<PAGE> 1
Pursuant to Item 601(b)(2) of Regulation S-K, the following exhibits and
schedules to this Agreement and Plan of Merger have been omitted. Such exhibits
and schedules will be submitted to the Securities and Exchange Commission upon
request.
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EXHIBIT/SCHEDULE NAME
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<S> <C>
Exhibit A Certain Definitions
Exhibit B Escrow Agreement
Exhibit C Financial Statements
Exhibit D Proprietary Information and Inventions Agreement
Exhibit E Shelf Registration Agreement
Exhibit F Voting Agreement
Exhibit G Opinion from Company Counsel
Exhibit H Opinion from Acquiror's Counsel
Company Disclosure Schedule
Acquiror Schedules
</TABLE>
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PLX TECHNOLOGY, INC.,
SEBRING SYSTEMS, INC.,
AND
OKW TECHNOLOGY ACQUISITION CORPORATION
APRIL 19, 2000
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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ARTICLE 1 THE MERGER.............................................................1
1.1 THE MERGER...................................................................1
1.2 EFFECTIVE TIME OF THE MERGER.................................................1
ARTICLE 2 THE SURVIVING CORPORATION..............................................1
2.1 CERTIFICATE OF INCORPORATION.................................................1
2.2 BYLAWS.......................................................................2
2.3 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION..............................2
ARTICLE 3 CONVERSION OF SECURITIES...............................................2
3.1 MERGER CONSIDERATION; CONVERSION OF SHARES...................................2
3.2 OPTIONS AND WARRANTS.........................................................3
3.3 EXCHANGE OF CERTIFICATES.....................................................3
3.4 ESCROW.......................................................................3
3.5 DIVIDENDS; TRANSFER TAXES....................................................4
3.6 NO FRACTIONAL SHARES.........................................................4
3.7 CLOSING OF COMPANY TRANSFER BOOKS............................................4
3.8 CLOSING......................................................................4
3.9 SUPPLEMENTARY ACTION.........................................................4
3.10 APPRAISAL RIGHTS.............................................................5
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDERS.....5
4.1 DUE ORGANIZATION; GOOD STANDING; AUTHORITY; BINDING NATURE OF
AGREEMENTS...................................................................5
4.2 CERTIFICATE OF INCORPORATION AND BYLAWS; RECORDS.............................6
4.3 CAPITALIZATION; OWNERSHIP OF STOCK...........................................6
4.4 FINANCIAL STATEMENTS.........................................................8
4.5 ABSENCE OF CHANGES...........................................................8
4.6 TITLE TO ASSETS; EQUIPMENT; REAL PROPERTY, LEASES; INVENTORY................10
4.7 BANK ACCOUNTS...............................................................11
4.8 RECEIVABLES; MAJOR CUSTOMERS................................................12
4.9 ACCOUNTS PAYABLE; MAJOR SUPPLIERS...........................................12
4.10 PROPRIETARY ASSETS..........................................................12
4.11 CONTRACTS...................................................................14
4.12 COMPLIANCE WITH LEGAL REQUIREMENTS..........................................16
4.13 GOVERNMENTAL AUTHORIZATIONS.................................................16
4.14 TAX MATTERS.................................................................17
4.15 EMPLOYEE AND LABOR MATTERS..................................................18
4.16 BENEFIT PLANS; ERISA........................................................19
4.17 ENVIRONMENTAL MATTERS.......................................................21
4.18 INSURANCE...................................................................21
4.19 RELATED PARTY TRANSACTIONS..................................................22
4.20 PROCEEDINGS; ORDERS.........................................................22
4.21 NON-CONTRAVENTION; CONSENTS.................................................23
4.22 BROKERS.....................................................................24
4.23 TAX TREATMENT...............................................................24
4.24 FULL DISCLOSURE.............................................................24
4.25 POWERS OF ATTORNEY..........................................................24
4.26 VOTING ARRANGEMENTS.........................................................25
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB.............25
5.1 DUE ORGANIZATION; GOOD STANDING; AUTHORITY; BINDING NATURE OF AGREEMENTS....25
</TABLE>
i
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TABLE OF CONTENTS
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5.2 CAPITALIZATION; OWNERSHIP OF STOCK..........................................25
5.3 BROKERS.....................................................................25
5.4 NON-CONTRAVENTION; CONSENTS.................................................25
5.5 TAX TREATMENT..............................................................26
5.6 SEC DOCUMENTS...............................................................26
5.7 OWNERSHIP OF MERGER SUB; NO PRIOR ACTIVITIES................................26
ARTICLE 6 CONDUCT OF BUSINESS PRIOR TO EFFECTIVE TIME...........................26
6.1 CONDUCT OF BUSINESS OF THE COMPANY..........................................26
6.2 OTHER NEGOTIATIONS..........................................................28
ARTICLE 7 ADDITIONAL AGREEMENTS AND ACQUIROR....................................28
7.1 ACCESS TO PROPERTIES AND RECORDS............................................28
7.2 TRANSFER OF SHARES..........................................................28
7.3 SECTION 16..................................................................28
7.4 REASONABLE EFFORTS; ETC.....................................................29
7.5 OBLIGATIONS OF THE COMPANY..................................................29
7.6 CONTROL OF OPERATIONS.......................................................29
