are owned by
Parent or another subsidiary free and clear of all Encumbrances.
3.4 Authority Relative to this Agreement. Each of Parent and Merger Sub has
all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Parent and Merger Sub, and no other
corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Parent and
Merger Sub and, assuming the due authorization, execution and delivery by
Company, constitutes the legal and binding obligation of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium or other similar laws of
general application affecting the enforcement of creditors' rights and the
exercise by courts of equitable powers.
3.5 No Conflict; Required Filings and Consents.
(a) The execution, delivery and performance of this Agreement does not and
will not, (i) conflict with or violate the Parent Charter Documents or
equivalent organizational documents or any of Parent's subsidiaries, (ii)
subject to compliance with the requirements set forth in Section 3.5(b) below,
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Parent or any of its subsidiaries or by which they or any of
their respective properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or impair Parent's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
against or to Parent under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of an
Encumbrance on any of the properties or assets of Parent or any of its
subsidiaries pursuant to, any material mortgage, Contract, permit, franchise or
other obligation to which Parent or any of its subsidiaries is a party or by
which Parent or any of its subsidiaries or its or any of their respective
properties are bound or affected, except in the case of clause (ii) or (iii),
to the extent such conflict, violation, breach, default, impairment or other
effect would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Parent.
(b) The execution and delivery of this Agreement by Parent and Merger Sub do
not, and the performance of this Agreement by Parent and Merger Sub shall not,
require Parent to obtain or make any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Entity except (i)
pursuant to
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applicable requirements, if any, of the Securities Act, the Exchange Act, Blue
Sky Laws, the pre-merger notification requirements of the HSR Act and of
foreign governmental entities and the rules and regulations thereunder, the
rules and regulations of Nasdaq, and the filing and recordation of the
Certificate of Merger as required by Delaware Law and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the aggregate, (A)
prevent consummation of the Merger or otherwise prevent Parent or Merger Sub
from performing their respective material obligations under this Agreement or
(B) reasonably be expected to have a Material Adverse Effect on Parent.
3.6 SEC Filings; Financial Statements.
(a) Parent has made available to Company (through reference to documents
filed by EDGAR or otherwise) a correct and complete copy of each report,
schedule, registration statement and definitive proxy statement filed by Parent
with the SEC since December 31, 1999 (the "Parent SEC Reports"), which are all
the forms, reports and documents required to be filed by Parent with the SEC
since December 31, 1999. The Parent SEC Reports (A) were prepared in accordance
with the requirements of the Securities Act or the Exchange Act, as the case
may be, and (B) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
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. None of Parent's subsidiaries is required to file any reports
or other documents with the SEC.
(b) Each set of consolidated financial statements (including, in each case,
any related notes thereto) contained in the Parent SEC Reports was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto and except that
unaudited statements do not contain footnotes in substance or form required by
GAAP, as is permitted by Form 10-Q of the Exchange Act) and each fairly
presents in all material respects the consolidated financial position of Parent
and its subsidiaries at the respective dates thereof and the consolidated
results of their operations and cash flows for the periods indicated, except
that the unaudited interim financial statements were or are subject to normal
adjustments which were not or are not expected to be material in amount.
(c) Parent has previously furnished to Company a complete and correct copy
of any amendments or modifications, which have not yet been filed with the SEC
but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by Parent with the SEC pursuant to
the Securities Act or the Exchange Act.
3.7 No Undisclosed Liabilities. Neither Parent nor any of its subsidiaries
has any liabilities (absolute, accrued, contingent or otherwise) of a nature
required to be disclosed on a balance sheet or in the related notes to the
consolidated financial statements prepared in accordance with GAAP which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of Parent and its subsidiaries taken as a
whole, except (i) liabilities disclosed or provided for in Parent's unaudited
balance sheet as of March 31, 2000 as set forth in the Parent SEC Reports or in
the related notes or (ii) liabilities incurred since March 31, 2000 in the
ordinary course of business.
3.8 Absence of Certain Changes or Events. Since March 31, 2000, there has
not been: (i) any Material Adverse Effect on Parent; (ii) any declaration,
setting aside or payment of any dividend on, or other distribution (whether in
cash, stock or property) in respect of, any of Parent's or any of its
subsidiaries' capital stock, or any purchase, redemption or other acquisition
by Parent of any of Parent's capital stock or any other securities of Parent or
its subsidiaries or any options, warrants, calls or rights to acquire any such
shares or other securities except for repurchases from employees following
their termination pursuant to the terms of their pre-existing stock option or
purchase agreements, (iii) any split, combination or reclassification of any of
Parent's or any of its subsidiaries' capital stock, (iv) any material change by
Parent in its accounting methods, principles or practices, except as required
by concurrent changes in GAAP, or (v) any material revaluation by Parent of
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any of its assets, including, without limitation, writing down the value of
capitalized inventory or writing off notes or accounts receivable or any sale
of assets of the Parent other than in the ordinary course of business.
3.9 Absence of Litigation. As of the date hereof, there are no claims,
suits, actions or proceedings that have a reasonable likelihood of success on
the merits pending or, to the knowledge of Parent, threatened against, relating
to or affecting Parent or any of its subsidiaries, before any court,
governmental department, commission, agency, instrumentality or authority, or
any arbitrator that seek to restrain or enjoin the consummation of the
transactions contemplated by this Agreement or that could otherwise reasonably
be expected to have a Material Adverse Effect on Parent.
3.10 Registration Statement; Proxy Statement. None of the information
supplied or to be supplied by Parent for inclusion in: (i) the S-4 will, at the
time the S-4 becomes effective under the Securities Act, 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 are made, not misleading; and (ii) the
Proxy Statement/Prospectus will, at the dates mailed to the stockholders of
Company and at the time of the Company Stockholders' Meeting, 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 are made, not misleading. The S-4
will comply as to form in all material respects with the provisions of the
Securities Act and the rules and regulations promulgated by the SEC thereunder.
Notwithstanding the foregoing, Parent makes no representation or warranty with
respect to any information supplied by Company which is contained in any of the
foregoing documents.
3.11 Pooling of Interests. To its knowledge, based on consultation with its
independent accountants, neither Parent nor any of its directors, officers or
affiliates has taken any action which would interfere with Parent's ability to
account for the Merger as a pooling of interests.
ARTICLE IV
Conduct Prior to the Effective Time
4.1 Conduct of Business by Company. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Company and each of its
subsidiaries shall, except (i) as permitted by the terms of this Agreement or
except as provided in Section 4.1 of the Company Schedule, or (ii) to the
extent that Parent shall otherwise consent in writing (which consent, or
refusal thereof, shall not be unreasonably delayed), carry on its business in
the ordinary course in substantially the same manner as heretofore conducted
and in substantial compliance with all applicable laws and regulations, pay its
debts and taxes when due subject to good faith disputes over such debts or
taxes, pay or perform other material obligations when due subject to good faith
disputes over such obligations, and use its commercially reasonable efforts
consistent with past practices and policies to (i) preserve intact its present
business organization, (ii) keep available the services of its present officers
and employees, and (iii) preserve its relationships with customers, suppliers,
distributors, licensors, licensees and others with which it has significant
business dealings. In addition, Company will promptly notify Parent of any
material event involving its business or operations occurring outside the
ordinary course of business.