7.7 EMPLOYEE OFFERS.............................................................29
7.8 REGISTRATION STATEMENT ON FORM S-8..........................................30
7.9 REGISTRATION STATEMENT ON FORM S-3..........................................30
7.10 VOTING AGREEMENT; PROXIES...................................................30
7.11 STOCK OPTIONS AND WARRANTS..................................................30
7.12 CERTAIN EMPLOYEE BENEFIT MATTERS............................................31
7.13 EXPENSES....................................................................31
7.14 PUBLIC ANNOUNCEMENTS........................................................31
7.15 ADDITIONAL AGREEMENTS.......................................................31
ARTICLE 8 CONDITIONS TO CONSUMMATION OF THE MERGER..............................31
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER..................31
8.2 ADDITIONAL CONDITIONS TO ACQUIROR'S AND MERGER SUB'S OBLIGATION TO
CONSUMMATE THE MERGER.......................................................32
8.3 ADDITIONAL CONDITIONS TO THE COMPANY'S OBLIGATION TO CONSUMMATE THE MERGER..33
ARTICLE 9 ESCROW AND INDEMNIFICATION............................................34
9.1 INDEMNIFICATION.............................................................34
9.2 ESCROW FUND.................................................................34
9.3 DAMAGE THRESHOLD............................................................34
9.4 ESCROW PERIODS..............................................................35
9.5 CLAIMS UPON ESCROW FUND.....................................................35
9.6 VALUATION...................................................................36
9.7 OBJECTIONS TO CLAIMS........................................................36
9.8 RESOLUTION OF CONFLICTS.....................................................36
9.9 STOCKHOLDERS' AGENT.........................................................37
9.10 ACTIONS OF THE STOCKHOLDERS' AGENT..........................................38
9.11 CLAIMS......................................................................38
ARTICLE 10 TERMINATION...........................................................38
10.1 TERMINATION.................................................................38
10.2 EFFECT OF TERMINATION.......................................................39
ARTICLE 11 MISCELLANEOUS PROVISIONS..............................................39
11.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS...................................39
11.2 ATTORNEYS' FEES.............................................................39
11.3 TRANSFER TAXES..............................................................39
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TABLE OF CONTENTS
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11.4 NOTICES.....................................................................39
11.5 TIME OF THE ESSENCE.........................................................40
11.6 HEADINGS....................................................................40
11.7 COUNTERPARTS................................................................40
11.8 GOVERNING LAW...............................................................40
11.9 WAIVER......................................................................41
11.10 AMENDMENTS..................................................................41
11.11 SEVERABILITY................................................................41
11.12 PARTIES IN INTEREST.........................................................41
11.13 ENTIRE AGREEMENT............................................................41
11.14 CONSTRUCTION................................................................41
</TABLE>
iii
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of April 19, 2000, by and
among PLX Technology, Inc. ("Acquiror"), a Delaware corporation, OKW Technology
Acquisition Corporation ("Merger Sub"), a Delaware corporation, and Sebring
Systems, Inc. (the "Company"), a Delaware corporation. Certain capitalized terms
used in this Agreement are defined in Exhibit A.
WHEREAS, the Boards of Directors of Acquiror, Merger Sub and the Company
each have determined that the acquisition of the Company by Acquiror is in the
best interests of their respective companies and stockholders and presents an
opportunity for their respective companies to achieve long-term strategic and
financial benefits, and accordingly have agreed to effect the merger provided
for herein upon the terms and subject to the conditions set forth herein;
WHEREAS, for federal income tax purposes, it is intended that the merger
contemplated herein shall qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code") and
in furtherance thereof intend that this Agreement shall be a "Plan of
Reorganization" within the meaning of Sections 354(a) and 361(a) of the Code;
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a purchase transaction;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined below), Merger Sub shall be merged with and
into the Company, the Company shall be the surviving corporation (the "Surviving
Corporation") and the separate existence of Merger Sub shall thereupon cease
(the "Merger"). Without limiting the generality of the foregoing, at the
Effective Time all property, rights, powers, privileges and franchises of Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation. Immediately following the Effective Time, the Surviving
Corporation shall be a wholly-owned subsidiary of Acquiror.
1.2 Effective Time of the Merger. The Merger shall become effective when
a properly executed certificate of merger (the "Certificate of Merger"), in such
form as may be agreed by the parties hereto and as required by the relevant
provisions of the Delaware General Corporation Law (the "DGCL"), is duly filed
with the Secretary of State of the State of Delaware, which filing shall be made
as soon as practicable upon satisfaction or waiver of the conditions set forth
in Article 8. When used in this Agreement, the term "Effective Time" shall mean
the date and time at which such Certificate of Merger has been accepted for
filing by the Secretary of State of the State of Delaware or at such later time
as is provided in the Certificate of Merger.