In addition, except as permitted by the terms of this Agreement and except
as provided in Section 4.1 of the Company Schedule, without the prior written
consent of Parent (which consent, or refusal thereof, shall not be unreasonably
delayed), during the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement pursuant to its terms or
the Effective Time, Company shall not do any of the following and shall not
permit its subsidiaries to do any of the following:
(a) Except as required by law or pursuant to the terms of a Plan in effect
as of the date hereof, and except as may be requested to enable Parent to
account for the Merger as a pooling of interests, waive any stock
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repurchase rights, accelerate, amend or change the period of exercisability of
options or restricted stock, or reprice options granted under any employee,
consultant, director or other stock plans or authorize cash payments in
exchange for any options granted under any of such plans;
(b) Grant any severance or termination pay to any officer or employee except
pursuant to written agreements outstanding, or policies existing, on the date
hereof and as previously disclosed in writing or made available to Parent, or
adopt any new severance plan, or amend or modify or alter in any manner any
severance plan, agreement or arrangement existing on the date hereof;
(c) Other than in the ordinary course of business consistent with past
practices, transfer or license to any person or entity or otherwise extend,
amend or modify any rights to the Company Intellectual Property, or enter into
grants to transfer or license to any person future patent rights; provided that
in no event shall Company license on an exclusive basis or sell any Company
Intellectual Property (other than in connection with the abandonment of
immaterial Company Intellectual Property after at least five business days'
written notice to Parent);
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock or split, combine or reclassify any capital stock
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Company or its subsidiaries, except repurchases of
unvested shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or purchase agreements
in effect on the date hereof (or any such agreements entered into in the
ordinary course consistent with past practice by Company with employees hired
after the date hereof);
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber or propose
any of the foregoing with respect to any shares of capital stock or any
securities convertible into shares of capital stock, or subscriptions, rights,
warrants or options to acquire any shares of capital stock or any securities
convertible into shares of capital stock, or enter into other agreements or
commitments of any character obligating it to issue any such shares or
convertible securities, other than (x) the issuance, delivery and/or sale of
(i) shares of Company Common Stock pursuant to the exercise of stock options or
warrants outstanding as of the date of this Agreement, and (ii) shares of
Company Common Stock issuable to participants in the ESPP consistent with the
terms thereof, and (y) the granting of stock options to new employees in the
ordinary course of business in such amounts and in all other respects and
consistent with past practices and with similar vesting terms.
(g) Cause, permit or submit to a vote of Company's stockholders any
amendments to the Company Charter Documents (or similar governing instruments
of any of its subsidiaries);
(h) Acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or agree
to enter into any joint ventures or strategic partnerships;
(i) Sell, lease, license, encumber or otherwise dispose of any properties or
assets except in the ordinary course of business consistent with past practice,
except for the sale, lease, licensing, encumbering or disposition (other than
through licensing permitted by clause (c)) of property or assets which are not
material, individually or in the aggregate, to the business of Company and its
subsidiaries;
(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Company,
enter into any "keep well" or other agreement to maintain any financial
statement condition or enter
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into any arrangement having the economic effect of any of the foregoing other
than in connection with the financing of working capital consistent with past
practice;
(k) Adopt or amend any Plan or any employee stock purchase or employee stock
option plan, or enter into any employment contract or collective bargaining
agreement (other than offer letters and letter agreements entered into in the
ordinary course of business consistent with past practice with employees who
are terminable "at will"), pay any special bonus or special remuneration to any
director or employee, or increase the salaries or wage rates or fringe benefits
(including rights to severance or indemnification) of its directors, officers,
employees or consultants except, in each case, as may be required by law;
(l) (i) pay, discharge, settle or satisfy any litigation (whether or not
commenced prior to the date of this Agreement) or any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, of liabilities recognized or disclosed in
the most recent financial statements (or the notes thereto) of Company included
in the Company SEC Reports or incurred since the date of such financial
statements or disclosed in Section 2.8 or Section 2.9 of the Company Schedule,
or (ii) waive the benefits of, agree to modify in any manner, terminate,
release any person from or knowingly fail to enforce the confidentiality or
nondisclosure provisions of any agreement to which Company or any of its
subsidiaries is a party or of which Company or any of its subsidiaries is a
beneficiary;
(m) Except in the ordinary course of business consistent with past practice,
modify, amend or terminate any Contract disclosed in Section 2.17(g) or Section
2.18 of the Company Schedule or waive, delay the exercise of, release or assign
any material rights or claims thereunder;
(n) Except as required by GAAP, revalue any of its assets or make any change
in accounting methods, principles or practices;
(o) Incur or enter into any agreement, contract or commitment requiring
Company or any of its subsidiaries to pay in excess of $3,000,000;
(p) Engage in any action that would reasonably be expected to (i) cause the
Merger to fail to qualify as a "reorganization" under Section 368(a) of the
Code or (ii) interfere with Parent's ability to account for the Merger as a
pooling of interests, whether or not (in each case) otherwise permitted by the
provisions of this Article IV;
(q) Make any Tax election or accounting method change (except as required by
GAAP) inconsistent with past practice that, individually or in the aggregate,
is reasonably likely to adversely affect in any material respect the Tax
liability or Tax attributes of Company or any of its subsidiaries, settle or
compromise any material Tax liability or consent to any extension or waiver of
any limitation period with respect to Taxes;
(r) Engage in any action with the intent to directly or indirectly adversely
impact any of the transactions contemplated by this Agreement other than to the
extent permitted by Section 5.4; or
(s) Agree in writing or otherwise to take any of the actions described in
Section 4.1 (a) through (r) above.
4.2 Conduct of Business by Parent. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, except as permitted by the terms
of this Agreement and except as provided in Section 4.2 of the Parent Schedule,
without the prior written consent of Company (which consent, or refusal
thereof, shall not be unreasonably delayed), Parent shall not engage in any
action that would reasonably be expected to (i) cause the Merger to fail to
qualify as a "reorganization" under Section 368(a) of the Code or (ii)
interfere with Parent's ability to account for the Merger as a pooling of
interests.
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ARTICLE V
Additional Agreements
5.1 Proxy Statement/Prospectus; Registration Statement; Other Filings; Board
Recommendations.
(a) As promptly as practicable after the execution of this Agreement,
Company and Parent will prepare, and file with the SEC, the Proxy
Statement/Prospectus, and Parent will prepare and file with the SEC the S-4 in
which the Proxy Statement/Prospectus will be included as a prospectus. Each of
Parent and Company shall 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 Proxy Statement/Prospectus and the S-4, or in
any amendments or supplements thereto, and cause its counsel and auditors to
cooperate with the other's counsel and auditors in the preparation of the Proxy
Statement/Prospectus and the S-4. Each of Company and Parent will respond to
any comments of the SEC, and will use its respective commercially reasonable
efforts to have the S-4 declared effective under the Securities Act as promptly
as practicable after such filing, and Company will cause the Proxy
Statement/Prospectus to be mailed to its stockholders at the earliest
practicable time after the S-4 is declared effective by the SEC. Each of the
parties hereto shall cause the Proxy Statement/Prospectus and the S-4 to comply
as to form and substance as to such party in all material respects with the
applicable requirements of (i) the Exchange Act, (ii) the Securities Act, and
(iii) the rules and regulations of Nasdaq. As promptly as practicable after the
date of this Agreement, each of Company and Parent will prepare and file any
other filings required to be filed by it under the Exchange Act, the Securities
Act or any other Federal, foreign or Blue Sky or related laws relating to the
Merger and the transactions contemplated by this Agreement (the "Other
Filings"). Prior to the Effective Time, Parent shall use reasonable efforts to
obtain all regulatory approvals needed to ensure that the Parent Common Stock
to be issued in the Merger will be registered or qualified under the securities
law of every jurisdiction in the United States in which any registered holder
of Company Common Stock has an address of record on the record date for
determining the stockholders entitled to notice of and to vote at the Company
Stockholders' Meeting; provided that Parent shall not be required to consent to
the service of process in any jurisdiction in which it is not so subject. Each
of Company and Parent will notify the other promptly upon the receipt of any
comments from the SEC or its staff or any other government officials of the
receipt of notice that the S-4 has become effective, of the issuance of any
stop order, of the suspension of the qualification of the Parent Common Stock
issuable in connection with the Merger for offering or sale in any
jurisdiction, or of any request by the SEC or its staff or any other government
officials for amendments or supplements to the S-4, the Proxy
Statement/Prospectus or any Other Filing or for additional information and,
except as may be prohibited by any Governmental Entity or by any Legal
Requirement, will supply the other with copies of all correspondence between
such party or any of its representatives, on the one hand, and the SEC or its
staff or any other government officials, on the other hand, with respect to the
S-4, the Proxy Statement/Prospectus, the Merger or any Other Filing. Each of
Company and Parent will cause all documents that it is responsible for filing
with the SEC or other regulatory authorities under this Section 5.1(a) to
comply in all material respects with all applicable requirements of law and the
rules and regulations promulgated thereunder. Whenever Company or Parent
becomes aware of any event which is required to be set forth in an amendment or
supplement to the Proxy Statement/Prospectus, the S-4 or any Other Filing,
Company or Parent, as the case may be, will promptly inform the other of such
event and cooperate in filing with the SEC or its staff or any other government
officials, and/or mailing to stockholders of Company, such amendment or
supplement.