ARTICLE 2
THE SURVIVING CORPORATION
2.1 Certificate of Incorporation. At the Effective Time, the Certificate
of Incorporation attached as Exhibit A to the Certificate of Merger shall be the
Certificate of Incorporation of the
1
<PAGE> 7
Surviving Corporation until thereafter amended as provided by Delaware Law and
such Certificate of Incorporation.
2.2 Bylaws. The Bylaws of the Company, as in effect immediately prior to
the Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended.
2.3 Directors and Officers of Surviving Corporation. The directors of
the Company shall resign effective as of the Effective Time. The directors of
Merger Sub immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and Bylaws of the Surviving Corporation, and
the officers of Merger Sub immediately prior to the Effective Time shall be the
initial and only officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed.
ARTICLE 3
CONVERSION OF SECURITIES
3.1 Merger Consideration; Conversion of Shares.
(a) Except as set forth in Section 3.10 hereof, the holders of
shares of the common stock, $ 0.005 par value per share, of the Company
("Company Common Stock"), including the former holders of the Series C Preferred
Stock, $0.01 par value per share of the Company and the Series C-1 Preferred
Stock, $0.01 par value per share of the Company (the "Series C Preferred
Stock"), all of whom shall convert all Series C Preferred Stock held by them
prior to the Effective Time, the holders of Series A Preferred Stock, $0.01 par
value per share, of the Company and the Series A-1 Preferred Stock, $0.01 par
value per share, of the Company (collectively, the "Series A Preferred Stock")
and the holders of the Series B Preferred Stock, $0.01 par value per share, of
the Company and the Series B-1 Preferred Stock, $0.01 par value per share, of
the Company (collectively, the "Series B Preferred Stock" and, together with the
Series A Preferred Stock and the Company Common Stock, the "Company Stock")
shall receive shares of the Common Stock $0.001 par value per share, of the
Acquiror ("Acquiror Stock") as follows: At the Effective Time, by virtue of the
Merger and without any action on the part of the holders thereof, and subject to
Section 3.3, each share of Company Stock (after giving effect to any adjustments
in respect of liquidation preference) that is issued and outstanding immediately
prior to the Effective Time shall be converted into the right to receive, upon
surrender of the certificate formerly representing such share of Company Stock
(the "Certificate"), that number of shares of the Acquiror Stock , $0.001 par
value per share, as equals the Exchange Ratio; provided, however, that each
share of Company Stock that is held in the treasury of the Company or by any
subsidiary of the Company immediately prior to the Effective Time shall not be
so converted but shall be canceled and retired, and no consideration shall be
delivered in exchange therefor; further, provided, that the holders of Series A
Preferred Stock and Series B Preferred Stock shall receive additional shares of
Acquiror Stock equal in value to their liquidation preference as calculated in
accordance with the Exchange Ratio. The "Exchange Ratio" shall be equal to the
quotient obtained by dividing (x) $40,000,000 minus the aggregate amount of the
liquidation preference to which the holders of Series A Preferred Stock and
Series B Preferred Stock are entitled by (y) the total number of Fully Diluted
Shares (as herein defined) (calculated using the treasury method) as of the
Effective Time by (z) $30.00. "Fully Diluted Shares" shall be equal to the total
number of outstanding shares of Company Common Stock, immediately prior to the
Closing Date, calculated on a fully diluted, fully converted basis as though all
convertible debt and equity securities and options (whether vested or unvested)
and warrants had been converted or exercised, but excluding the New Options (as
hereinafter defined) and shares issuable upon exercise of the New Options.
(b) At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, each share of the common stock, no par
value per share, of Merger Sub that is
2
<PAGE> 8
issued and outstanding immediately prior to the Effective Time shall be
converted into and continue as one share of the common stock of the Surviving
Corporation.
3.2 Options and Warrants.
(a) Prior to the Effective Time, the Company shall grant to the
employees of the Company listed on Schedule 3.2 hereto the number of options to
purchase shares of Company Common Stock and at a price per share set forth on
Schedule 3.2, or such higher aggregate amount as agreed to by Acquiror (the "New
Options"). The New Options shall be granted pursuant to a form of option
agreement reasonably acceptable to the Acquiror. The New Options shall be
assumed by Acquiror in accordance with Section 7.11 and each such option shall
become exercisable for the number of shares of Acquiror Common Stock and at an
exercise price as set forth on Schedule 3.2.
(b) In addition, all other outstanding stock options to purchase
Company Stock, whether vested or unvested ("Company Stock Options"), warrants
and convertible securities to purchase Company Stock shall be assumed by
Acquiror in accordance with Section 7.11 in a manner consistent with the
requirements of Section 422 of the Code.
3.3 Exchange of Certificates.
(a) Within a reasonable period of time after the Effective Time,
Acquiror shall make available, and each holder of shares of Company Stock will
be entitled to receive upon surrender to BankBoston, N.A., acting as exchange
agent (the "Exchange Agent") of one or more Certificates, certificates
representing the number of whole shares of Acquiror Stock into which such shares
of Company Stock are converted in the Merger (excluding the Escrow Shares),
subject to this Section 3.3 plus the Fractional Share Amount (as defined below).
The shares of Acquiror Stock into which the shares of the Company Stock shall be
converted in the Merger shall be deemed to have been issued at the Effective
Time.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of Company Stock (i) a letter
of transmittal (which shall specify that delivery of the shares of Acquiror
Stock and the Fractional Share Amount, if any, shall be effected only upon
delivery of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions as Acquiror may reasonably specify that are not
inconsistent with the terms of this Agreement) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of Acquiror Stock and the Fractional Share Amount, if any.
Upon surrender of a Certificate for cancellation to the Exchange Agent together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor (i) a certificate representing
that number of whole shares of Acquiror Stock and (ii) a check representing the
Fractional Share Amount, if any, which such holder has the right to receive in
respect of the Certificate so surrendered pursuant to Section 3.6.
3.4 Escrow. As security for the Stockholders' indemnification
obligations set forth herein, Acquiror will deliver to the Escrow Agent under an
Escrow Agreement dated as of the date hereof by and among Acquiror, the
Stockholders' Agent and the Escrow Agent (the "Escrow Agreement") attached
hereto as Exhibit B, ten percent (10%) of the aggregate number of shares of
Acquiror Stock to be issued pursuant to Section 3.1 in respect of Company Stock
(the "Escrow Fund") outstanding immediately prior to the Effective Time. Such
shares shall be in escrow on behalf of the Stockholders, on a pro rata basis, in
accordance with each Stockholder's percentage ownership of Acquiror Stock
issuable pursuant to Section 3.1 ("Pro Rata Portion"). Such shares ("Escrow
Shares") shall be held as security for the Stockholders' indemnification
obligations under Article 9.
3
<PAGE> 9
3.5 Dividends; Transfer Taxes.
(a) No dividends that are declared on shares of Acquiror Stock after
the Effective Time (if any) will be paid to persons entitled to receive
certificates representing shares of Acquiror Stock until such persons surrender
their Certificates. Upon such surrender, there shall be paid to the person in
whose name the certificates representing such shares of Acquiror Stock shall be
issued any dividends which shall have become payable with respect to such shares
of Acquiror Stock between the Effective Time and the time of such surrender. In
no event shall the person entitled to receive such dividends be entitled to
receive interest on such dividends.
(b) If any certificates for any shares of Acquiror Stock are to be
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of such exchange that
the Person requesting such exchange shall (i) pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of certificates for
such shares of Acquiror Stock in a name other than that of the registered holder
of the Certificate surrendered or (ii) establish to the reasonable satisfaction
of the Exchange Agent that such tax has been paid or is not applicable.
(c) Notwithstanding anything in this Agreement to the contrary,
neither the Exchange Agent nor any party hereto shall be liable to a holder of
shares of Company Stock for any shares of Acquiror Stock or dividends thereon or
the cash payments otherwise due hereunder delivered to a public official
pursuant to applicable escheat laws following the passage of time specified
therein.
3.6 No Fractional Shares. Notwithstanding anything herein to the
contrary, no fractional shares of Acquiror Stock shall be issued pursuant to the
Merger. In lieu of the issuance of any such fractional share of Acquiror Stock,
a cash adjustment will be paid in respect of any fractional share of Acquiror
Stock that would otherwise be issuable (each, a "Fractional Share Amount"). The
amount of such adjustment shall be the product of (i) such fraction of a share
of Acquiror Stock multiplied by (ii) $30.00.
3.7 Closing of Company Transfer Books. If Certificates are presented to
the Surviving Corporation, they shall be canceled and exchanged for certificates
representing shares of Acquiror Stock or cash in accordance with the terms
hereof. The holders of shares of Company Stock to be exchanged for shares of
Acquiror Stock pursuant to this Agreement shall cease to have any rights as
stockholders of the Company, except for the right to surrender such Certificates
in exchange for shares of Acquiror Stock as provided hereunder or such
dissenters' rights as are provided under applicable law.
3.8 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place on a date to be specified by the
Acquiror and the Company, which shall be no later than the second business day
after satisfaction or waiver of the latest to occur of the conditions set forth
in Article 8 (the "Closing Date") at the offices of Morrison & Foerster LLP, 755
Page Mill Road, Palo Alto, California 94304; provided, however, that the parties
shall use reasonable commercial efforts to effect the Closing on or prior to
June 15, 2000.
3.9 Supplementary Action. If, at any time after the Effective Time, any
further assignments or assurances in law or any other things are necessary or
desirable to vest or to perfect or confirm of record in the Surviving
Corporation the title to any property or rights of the Company, or otherwise to
carry out the provisions of this Agreement, the officers and directors of the
Surviving Corporation are hereby authorized and empowered on behalf of the
Company in the name of and on behalf of the Company to execute and deliver any
and all things necessary or proper to vest or to perfect or confirm title to
such property or rights in the Surviving Corporation, and otherwise to carry out
the purposes and provisions of this Agreement.
4
<PAGE> 10
3.10 Appraisal Rights.
(a) Notwithstanding any provisions of this Agreement to the
contrary, any shares of Company Stock held by a holder who has exercised such
holder's appraisal rights in accordance with the DGCL and who, as of the
Effective Time, has not effectively withdrawn or lost such appraisal rights
("Dissenting Shares"), shall not be converted into or represent a right to
receive the consideration described in Section 3.1, but the holder of the
Dissenting Shares shall only be entitled to such rights as are granted by the
DGCL.