(b) The Proxy Statement/Prospectus will include (i) the recommendation of
the Board of Directors of Company to Company's stockholders that they vote in
favor of adoption of this Agreement, subject to the right of the Board of
Directors of Company to withhold, withdraw, modify, change or refrain from
making its recommendation in compliance with Section 5.2(c) and (ii) the
opinion of Morgan Stanley & Co. Incorporated referred to in Section 2.19.
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5.2 Meeting of Company Stockholders.
(a) Company will take all action necessary in accordance with Delaware Law
and the Company Charter Documents to convene the Company Stockholders' Meeting
to be held as promptly as practicable after the declaration of the
effectiveness of the S-4 for the purpose of enabling Company's stockholders to
vote upon the adoption of this Agreement. Unless the Board of Directors of
Company shall have withheld, withdrawn, modified, amended, changed or refrained
from making its recommendation in favor of the adoption of this Agreement in
compliance with Section 5.2(c), Company will use its commercially reasonable
efforts to solicit from its stockholders proxies in favor of the adoption of
this Agreement and to secure the vote or consent of its stockholders required
by the rules of Nasdaq or Delaware Law. Notwithstanding anything to the
contrary contained in this Agreement, Company may adjourn or postpone the
Company Stockholders' Meeting (i) to the extent necessary to facilitate the
providing of any necessary supplement or amendment to the Proxy
Statement/Prospectus to Company's stockholders in advance of a vote on the
adoption of this Agreement, or (ii) if as of the time for which the Company
Stockholders' Meeting is originally scheduled (as set forth in the Proxy
Statement/Prospectus) there are insufficient shares of Company Common Stock
represented (either in person or by proxy) to constitute a quorum necessary to
conduct the business of the Company Stockholders' Meeting. Company shall ensure
that the Company Stockholders' Meeting is called, noticed, convened, held and
conducted, and that all proxies solicited by Company in connection with the
Company Stockholders' Meeting are solicited, in compliance with Delaware Law,
the Company Charter Documents, the rules of Nasdaq and all other applicable
legal requirements. Company's obligation to call, give notice of, convene and
hold the Company Stockholders' Meeting in accordance with this Section 5.2(a)
shall not be limited or otherwise affected by the commencement, disclosure,
announcement or submission to Company of any Acquisition Proposal or any change
in the Board of Directors' recommendation regarding the Merger or any other
determination subsequent to the date hereof by Company's Board of Directors
that it can no longer make such recommendation.
(b) Unless the Board of Directors of Company shall have withheld, withdrawn,
modified, amended, changed or refrained from making its recommendation in favor
of the adoption of this Agreement in compliance with Section 5.2(c): (i) the
Board of Directors of Company shall recommend that Company's stockholders vote
in favor of the adoption of this Agreement at the Company Stockholders'
Meeting; (ii) the Proxy Statement/Prospectus shall include a statement to the
effect that the Board of Directors of Company has recommended that Company's
stockholders vote in favor of the adoption of this Agreement at the Company
Stockholders' Meeting; and (iii) neither the Board of Directors of Company nor
any committee thereof shall withhold, withdraw, modify, amend, change or
refrain from making, or resolve to withhold, withdraw or refrain from making,
or modify, amend or change, in a manner adverse to Parent, the recommendation
of the Board of Directors of Company that Company's stockholders vote in favor
of the adoption of this Agreement.
(c) Nothing in this Agreement shall prevent the Board of Directors of
Company from withholding, withdrawing, modifying, amending, changing or
refraining from making ("Changing") its recommendation in favor of the adoption
of this Agreement if (i) neither Company nor any of its representatives shall
have violated any of the restrictions set forth in Section 5.4 prior to and in
connection with the proposed Changing of its recommendation and (ii) the Board
of Directors of Company concludes in good faith, after consultation with its
outside legal counsel, that the Changing of such recommendation is required in
order for the Board of Directors of Company to comply with its fiduciary
obligations to Company's stockholders under applicable law; provided, however,
that prior to publicly Changing such recommendation, Company shall have given
Parent at least forty-eight (48) hours written notice (or such lesser prior
notice as provided to the members of Company's Board of Directors) and the
opportunity to meet with Company and its counsel. Nothing contained in this
Section 5.2 shall limit Company's obligation to hold and convene the Company
Stockholders' Meeting (regardless of whether the recommendation of the Board of
Directors of Company shall have been withdrawn, amended or modified).
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5.3 Confidentiality; Access to Information.
(a) Confidentiality Agreement. The parties acknowledge that Company and
Parent have previously executed a Confidentiality Agreement, dated as of June
28, 2000 (the "Confidentiality Agreement"), which Confidentiality Agreement
will continue in full force and effect in accordance with its terms.
(b) Access to Information. Company will afford Parent and its accountants,
counsel and other representatives reasonable access during normal business
hours, upon reasonable notice, to the properties, books, records and personnel
of Company during the period prior to the Effective Time to obtain all
information concerning the business, including the status of product
development efforts, properties, results of operations and personnel of
Company, as Parent may reasonably request. No information or knowledge obtained
by Parent in any investigation pursuant to this Section 5.3 will affect or be
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Merger.
5.4 No Solicitation.
(a) From and after the date of this Agreement until the Effective Time or
termination of this Agreement pursuant to Article VII, Company and its
subsidiaries will not, nor will they authorize or permit any of their
respective officers or directors or any investment banker, attorney or other
advisor or representative retained by any of them to, nor will they authorize
any of their respective employees or affiliates to, nor will they fail to take
reasonable measures to cause their respective employees not to, directly or
indirectly (i) solicit or initiate or knowingly encourage or induce the making,
submission or announcement of any Acquisition Proposal (as defined below), (ii)
participate in any discussions or negotiations regarding, or knowingly furnish
to any person any information with respect to, or knowingly take any other
action that would reasonably be expected to lead to, any Acquisition Proposal,
(iii) approve, endorse or recommend any Acquisition Proposal without complying
with Section 5.2(c) or (iv) enter into any letter of intent or similar document
or any contract, agreement or commitment providing for any Acquisition
Transaction (as defined below); provided, however, that this Agreement shall
not prohibit Company or any of its officers, directors, affiliates, employees,
investment bankers, attorneys or other advisors or representatives from (A) at
any time prior to the adoption of this Agreement by Company's stockholders,
furnishing information regarding Company to, entering into a confidentiality
agreement with, entering into discussions or negotiations with, or entering
into a definitive acquisition agreement with any person or group in response to
a Superior Offer submitted by such person or group (and not withdrawn) if (1)
neither Company nor any representative of Company and its subsidiaries shall
have violated any of the restrictions set forth in this Section 5.4 prior to
and in connection with such Acquisition Proposal, (2) the Board of Directors of
Company concludes in good faith, after consultation with its outside legal
counsel, that such action is required in order for the Board of Directors of
Company to comply with its fiduciary obligations to Company's stockholders
under applicable law, (3) (x) at least forty-eight (48) hours prior to
furnishing any such information to, entering into a confidentiality agreement
with or entering into discussions or negotiations with, such person or group,
Company gives Parent written notice of the identity of such person or group and
of Company's intention to take such action and (y) Company receives from such
person or group an executed agreement with confidentiality provisions at least
as restrictive as the Confidentiality Agreement, and (4) contemporaneously with
furnishing any such information to such person or group, Company furnishes such
information to Parent (to the extent such information has not been previously
furnished by Company to Parent) or (B) complying with Rule 14d-9 or Rule 14e-2
promulgated under the Exchange Act or furnishing a copy or excerpts of this
Agreement (excluding, however, the Company Schedule and the Parent Schedule) to
any person. Company and its subsidiaries will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal. In addition to the
foregoing, Company shall (i) provide Parent with at least twenty-four (24)
hours prior notice (or such lesser prior notice as provided to the members of
Company's Board of Directors) of any meeting of Company's Board of Directors at
which Company's Board of Directors is reasonably expected to consider a
Superior Offer and (ii) provide Parent with at least two (2) business days
prior written notice (or such lesser prior notice as provided to the members of
Company's Board of Directors)
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of a meeting of Company's Board of Directors at which Company's Board of
Directors is reasonably expected to recommend a Superior Offer to its
stockholders and together with such notice a copy of any definitive
documentation relating to such Superior Offer.