(b) Notwithstanding the provisions of subsection (a) above, if any
holder of shares of Company Stock who demands appraisal rights with respect to
such shares shall effectively withdraw or lose (through the failure to perfect
or otherwise) such holder's appraisal rights under the DGCL, then, as of the
Effective Time or the occurrence of such event, such holder's shares shall
automatically be converted into and represents only the right to receive the
consideration described in Section 3.1, subject in any event to Section 3.4.
(c) The Company shall give Acquiror (i) prompt written notice of any
written demands for payment with respect to any shares of Company Stock pursuant
to appraisal rights, and any withdrawals of such demands or losses of such
rights, and any other instruments served pursuant to the DGCL, and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
demands for appraisal rights. The Company shall not, except with the prior
written consent of Acquiror, voluntarily make any payment with respect to
demands for appraisal rights or offer to settle or settle any such demands.
Acquiror shall assist the Company in the preparation and delivery of any and all
notices, documents, information or instruments required by law to be delivered
to stockholders of the Company in connection with the provisions of the DGCL.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDERS
Except as specifically set forth in the disclosure schedule delivered by
the Company to Acquiror at or prior to the execution of this Agreement (the
"Disclosure Schedule"), the parts of which are numbered to correspond to the
Section numbers of this Agreement, the Company and the Stockholders hereby
severally represent and warrant to Acquiror and Merger Sub as follows:
4.1 Due Organization; Good Standing; Authority; Binding Nature of
Agreements.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has all
necessary corporate power and authority: (i) to conduct its business in the
manner in which its business is currently being conducted and in the manner in
which its business is proposed to be conducted; (ii) to own and use its assets
in the manner in which its assets are currently owned and used and in the manner
in which its assets are proposed to be owned and used; (iii) to perform its
obligations under all Company Contracts; and (iv) to enter into and perform all
of its obligations under the Transactional Agreements.
(b) The Company has never conducted any business under or otherwise
used, for any purpose or in any jurisdiction, any fictitious name, assumed name,
trade name or name other than the name set forth in its Certificate of
Incorporation, as amended.
(c) The Company is duly qualified and in good standing as a foreign
corporation in each of the jurisdictions in which the nature of its business or
the ownership or leasing of its properties requires such qualification, except
where the failure to be so qualified (i) would not individually or in the
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<PAGE> 11
aggregate have a material adverse effect on its business or operations or (ii)
would not adversely affect the ability of the Company to consummate the
transactions contemplated hereby. Section 4.1(c) of the Disclosure Schedule sets
forth a true and complete list of each jurisdiction in which the Company has an
officer or a paid representative (employee or consultant) or owns or leases
property and of each jurisdiction in which the Company is qualified to do
business.
(d) Section 4.1(d) of the Disclosure Schedule accurately sets forth
(i) the names of the members of the Company's board of directors and (ii) the
names and titles of the Company's officers. The Company has no committee of the
Company's board of directors.
(e) Neither the Company nor any of its stockholders has ever
approved, or commenced any proceeding or made any election contemplating, the
dissolution or liquidation of the Company or the winding up or cessation of the
Company's business or affairs.
(f) The Company has no subsidiaries, and the Company has never
owned, beneficially or otherwise, any shares or other securities of, or any
direct or indirect interest of any nature in, any Entity.
(g) The execution, delivery and performance of the Transactional
Agreements to which the Company is a party have been duly authorized by all
necessary action on the part of Company, its officers, its board of directors,
and its stockholders.
(h) Each of the Transactional Agreements to which the Company is a
party, subject to obtaining the approval of the stockholders of the Company,
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms and conditions.
4.2 Certificate of Incorporation and Bylaws; Records.
(a) The Company has delivered to Acquiror or its counsel accurate
and complete copies of: (i) the Company's Certificate of Incorporation and
Bylaws, including all amendments thereto; (ii) the stock records of the Company;
and (iii) the minutes and other records of the meetings and other proceedings
(including any actions taken by written consent or otherwise without a meeting)
of the stockholders of the Company and the board of directors of the Company.
There have been no meetings or other proceedings of the stockholders of the
Company or the board of directors of the Company that are not reflected in such
minutes or other records.
(b) There has not been any violation of any of the provisions of the
Company's Certificate of Incorporation or bylaws or of any resolution adopted by
the Company's stockholders or the Company's board of directors, and to the
Knowledge of the Company no event has occurred, and no condition or circumstance
exists, that likely would (with or without notice or lapse of time) constitute
or result directly or indirectly in such a violation.
(c) The books of account, stock records, minute books and other
records of the Company are accurate, up to date and complete. All of the records
of the Company are in the actual possession and direct control of the Company or
its counsel.
4.3 Capitalization; Ownership of Stock. As of the date of this Agreement
and as of the Closing:
(a) The authorized capital stock of the Company consists of (i)
Sixteen Million Two-Hundred Eight Thousand Six Hundred Five (16,208,605) shares
of Common Stock, $0.005 par value per
6
<PAGE> 12
share, and (ii) Eighteen Million Seven Hundred Ninety-One Thousand Three Hundred
Ninety-Six (18,791,396) shares of Preferred Stock, $0.01 par value per share, of
which Three Hundred Twelve Thousand Five Hundred (312,500) shares are designated
Series A Preferred Stock, Three Hundred Twelve Thousand Five Hundred (312,500)
are designated Series A-1 Preferred Stock, Five Hundred Eighty-Three Thousand
One Hundred Ninety-Eight (583,198) shares are designed Series B Preferred Stock,
Five Hundred Eighty-Three Thousand One Hundred Ninety-Eight (583,198) shares are
designed Series B-1 Preferred Stock, Eight Million Five Hundred Thousand
(8,500,000) shares are designated Series C Preferred Stock and Eight Million
Five Hundred Thousand (8,500,000) shares are designated Series C-1 Preferred
Stock. As of the date of this Agreement, the outstanding capital of the Company
consists of (i) One Million Three Hundred Two Thousand Five Hundred Eleven
(1,302,511) shares of Common Stock, (ii) Three Hundred Twelve Thousand Four
Hundred Ninety Seven (312,497) shares of Series A Preferred stock, no shares of
Series A-1 Preferred Stock, Five Hundred Seventy Eight Thousand Four Hundred
Fifty One (578,451) shares of Series B Preferred Stock, no shares of Series B-1
Preferred Stock, Six Million Four Hundred Seventy Two Thousand Four Hundred
Eighty Two (6,472,482) shares of Series C Preferred Stock, no shares of Series
C-1 Preferred Stock, (iii) options to purchase One Million Eight Hundred Ninety
Three Seven Hundred Eighty (1,893,780) shares of Common Stock, and (iv) warrants
to purchase Thirty Eight Thousand Two Hundred Eighteen (38,218) shares of Common
Stock and Four Thousand Seven Hundred Thirty Two (4,732) shares of Series B
Preferred Stock. All of such Common Stock, warrants and options are owned of
record by the stockholders, warrantholders and optionholders, respectively, free
and clear of any Encumbrances created by or resulting from the actions of the
Company or, to the knowledge of the Company, otherwise. Section 4.3 of the
Disclosure Schedule includes a list of all Company Stock Options as of the date
hereof, including the name of each holder of Company Stock Options, the date of
grant, the number of shares of Company Stock subject to such options, the
vesting commencement date and the vesting schedule.
(b) All of the shares of Company Stock currently outstanding (i)
have been duly authorized and validly issued, (ii) are fully paid and
nonassessable, and (iii) have been issued in full compliance with all applicable
securities laws and any judgments, orders, injunctions, decrees or awards to
which the Company is a party, or involving the Company's properties, assets or
business. Each holder of Company Stock is and was, at the time such shares were
issued, a citizen of the United States. The Company has delivered or made
available to Acquiror or its counsel accurate and complete copies of the stock
certificates evidencing the currently outstanding shares of Common Stock.
(c) Other than as stated in Section 4.3(a) above, there is no (i)
outstanding preemptive right, subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire any shares of the capital
stock or other securities of the Company; (ii) outstanding security, instrument
or obligation that is or may become convertible into or exchangeable for any
shares of the capital stock or other securities of the Company; (iii) Contract
under which the Company is or may become obligated to sell or otherwise issue
any shares of its capital stock or any other securities; or (iv) to the
Company's Knowledge, condition or circumstance that likely would directly or
indirectly give rise to or provide a basis for the assertion of a claim by any
Person to the effect that such Person is entitled to acquire or receive any
shares of capital stock or other securities of the Company.
(d) Other than the repurchase of unvested stock or the cancellation
of outstanding options from the Company's service providers upon their
termination of service to the Company, the Company has neither repurchased,
redeemed or otherwise reacquired, and has not agreed, committed or offered (in
writing or otherwise) to reacquire, any shares of capital stock or other
securities. Any securities reacquired by the Company were (or will have been)
reacquired in full compliance with the applicable provisions of all applicable
Legal Requirements.
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<PAGE> 13
4.4 Financial Statements.
(a) The Company has delivered to Acquiror the following financial
statements and notes (collectively, the "Financial Statements"), which are
attached hereto as Exhibit C:
(i) the audited balance sheet of the Company as of
December 31, 1999, and the related statements of
operations, changes in stockholders' equity and
fund balance and cash flows of the Company as of
December 31, 1999, together with the notes thereto;
and
(ii) the unaudited balance sheets of the Company as of
March 31, 2000 (the "Unaudited Interim Balance
Sheet") and related unaudited statements of
operations, for the three (3) months
then ended.
(b) All of the Financial Statements are accurate and complete in all
material respects. The Financial Statements are in accordance with the books and
records of the Company, present fairly the financial position of the Company as
of the respective dates thereof and the results of operations and, with respect
to the audited Financial Statements, changes in stockholders' equity and fund
balance and cash flows of the Company for the respective periods covered
thereby, and have been prepared in conformity with GAAP applied on a consistent
basis, subject, in the case of the unaudited financial statements, to normal
recurring year-end adjustments, the effect of which will not be material and the
absence of notes and statements of cash flows and changes in stockholders'
equity.