"Superior Offer" shall mean any bona fide written Acquisition Proposal not
received in violation of Section 5.4 for at least a majority of the outstanding
shares of Company Common Stock on terms that the Board of Directors of Company
determines in its good faith judgment, after consultation with a financial
advisor of nationally recognized reputation and taking into account all the
known terms and conditions of the Acquisition Proposal, are more favorable to
Company's stockholders than the terms of the Merger; provided, however, that
any such Acquisition Proposal shall not be deemed to be a "Superior Offer" if
any financing required to consummate the transaction contemplated by such
Acquisition Proposal is not committed and is not likely in the judgment of
Company's Board of Directors to be obtained by the entity making such
Acquisition Proposal on a timely basis. The parties agree that an Acquisition
Proposal shall not be precluded from being deemed a "Superior Offer" solely as
a result of such Acquisition Proposal being conditioned upon the completion of
due diligence. For purposes of this Agreement, "Acquisition Proposal" shall
mean any offer or proposal (other than an offer or proposal by Parent or any of
its affiliates) contemplating any Acquisition Transaction. For purposes of this
Agreement, "Acquisition Transaction" shall mean any transaction or series of
related transactions other than the transactions contemplated by this Agreement
that constitutes: (A) an acquisition or purchase from Company by any person or
"group" (as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of more than a 15% interest in the total outstanding
voting securities of Company or any tender offer or exchange offer that if
consummated would result in any person or "group" (as defined under Section
13(d) of the Exchange Act and the rules and regulations thereunder)
beneficially owning 15% or more of the total outstanding voting securities of
Company or any merger, consolidation, business combination or similar
transaction involving Company pursuant to which the stockholders of Company
immediately preceding such transaction hold, directly or indirectly, less than
85% of the equity interests in the surviving or resulting entity of such
transaction or in any parent entity immediately following such transaction; (B)
a sale, lease (other than in the ordinary course of business), exchange,
transfer, license (other than in the ordinary course of business), acquisition
or disposition of more than 25% of the assets of Company; or (C) a liquidation
or dissolution of Company having similar effect to the foregoing.
(b) In addition to the obligations of Company set forth in paragraph (a) of
this Section 5.4, Company shall notify Parent orally and in writing of (i) (A)
any request received by Company for information which Company reasonably
believes would lead to an Acquisition Proposal, (B) any Acquisition Proposal,
or (C) any inquiry received by Company with respect to, or which Company
reasonably believes would lead to, any Acquisition Proposal, (ii) the material
terms and conditions of such request, Acquisition Proposal or inquiry, and
(iii) the identity of the person or group making any such request, Acquisition
Proposal or inquiry, such written and oral notice to be provided as promptly as
practicable, and in any event within one (1) business day after any of
Company's officers, directors, investment bankers, attorneys or other advisors
or representatives become aware of the receipt by Company of any request,
proposal or inquiry described in clause (i). Company will take reasonable
measures to cause its employees to notify its officers when any such employee
becomes aware of the receipt by Company of any request, proposal or inquiry
described in clause (i). Company will keep Parent informed in all material
respects of the status and details (including material amendments or proposed
amendments) of any such request, Acquisition Proposal or inquiry.
5.5 Public Disclosure. Parent and Company will consult with each other, and
to the extent practicable, agree, before issuing any press release or otherwise
making any public statement with respect to the Merger, this Agreement or an
Acquisition Proposal and will not issue any such press release or make any such
public statement prior to such consultation, except as may be required by law
or any listing agreement with a national securities exchange or Nasdaq, in
which case reasonable efforts to consult with the other party will be made
prior to such release or public statement; provided, however, that no such
consultation or agreement shall be required if, prior to the date of such
release or public statement, Company shall have withheld, withdrawn, modified,
amended, changed or refrained from making its recommendation in favor of the
adoption of this
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Agreement in compliance with Section 5.2. The parties have agreed to the text
of the joint press release announcing the signing of this Agreement.
5.6 Commercially Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including using commercially reasonable efforts
to accomplish the following: (i) causing the conditions precedent set forth in
Article VI to be satisfied; (ii) obtaining all necessary actions or nonactions,
waivers, consents, approvals, orders and authorizations from Governmental
Entities; (iii) making all necessary registrations, declarations and filings
(including registrations, declarations and filings with Governmental Entities,
if any); (iv) avoiding any suit, claim, action, investigation or proceeding by
any Governmental Entity challenging the Merger or any other transaction
contemplated by this Agreement; (v) obtaining all consents, approvals or
waivers from third parties required as a result of the transactions
contemplated in this Agreement; (vi) defending any suits, claims, actions,
investigations or proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions contemplated hereby,
including seeking to have any stay or temporary restraining order entered by
any court or other Governmental Entity vacated or reversed; and (vii) executing
or delivering any additional instruments reasonably necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement. In connection with and without limiting the foregoing, subject to
the other terms and conditions hereof, Company and its Board of Directors
shall, if any state takeover statute or similar statute or regulation is or
becomes applicable to the Merger, this Agreement or any of the transactions
contemplated by this Agreement, use commercially reasonable efforts and take
all commercially reasonable acts to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger, this Agreement
and the transactions contemplated hereby. Notwithstanding anything herein to
the contrary, nothing in this Agreement shall be deemed to require Parent or
Company or any subsidiary or affiliate thereof to agree to any divestiture by
itself or any of its affiliates of shares of capital stock or of any business,
assets or property, or the imposition of any material limitation on the ability
of any of them to conduct their business or to own or exercise control of such
assets, properties and stock.
(b) Company shall give prompt notice to Parent upon becoming aware that any
representation or warranty made by it contained in this Agreement has become
untrue or inaccurate, or of any failure of Company to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement, in each case, where the conditions set
forth in Section 6.3(a) or Section 6.3(b) would not be satisfied as a result
thereof; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
(c) Parent shall give prompt notice to Company upon becoming aware that any
representation or warranty made by it or Merger Sub contained in this Agreement
has become untrue or inaccurate, or of any failure of Parent or Merger Sub to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement, in each
case, where the conditions set forth in Section 6.2(a) or Section 6.2(b) would
not be satisfied as a result thereof; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
5.7 Third Party Consents. As soon as practicable following the date hereof,
Parent and Company will each use its commercially reasonable efforts to obtain
any consents, waivers and approvals under any of its or its subsidiaries'
respective agreements, contracts, licenses or leases required to be obtained in
connection with the consummation of the transactions contemplated hereby.
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5.8 Stock Options; ESPP; Warrants and Employee Benefits.
(a) Stock Options. At the Effective Time, each outstanding option to
purchase shares of Company Common Stock (each, a "Company Stock Option") under
the Company Option Plans, whether or not vested, shall be assumed by Parent.