(c) At the date of the Unaudited Interim Balance Sheet, (i) the
Company had no Liabilities of any nature (matured or unmatured, fixed or
contingent) required by GAAP consistently applied to be provided for in such
Unaudited Interim Balance Sheet which were not provided for, (ii) the Company
had no material Liabilities of any nature (matured or unmatured, fixed or
contingent) which were not required by GAAP to be provided for in the Unaudited
Interim Balance Sheet and (iii) all reserves established by the Company and set
forth in the Unaudited Interim Balance Sheet were adequate for the purposes for
which they were established.
(d) As of the date of this Agreement, the Company has no Liabilities
in excess of $5,000 individually or in the aggregate, except for (i) Liabilities
identified as such in the "liabilities" column of the Unaudited Interim Balance
Sheet; and (ii) accounts payable and Liabilities (of the type required to be
reflected as current liabilities in the "liabilities" column of a balance sheet
prepared in accordance with GAAP) incurred and accrued by the Company in the
Ordinary Course of Business since the date of the Unaudited Interim Balance
Sheet.
4.5 Absence of Changes. Since March 31, 2000:
(a) there has not been any material adverse change in the Company's
business, condition, assets, liabilities, operations, financial performance,
results of operations or prospects, and no event has occurred that likely would
have an adverse effect on the Company's business, condition, assets,
liabilities, operations, financial performance, results of operations or
prospects;
(b) there has not been any material loss, damage or destruction to,
or any interruption in the use of, any of the Company's assets (whether or not
covered by insurance);
(c) the Company has not (i) declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, or (ii) repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities other than the repurchase of unvested
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<PAGE> 14
stock or the cancellation of outstanding options from the Company's service
providers upon termination of their service to the Company;
(d) the Company has not sold or otherwise issued any shares of
capital stock or any other securities other than upon the exercise of
outstanding options or the grant of stock options as reflected in its minute
books;
(e) the Company has not amended its Certificate of Incorporation or
bylaws and has not effected or been a party to any recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(f) the Company has not purchased or otherwise acquired any asset
from any other Person, except for assets acquired by the Company in the Ordinary
Course of Business;
(g) the Company has not leased or licensed any asset from any other
Person except for assets leased or licensed in the Ordinary Course of Business;
(h) the Company has not made any individual capital expenditure,
measured by invoice amount, in excess of $10,000;
(i) the Company has not sold or otherwise transferred, and has not
leased or licensed, any asset to any other Person except for products sold by
the Company from its inventory in the Ordinary Course of Business;
(j) the Company has not written off as uncollectible, or established
any extraordinary reserve with respect to, any account receivable or other
indebtedness, except in the Ordinary Course of Business;
(k) the Company has not pledged or hypothecated any of its assets or
otherwise permitted any of its assets to become subject to any Encumbrance,
except in the Ordinary Course of Business;
(l) the Company has not made any loan or advance to any other
Person, including without limitation, any stockholder of the Company;
(m) the Company has not (i) established or adopted any Employee
Benefit Plan or (ii) paid any bonus or made any profit sharing or similar
payment to, or increased the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its directors,
officers or employees other than increases for non-officer employees consistent
with the Company's review and compensation policies in force prior to the date
of this Agreement;
(n) the Company has not entered into, and neither the Company nor
any of the assets owned or used by the Company has become bound by, any
Contract, except in the Ordinary Course of Business;
(o) no Contract by which the Company or any of the assets owned or
used by the Company is or was bound, or under which the Company has or had any
rights or interest, has been amended or terminated, except in the Ordinary
Course of Business;
(p) there has been no borrowing or agreement to borrow by the
Company or change in the contingent obligations of the Company by way of
guaranty, endorsement, indemnity, warranty or
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<PAGE> 15
otherwise or grant of a mortgage or security interest in any property of the
Company, and the Company has not incurred, assumed or otherwise become subject
to any Liabilities, other than accounts payable (of the type required to be
reflected as current liabilities on a balance sheet prepared in accordance with
GAAP) incurred by the Company in the Ordinary Course of Business;
(q) the Company has not discharged any Encumbrance or discharged or
paid any indebtedness or other Liability, except any that (i) are reflected as
current liabilities in the Unaudited Interim Balance Sheet or have been incurred
by the Company since the date thereof in the Ordinary Course of Business, and
(ii) have been discharged or paid in the Ordinary Course of Business;
(r) the Company has not forgiven any debt or otherwise released or
waived any right or claim;
(s) the Company has not changed any of its methods of accounting or
accounting practices in any respect;
(t) the Company has not entered into any transaction or taken any
other action outside the Ordinary Course of Business; and
(u) the Company has not agreed or committed (in writing or
otherwise) to take any of the actions referred to in clauses (c) through (t)
above.