Each Company Stock Option so assumed by Parent under this Agreement will
continue to have, and be subject to, the same terms and conditions of such
Company Stock Options immediately prior to the Effective Time (including,
without limitation, any repurchase rights or vesting provisions and provisions
regarding the acceleration of vesting on certain transactions, other than the
transactions contemplated by this Agreement), except that (i) each Company
Stock Option will be exercisable (or will become exercisable in accordance with
its terms) for that number of whole shares of Parent Common Stock equal to the
product of the number of shares of Company Common Stock that were issuable upon
exercise of such Company Stock Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of Parent Common Stock and (ii) the per share exercise price for the
shares of Parent Common Stock issuable upon exercise of such assumed Company
Stock Option will be equal to the quotient determined by dividing the exercise
price per share of Company Common Stock at which such Company Stock Option was
exercisable immediately prior to the Effective Time by the Exchange Ratio,
rounded up to the nearest whole cent. Parent shall comply with the terms of all
such Company Stock Options and use its best efforts to ensure, to the extent
required by and subject to the provisions of, the Company Option Plans, and to
the extent permitted under the Code, that any Company Stock Options that
qualified for tax treatment as incentive stock options under Section 422 of the
Code prior to the Effective Time continue to so qualify after the Effective
Time. Parent shall take all corporate actions necessary to reserve for issuance
a sufficient number of shares of Parent Common Stock for delivery upon exercise
of assumed Company Stock Options on the terms set forth in this Section 5.8(a).
(b) ESPP. At the Effective Time, Parent shall assume the ESPP, and all
outstanding rights to purchase shares of Company Common Stock under the ESPP
("Purchase Rights") shall be converted (in accordance with the Exchange Ratio)
into rights to purchase shares of Parent Common Stock (with the number of
shares rounded down to the nearest whole share and the purchase price as of the
offering date for each offering period in effect as of the Effective Time
rounded up to the nearest whole cent). All such converted Purchase Rights shall
be assumed by Parent, and each offering period in effect under the ESPP
immediately prior to the Effective Time shall be continued in accordance with
the terms of the ESPP until the end of such offering period. The ESPP shall
terminate with the exercise of the last assumed Purchase Right, and no
additional Purchase Rights shall be granted under the ESPP following the
Effective Time, provided that references to Company in the ESPP and related
documents shall mean Parent (except that the purchase price as of the offering
date for a relevant period shall be determined with respect to the fair market
value of Company Common Stock on such date, as adjusted hereby). Parent shall
take all corporate action necessary to reserve for issuance a sufficient number
of shares of Parent Common Stock for issuance upon exercise of Purchase Rights
under the ESPP assumed in accordance with this Section 5.8(b). Parent agrees
that, from and after the Effective Time, Company's employees may participate in
the employee stock purchase plan sponsored by Parent (the "Parent ESPP"),
subject to the terms and conditions of the Parent ESPP, and that service with
Company shall be treated as service with Parent for determining eligibility of
Company's employees under the Parent ESPP.
(c) Warrants. At the Effective Time, each outstanding warrant to purchase
shares of Company Common Stock (each, a "Company Warrant") shall be assumed by
Parent. Each Company Warrant so assumed by Parent under this Agreement will
continue to have, and be subject to, the same terms and conditions of such
Company Warrant immediately prior to the Effective Time, except that (i) each
Company Warrant will be exercisable (or will become exercisable in accordance
with its terms) for that number of whole shares of Parent Common Stock equal to
the product of the number of shares of Company Common Stock that were issuable
upon exercise of such Company Warrant immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of Parent Common Stock and (ii) the per share exercise price for the
shares of Parent Common Stock issuable upon exercise of such assumed Company
Warrant will be equal to the quotient determined by dividing the exercise price
per share of Company Common
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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.
Parent shall comply with the terms of all such Company Warrants. Parent shall
take all corporate actions necessary to reserve for issuance a sufficient
number of shares of Parent Common Stock for delivery upon exercise of assumed
Company Warrants on the terms set forth in this Section 5.8(c).
(d) 401(k). Company shall terminate, effective as of the day immediately
preceding the Effective Time, any and all 401(k) plans sponsored or maintained
by Company unless Parent provides written notice to Company prior to the
Effective Time that any such 401(k) plan shall not be terminated. Parent shall
receive from Company evidence that Company's plan(s) and / or program(s) have
been terminated pursuant to resolutions of Company's Board of Directors (the
form and substance of such resolutions shall be subject to review and
reasonable approval of Parent), effective as of the day immediately preceding
the Effective Time. Company employees shall be eligible to participate in a
401(k) plan sponsored by Parent no later than the first day of the next
commencing month immediately after the Effective Time.
(e) Benefits; Prior Service. From and after the Effective Time, Company
employees shall be provided with employee benefits that are the same as those
provided to employees of Parent who are similarly situated, including as to
their location of employment. Parent shall cause employees of Company and its
subsidiaries to be credited with service with Company and each of its
subsidiaries for purposes of eligibility and vesting under each employee
benefit plan maintained by Parent or its subsidiaries after the Effective Time
to the extent of their service with Company; provided, however, that such
service shall not be recognized to the extent that such recognition would
result in duplication of benefits.
5.9 Form S-8. Parent agrees to file a registration statement on Form S-8 for
the shares of Parent Common Stock issuable with respect to assumed Company
Stock Options as soon as is reasonably practicable and in any event within ten
(10) business days after the Effective Time.
5.10 Indemnification.
(a) From and after the Effective Time, Parent will cause the Surviving
Corporation to fulfill and honor in all respects the obligations of Company (or
any predecessor corporation) pursuant to (i) each indemnification agreement
currently in effect between Company and each person who is or was a director or
officer of Company (or any predecessor corporation) prior to the Effective Time
(the "Indemnified Parties") and (ii) any indemnification provision under the
Company Charter Documents as in effect on the date hereof. The Certificate of
Incorporation and Bylaws of the Surviving Corporation will contain provisions
with respect to exculpation and indemnification that are at least as favorable
to the Indemnified Parties as those contained in the Company Charter Documents
as in effect on the date hereof, which provisions will not be amended, repealed
or otherwise modified for a period of six (6) years from the Effective Time in
any manner that would adversely affect the rights thereunder of any Indemnified
Party or of individuals who, immediately prior to the Effective Time, were
employees or agents of Company, unless such modification is required by law.
(b) For a period of six (6) years after the Effective Time, Parent will
cause the Surviving Corporation to maintain in effect, to the extent available,
directors' and officers' liability insurance covering those persons who are
currently covered by Company's directors' and officers' liability insurance
policy on terms equivalent in all material respects to those applicable to the
current directors and officers of Company; provided, however, that in no event
will Parent or the Surviving Corporation be required to expend an annual
premium for such coverage in excess of 150% of the amount of the last annual
premium paid by the Company prior to the date of this Agreement for such
coverage and provided, further, that if the annual premium payable for such
insurance coverage exceeds such amount, Parent shall be obligated to obtain a
policy with the greatest coverage available for an annual premium not exceeding
such amount.
(c) In the event Company or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or
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entity of such consolidation or merger or (ii) transfers a material amount of
its properties and assets to any person in a single transaction or a series of
transactions, then, and in each such case, Parent will either guarantee or
otherwise remain liable for the indemnification obligations referred to in this
Section 5.10 or will make or cause to be made proper provision so that the
successors and assigns of Company or the Surviving Corporation, as the case may
be, assume the indemnification obligations described herein for the benefit of
the Indemnified Parties.
(d) The provisions of this Section 5.10 are (i) intended to be for the
benefit of, and will be enforceable by, each of the Indemnified Parties and
(ii) in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such Indemnified Party may have by
contract or otherwise.
5.11 Affiliate Agreement.
(a) Set forth in Section 5.11 of the Company Schedule is a list of those
persons who may be deemed to be, in Company's reasonable judgment, affiliates
of Company within the meaning of Rule 145 promulgated under the Securities Act
or Opinion 16 of the Accounting Principles Board and applicable SEC rules and
regulations (each, a "Company Affiliate"). Company will provide Parent with
such information and documents as Parent reasonably requests for purposes of
reviewing such list. Company will use its commercially reasonable efforts to
deliver or cause to be delivered to Parent, on or as promptly as practicable
following the date hereof, from each Company Affiliate that has not delivered a
Company Affiliate Agreement on or prior to the date hereof, an executed Company
Affiliate Agreement. Each Company Affiliate Agreement will be in full force and
effect as of the Effective Time. Parent will be entitled to place appropriate
legends on the certificates evidencing any Parent Common Stock to be received
by a Company Affiliate pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the Parent
Common Stock, consistent with the terms of the Company Affiliate Agreement
entered into by such Company Affiliate.
(b) Set forth in Section 5.11 of the Parent Schedule is a list of those
persons who may be deemed to be, in Parent's reasonable judgment, affiliates of
Parent within the meaning of Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations (each, a "Parent Affiliate"). Parent will
provide Company with such information and documents as Company reasonably
requests for purposes of reviewing such list. Parent will use its commercially
reasonable efforts to obtain and provide a copy to Company, on or as promptly
as practicable following the date hereof, from each Parent Affiliate, an
executed Parent Affiliate Agreement in substantially the form attached hereto
as Exhibit B-2 (the "Parent Affiliate Agreements"). Each Parent Affiliate
Agreement will be in full force and effect as of the Effective Time.
5.12 Regulatory Filings; Reasonable Efforts. As soon as may be reasonably
practicable, Company and Parent each shall file with the United States Federal
Trade Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice ("DOJ") Notification and Report Forms relating to the
transactions contemplated herein as required by the HSR Act, as well as
comparable pre-merger notification forms required by the merger notification or
control laws and regulations of any other applicable jurisdiction, as agreed to
by the parties. Company and Parent each shall promptly (a) supply the other
with any information which may be required in order to effectuate such filings
and (b) supply any additional information which reasonably may be required by
the FTC, the DOJ or the competition or merger control authorities of any other
jurisdiction and which the parties may reasonably deem appropriate; provided,
however, that Parent shall not be required to agree to any divestiture by
Parent or Company or any of Parent's subsidiaries or affiliates of shares of
capital stock or of any business, assets or property of Parent or its
subsidiaries or affiliates or of Company, its affiliates, or the imposition of
any material limitation on the ability of any of them to conduct their
businesses or to own or exercise control of such assets, properties and stock.
5.13 Noncompetition Agreements. Each of Thomas Riordan and Raymond Kunita
shall have entered into Noncompetition Agreements and each such agreement shall
be in full force and effect at the Effective Time.
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5.14 Tax Matters. Prior to the filing of the S-4, Company, Parent and Merger
Sub shall execute and deliver to Cooley Godward LLP and to Wilson Sonsini
Goodrich & Rosati, Professional Corporation, tax representation letters in
customary form. To the extent requested by Cooley Godward LLP or Wilson Sonsini
Goodrich & Rosati, Professional Corporation, Parent, Merger Sub and Company
shall each confirm to Cooley Godward LLP and to Wilson Sonsini Goodrich &
Rosati, Professional Corporation, the accuracy and completeness as of the
Effective Time of the foregoing tax representation letters. Parent and Company
shall use reasonable efforts prior to and after the Effective Time to cause the
Merger to qualify as a reorganization under Section 368(a) of the Code.
Following delivery of the foregoing tax representation letters, each of Company
and Parent shall use its reasonable efforts to cause Cooley Godward LLP and
Wilson Sonsini Goodrich & Rosati, Professional Corporation, respectively, to
deliver to it a tax opinion satisfying the requirements of Item 601 of
Regulation S-K promulgated under the Securities Act. In rendering such opinions
and the opinions referred to in Section 6.2(c), each of such counsel shall be
entitled to rely on the foregoing tax representation letters.
5.15 Action by Board of Directors. Prior to the Effective Time, the Board of
Directors of Parent, or an appropriate committee of non-employee directors
thereof, shall adopt a resolution consistent with the interpretative guidance
of the SEC so that (i) the assumption of Company Stock Options by Company
Insiders (as defined below) pursuant to this Agreement, and (ii) the receipt by
Company Insiders of Parent Common Stock in exchange for Company Common Stock
pursuant to the Merger, shall in each case be an exempt transaction for
purposes of Section 16 of the Exchange Act by any officer or director of
Company who may become a covered person of Parent for purposes of Section 16 of
the Exchange Act (a "Company Insider").
ARTICLE VI
Conditions to the Merger
6.1 Conditions to Obligation 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 Date of the
following conditions, any of which may be waived if waived in writing by both
Parent and Company:
(a) Company Stockholder Approval. This Agreement shall have been adopted by
the requisite vote under applicable law by the stockholders of Company.
(b) Registration Statement Effective; Proxy Statement. The SEC shall have
declared the S-4 effective. No stop order suspending the effectiveness of the
S-4 or any part thereof shall have been issued and then be in effect and no
proceeding for that purpose, and no similar proceeding in respect of the Proxy
Statement/Prospectus, shall have been initiated or threatened in writing by the
SEC and shall not have been withdrawn.
(c) No Order; HSR Act. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which has the effect of making the Merger
illegal or otherwise prohibiting consummation of the Merger. All waiting
periods, if any, under the HSR Act relating to the transactions contemplated
hereby will have expired or terminated early and all material foreign antitrust
approvals required to be obtained prior to the Merger in connection with the
transactions contemplated hereby shall have been obtained.
6.2 Additional Conditions to Obligation of Company. The obligation of
Company to effect the Merger shall be subject to the satisfaction at or prior
to the Closing Date of each of the following conditions, any of which may be
waived, in writing, exclusively by Company:
(a) Representations and Warranties. Each representation and warranty of
Parent and Merger Sub contained in this Agreement (i) shall have been accurate
in all respects as of the date of this Agreement and (ii) shall be accurate in
all respects on and as of the Closing Date with the same force and effect as if
made on
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the Closing Date except, with respect to clauses (i) and (ii), (A) in each
case, or in the aggregate, as does not constitute a Material Adverse Effect on
Parent determined as of the Closing Date, (B) for inaccuracies arising from
changes or actions contemplated by this Agreement and (C) for those
representations and warranties which address matters only as of a particular
date (which representations shall have been accurate (subject to the
qualification as set forth in the preceding clause (A)) as of such particular
date) (it being understood that, for purposes of determining the accuracy of
such representations and warranties, (i) all "Material Adverse Effect"
qualifications and other qualifications based on the word "material" contained
in such representations and warranties shall be disregarded and (ii) any update
of or modification to the Parent Schedule made or purported to have been made
after the date of this Agreement shall be disregarded). Company shall have
received a certificate with respect to the foregoing signed on behalf of Parent
by an authorized officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have performed or
complied with, in all material respects, all agreements and covenants required
by this Agreement to be performed or complied with by them on or prior to the
Closing Date, and Company shall have received a certificate to such effect
signed on behalf of Parent by an authorized officer of Parent.
(c) Tax Opinions. Each of Company and Parent shall have received a written
opinion from its respective tax counsel, in form and substance reasonably
satisfactory to Company or Parent, as the case may be, to the effect that the
Merger will constitute a reorganization within the meaning of Section 368(a) of
the Code and such opinion shall not have been withdrawn; provided, however,
that if tax counsel to Company (Cooley Godward LLP) does not render such
opinion or renders but withdraws such opinion, this condition shall nonetheless
be deemed to be satisfied if counsel to Parent (Wilson Sonsini Goodrich &
Rosati, Professional Corporation) renders, and does not withdraw, such opinion
to Company.
6.3 Additional Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger shall be subject to
the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Parent:
(a) Representations and Warranties. Each representation and warranty of
Company contained in this Agreement (i) shall have been accurate in all
respects as of the date of this Agreement and (ii) shall be accurate in all
respects on and as of the Closing Date with the same force and effect as if
made on and as of the Closing Date except, with respect to clauses (i) and
(ii), (A) in each case, or in the aggregate, as does not constitute a Material
Adverse Effect on Company determined as of the Closing Date; provided, however,
such Material Adverse Effect qualifier shall be inapplicable with respect to
representations and warranties contained in Sections 2.4, 2.19, 2.20, 2.21,
2.27 and 2.28 (which representations shall have been accurate in all material
respects as of the date of this Agreement and shall be accurate in all material
respects as of the Closing Date), (B) for inaccuracies arising from changes or
actions contemplated by this Agreement and (C) for those representations and
warranties which address matters only as of a particular date (which
representations shall have been accurate (subject to the qualification as set
forth in the preceding clause (A)) as of such particular date) (it being
understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect"
qualifications and other qualifications based on the word "material" contained
in such representations and warranties shall be disregarded and (ii) any update
of or modification to the Company Schedule made or purported to have been made
after the date of this Agreement shall be disregarded). Parent shall have
received a certificate with respect to the foregoing signed on behalf of
Company by an authorized officer of Company.
(b) Agreements and Covenants. Company shall have performed or complied with,
in all material respects, all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of Company by an authorized officer of Company.
(c) Affiliate Agreements. Each of the Company Affiliates shall have entered
into the Company Affiliate Agreement and each of such agreements will be in
full force and effect as of the Effective Time.
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(d) Opinion of Accountants. Parent shall have received (i) from
PricewaterhouseCoopers LLP, independent auditors for Company, a copy of a
letter addressed to Company dated as of the Closing Date in substance
reasonably satisfactory to Parent (which may contain customary qualifications
and assumptions) to the effect that PricewaterhouseCoopers LLP concurs with
Company management's conclusion that no conditions exist related to Company
that would preclude Company from being a party to a business combination for
which the "pooling-of-interest" method of accounting is used and (ii) from
Deloitte & Touche LLP, independent accountants for Parent, a copy of a letter
addressed to Parent dated as of the Closing Date in substance reasonably
satisfactory to Parent (which may contain customary qualifications and
assumptions) to the effect that Deloitte & Touche LLP concurs with Parent
management's conclusion that the Merger can properly be accounted for as a
"pooling-of-interests."
ARTICLE VII
Termination, Amndment and Waiver
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after the requisite approval of the
stockholders of Company:
(a) by mutual written consent duly authorized by the Boards of Directors of
Parent and Company;
(b) by either Company or Parent if the Merger shall not have been
consummated by February 15, 2001 (such date, or such other date that may be
agreed by mutual written consent, being the "Outside Date") for any reason;
provided, however, that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any party whose action or failure to
act has been a principal cause of or resulted in the failure of the Merger to
occur on or before such date if such action or failure to act constitutes a
breach of this Agreement;
(c) by either Company or Parent if a Governmental Entity shall have issued
an order, decree or ruling or taken any other action, in any case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or other action shall have become final and
nonappealable;
(d) by either Company or Parent if (1) the Company Stockholders' Meeting
(including any adjournments thereof) shall have been held and completed and the
stockholders of Company shall have taken a final vote on a proposal to adopt
this Agreement, and (2) the required approval of the stockholders of Company
contemplated by this Agreement shall not have been obtained; provided, however,
that the right to terminate this Agreement under this Section 7.1(d) shall not
be available to Company or Parent where the failure to obtain Company
stockholder approval shall have been caused by the action or failure to act of
Company or Parent, respectively, and such action or failure to act constitutes
a breach by Company or Parent, respectively, of this Agreement;
(e) by Company, upon a breach of any covenant or agreement on the part of
Parent set forth in this Agreement, or if any representation or warranty of
Parent shall have been inaccurate when made or shall have become inaccurate, in
either case such that the conditions set forth in Section 6.2(a) or Section
6.2(b) would not be satisfied as of the time of such breach or as of the time
such representation or warranty shall have become inaccurate, provided, that if
such inaccuracy in Parent's representations and warranties or breach by Parent
is curable by Parent, then this Agreement shall not terminate pursuant to this
Section 7.1(e) with respect to a particular breach or inaccuracy until the
earlier of (i) the expiration of a thirty (30) day period commencing upon
delivery of written notice from Company to Parent of such breach or inaccuracy
and (ii) Parent ceasing to exercise commercially reasonable efforts to cure
such breach (it being understood that Company may not terminate this Agreement
pursuant to this Section 7.1(e) if it shall have materially breached this
Agreement or if such breach by Parent or inaccuracy in Parent's representations
and warranties is cured prior to such termination becoming effective pursuant
hereto);
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(f) by Parent, upon a breach of any covenant or agreement on the part of
Company set forth in this Agreement, or if any representation or warranty of
Company shall have been inaccurate when made or shall have become inaccurate,
in either case such that the conditions set forth in Section 6.3(a) or Section
6.3(b) would not be satisfied as of the time of such breach or as of the time
such representation or warranty shall have become inaccurate, provided, that if
such inaccuracy in Company's representations and warranties or breach by
Company is curable, then this Agreement shall not terminate pursuant to this
Section 7.1(f) with respect to a particular breach or inaccuracy until the
earlier of (i) the expiration of a thirty (30) day period commencing upon
delivery of written notice from Parent to Company of such breach or inaccuracy
and (ii) Company ceasing to exercise commercially reasonable efforts to cure
such breach (it being understood that Parent may not terminate this Agreement
pursuant to this Section 7.1(f) if it shall have materially breached this
Agreement or if such breach by Company or inaccuracy in Company's
representations and warranties is cured prior to such termination becoming
effective pursuant hereto);
(g) by Parent if a Triggering Event (as defined below) shall have occurred.
For the purposes of this Agreement, a "Triggering Event" shall be deemed to
have occurred if: (i) the Board of Directors of Company or any committee
thereof shall for any reason have withheld, withdrawn or refrained from making
or shall have modified, amended or changed in a manner adverse to Parent its
recommendation in favor of the adoption of this Agreement; (ii) Company shall
have failed to include in the Proxy Statement/Prospectus the recommendation of
the Board of Directors of Company in favor of the adoption of this Agreement;
(iii) the Board of Directors of Company fails to reaffirm its recommendation in
favor of the adoption of this Agreement within ten (10) business days after
Parent requests in writing that such recommendation be reaffirmed at any time
following the public announcement and during the pendency of an Acquisition
Proposal; (iv) the Board of Directors of Company or any committee thereof shall
have approved or recommended any Acquisition Proposal; (v) Company shall have
entered into any letter of intent or similar document or any agreement,
contract or commitment accepting any Acquisition Proposal; (vi) Company shall
have breached any of the provisions of Section 5.4 of this Agreement in any
material respect or (vii) a tender or exchange offer relating to not less than
15% of the then outstanding shares of capital stock of Company shall have been
commenced by a person unaffiliated with Parent and Company shall not have sent
to its securityholders pursuant to Rule 14e-2 promulgated under the Securities
Act, within ten (10) business days after such tender or exchange offer is first
published sent or given, a statement disclosing that Company recommends
rejection of such tender or exchange offer.
7.2 Notice of Termination; Effect of Termination. Any termination of this
Agreement under Section 7.1 will be effective immediately upon the delivery of
written notice thereof by the terminating party to the other parties hereto
(or, in the case of termination pursuant to Section 7.1(f) or Section 7.1(g),
on the date specified therein). In the event of the termination of this
Agreement as provided in Section 7.1, this Agreement shall be of no further
force or effect, except (i) as set forth in this Section 7.2, Section 7.3 and
Article 8 (General Provisions), each of which shall survive the termination of
this Agreement, and (ii) nothing herein shall relieve any party from liability
for any intentional or willful breach of this Agreement. No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement, all of which obligations shall survive termination
of this Agreement in accordance with their terms.
7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such fees and expenses whether or
not the Merger is consummated; provided, however, that Parent and Company shall
share equally all fees and expenses, other than attorneys' and accountants fees
and expenses, incurred in connection with the printing and filing (with the
SEC) of the Proxy Statement/Prospectus (including any preliminary materials
related thereto) and the S-4 (including financial statements and exhibits) and
any amendments or supplements thereto and any fees required to be paid under
the HSR Act.
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(b) Company Payments.
(i) Company shall pay to Parent in immediately available funds, within one
(1) business day after demand by Parent, an amount equal to $65,000,000 (the
"Termination Fee") if this Agreement is terminated by Parent pursuant to
Section 7.1(g); provided, however, that in the event this Agreement is
terminated by Parent pursuant to 7.1(g) as a result of a "Triggering Event"
specified in clause (vi) of the definition thereof, then the Termination Fee
shall not be payable if Parent shall have terminated this Agreement more than
ten (10) business days after the Company shall have notified Parent of the
breach of Section 5.4 hereof to which such Triggering Event relates.
(ii) If (A) this Agreement is terminated by Parent or Company, as
applicable, pursuant to Section 7.1(d), (B) prior to such termination a third
party shall have publicly announced an Acquisition Proposal, (C) such
Acquisition Proposal shall not have been unconditionally and publicly withdrawn
prior to the date that is five (5) business days prior to such termination, and
(D) within nine (9) months following the termination of this Agreement a
Company Acquisition (as defined below) is consummated or Company enters into a
definitive agreement or binding letter of intent providing for a Company
Acquisition (which is subsequently consummated), then Company shall pay Parent
in immediately available funds at or prior to the consummation of such Company
Acquisition an amount equal to the Termination Fee.
(iii) Company acknowledges that the agreements contained in this Section
7.3(b) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Parent would not enter into this Agreement;
accordingly, if Company fails to pay in a timely manner the amounts due
pursuant to this Section 7.3(b) and, in order to obtain such payment, Parent
makes a claim that results in a final judgment against Company no longer
subject to appeal for the amounts set forth in this Section 7.3(b), Company
shall pay to Parent its reasonable costs and expenses (including reasonable
attorneys' fees and expenses) in connection with such suit, together with
interest on the amounts set forth in this Section 7.3(b) at the prime rate of
Bank of America N.T. & S.A. in effect on the date such payment was required to
be made. Payment of the fees described in this Section 7.3(b) shall not be in
lieu of damages incurred in the event of willful breach of this Agreement. For
the purposes of this Agreement, "Company Acquisition" shall mean any of the
following transactions (other than the transactions contemplated by this
Agreement): (i) a merger, consolidation, business combination, recapitalization
or similar transaction involving Company pursuant to which the stockholders of
Company immediately preceding such transaction do not hold (directly or
indirectly) at least 60% of the aggregate equity interests in the surviving or
resulting entity of such transaction or a parent entity following such
transaction, (ii) a sale or other disposition by Company of assets representing
in excess of 60% of the aggregate fair market value of Company's business
immediately prior to such sale or (iii) the acquisition by any person or group
(including by way of a tender offer or an exchange offer or issuance by
Company), directly or indirectly, of beneficial ownership or a right to acquire
beneficial ownership of shares representing in excess of 60% of the voting
power of the then outstanding shares of capital stock of Company.
7.4 Amendment. Subject to applicable law, 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 Parent and Company.
7.5 Extension; Waiver. At any time prior to the Effective Time, any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties made
to such party contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements 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. Delay in exercising any right under
this Agreement shall not constitute a waiver of such right.
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ARTICLE VIII
General Provisions
8.1 Non-Survival of Representations and Warranties. The representations and
warranties of Company, Parent and Merger Sub contained in this Agreement or in
any certificate or instrument delivered pursuant to Article VI shall terminate
at the Effective Time, and only the covenants that by their terms survive the
Effective Time shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given on the day of delivery if delivered
personally or sent via telecopy (receipt confirmed) or on the second business
day after being sent if delivered by commercial delivery service, to the
parties at the following addresses or telecopy numbers (or at such other
address or telecopy numbers for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
PMC-Sierra, Inc.
900 East Hamilton Avenue
Suite 250
Campbell, CA 95008
Attention: President
Telecopy No.: (408) 369-1176
with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Neil J. Wolff, Esq.
Telecopy No.:(650) 493-6811
and to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
One Market
Spear Tower, Suite 3300
San Francisco, California 94105
Attention: Steve L. Camahort, Esq.
Michael S. Dorf, Esq.
Telecopy No.:(415) 947-2099
(b) if to Company, to:
Quantum Effect Devices, Inc.
3255-3 Scott Boulevard
Suite 200
Santa Clara, CA 95054
Attention: President
Telecopy No.: (408) 565-0335
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with a copy to:
Cooley Godward LLP
5 Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
Attention: David Lipkin, Esq.
Matt Sonsini, Esq.
Telecopy No.: (650) 849-7400
8.3 Interpretation.
(a) When a reference is made in this Agreement to Exhibits, such reference
shall be to an Exhibit to this Agreement unless otherwise indicated. When a
reference is made in this Agreement to a Section, such reference shall be to a
Section of this Agreement. Unless otherwise indicated the words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. When
reference is made herein to "the business of" an entity, such reference shall
be deemed to include the business of all direct and indirect subsidiaries of
such entity. Reference to the subsidiaries of an entity shall be deemed to
include all direct and indirect subsidiaries of such entity.
(b) For purposes of this Agreement, the term "person" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
(c) For purposes of this Agreement, the term "Material Adverse Effect" when
used in connection with an entity means any change, event, violation,
inaccuracy, circumstance or effect, individually or when aggregated with other
changes, events, violations, inaccuracies, circumstances or effects, that is or
would reasonably be expected to be materially adverse to the business,
capitalization, financial condition or results of operations of such entity and
its subsidiaries taken as a whole; provided, however that none of the following
shall be deemed either alone or in combination to constitute, and none of the
following shall be taken into account in determining whether there has been or
will be, a Material Adverse Effect on an entity: (i) any change, event,
violation, inaccuracy, circumstance or effect attributable or relating to in
significant part (A) conditions affecting the U.S. economy as a whole or any
foreign economy in any location where such entity has material operations or
sales or affecting the semiconductor industry generally or (B) the announcement
or pendency of the Merger (including cancellations of or delays in customer
orders, reductions in sales, disruptions in supplier, distributor, partner or
similar relationships or litigation relating to the Merger, in each case that
are attributable or relate in significant part to the announcement or pendency
of the Merger); (ii) any change in the market price or trading volume of such
entity's stock; or (iii) any failure by such entity to meet internal
projections or forecasts or published revenue or earnings predictions.
(d) For purposes of this Agreement, an "agreement," "arrangement,"
"contract," "commitment" or "plan" shall mean a legally binding, written
agreement, arrangement, contract, commitment or plan, as the case may be.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company
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Schedule and the Parent Schedule (a) 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, it being understood, however, that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) except
with respect to the Indemnified Parties under Section 5.10, are not intended to
confer upon any other person any rights or remedies hereunder.
8.6 Severability. In the event that any provision of this Agreement, or the
application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
8.7 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity. In any action at law or suit in equity to enforce this Agreement or the
rights of any of the parties hereunder, the prevailing party in such action or
suit shall be entitled to receive a reasonable sum for its attorneys' fees and
all other reasonable costs and expenses incurred in such action or suit.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
8.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule
of construction providing that ambiguities in an agreement or other document
will be construed against the party drafting such agreement or document.
8.10 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Subject to the preceding sentence, this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
8.11 Waiver of Jury Trial. EACH OF PARENT, COMPANY AND MERGER SUB HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
PMC-Sierra, Inc.
By: _________________________________
Name: _______________________________
Title: ______________________________
Penn Acquisition Corp.
By: _________________________________
Name: _______________________________
Title: ______________________________
Quantum Effect Devices, Inc.
By: _________________________________
Name: _______________________________
Title: ______________________________
**** REORGANIZATION AGREEMENT ****
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