4.6 Title to Assets; Equipment; Real Property, Leases; Inventory.
(a) The Company owns, and has good and marketable title to, all
assets it purports to own, including (i) all assets reflected on the Unaudited
Interim Balance Sheet except for inventory sold by the Company since the date
thereof in the Ordinary Course of Business; (ii) all assets acquired by the
Company since the date of the Unaudited Interim Balance Sheet except for
inventory sold by the Company since the date of the Unaudited Interim Balance
Sheet in the Ordinary Course of Business; (iii) all assets referred to in
Section 4.6(b) of the Disclosure Schedule and all of the Company's rights under
Company Contracts; and (iv) all other assets reflected in the Company's books
and records as being owned by the Company. All of said assets are owned by the
Company free and clear of any Encumbrances, except liens for current taxes and
assessments not delinquent.
(b) Section 4.6(b) of the Disclosure Schedule identifies all
equipment, furniture, fixtures, improvements and other tangible and intangible
assets owned by or leased to the Company with a value greater than $10,000, and
sets forth the original cost and book value of each of said assets.
(c) To the Knowledge of the Company, each asset identified in
Section 4.6(b) of the Disclosure Schedule (i) is free of defects and
deficiencies and in good condition and repair, consistent with its age and
intended use (ordinary wear and tear excepted); (ii) complies in all respects,
and is being operated and otherwise used in full compliance, with all applicable
Legal Requirements; and (iii) is adequate for the uses to which it is being put.
(d) The Company does not own any real property or any interest in
real property, except for the leaseholds created under the real property leases
identified in Section 4.6(d) of the Disclosure Schedule (the "Leased Premises").
Section 4.6(d) of the Disclosure Schedule provides an accurate and complete
description of the premises covered by said leases and the facilities located on
such premises. The Company enjoys peaceful and undisturbed possession of such
premises. The Company has delivered to Acquiror or its counsel complete copies
of all such leases. The Company holds a valid leasehold interest in such leases,
in each case free and clear of all title defects, Encumbrances and
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<PAGE> 16
restrictions of any kind, except: (i) mechanics', carriers', workers' and other
similar liens arising in the Ordinary Course of Business, (ii) liens for current
taxes not yet due and payable, or (iii) such Encumbrances and restrictions that
do not and would not reasonably be expected to be material to the Company.
(e) Section 4.6(e) of the Disclosure Schedule identifies all
personal property assets that are being leased or licensed to the Company.
(f) All leases pursuant to which the Company leases real or personal
property are valid and effective in accordance with their respective terms and,
to the Company's Knowledge, there exists no default thereunder or occurrence or
condition which could result in a default thereunder or termination thereof.
(g) The Company's Leased Premises are in a condition adequate for
the conduct of the business in the Ordinary Course of Business, and the Company
owns, or has a valid leasehold interest in or license to, all assets, not
including those assets covered by or described in Section 4.10, necessary for
the conduct of its business as presently conducted.
(h) The inventories of the Company reflected in the Unaudited
Interim Balance Sheet consist of items that are useable or salable in the
Ordinary Course of Business and do not include below-standard quality, damaged,
defective or obsolete items the value of which has not been fully written down
or with respect to which adequate reserves have not been provided, adjusted for
operations and transactions through the Effective Time in accordance with the
past custom and practice of the Company. Section 4.6(h) of the Disclosure
Schedule discloses the addresses of all warehouses or other facilities and
customers, if any, in which or with whom any material amounts of the inventories
of the Company are located.
4.7 Bank Accounts. Section 4.7 of the Disclosure Schedule accurately
sets forth, with respect to each account maintained by or for the benefit of the
Company at any bank or other financial institution:
(a) the name and location of the institution at which such account
is maintained;
(b) the name in which such account is maintained and the account
number of such account;
(c) a description of such account and the purpose for which such
account is used;
(d) the current balance in such account;
(e) the rate of interest being earned on the funds in such account;
and
(f) the names of all individuals authorized to draw on or make
withdrawals from such account.
There are no safe deposit boxes or similar arrangements maintained by or for the
benefit of the Company.
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<PAGE> 17
4.8 Receivables; Major Customers.
(a) Section 4.8 of the Disclosure Schedule provides an accurate and
complete breakdown and aging of all accounts and notes receivable and a list of
all other receivables of the Company as of March 31, 2000.
(b) All existing accounts receivable of the Company (including those
accounts receivable reflected on the Unaudited Interim Balance Sheet that have
not yet been collected and those accounts receivable that have arisen since such
date and have not yet been collected) (i) represent valid obligations of
customers of the Company arising from bona fide transactions entered into in the
Ordinary Course of Business; and (ii) are current and in the aggregate, will be
collected in full (without any counterclaim or setoff), net of reserves, on or
before the later of 90 days from the date of invoice or 60 days from the date
hereof.
(c) Section 4.8(c) of the Disclosure Schedule accurately identifies,
and provides an accurate and complete list of the revenues received from, each
customer or other Person that accounted for more than $10,000 of the gross
revenues of the Company during fiscal year 1999. The Company has not received
any notice or other communication (in writing or otherwise), or received any
other information, indicating that any customer or other Person identified in
Section 4.8(c) of the Disclosure Schedule may cease dealing with the Company or
may otherwise reduce the volume of business transacted by such Person with the
Company below historical levels.
(d) The Company has provided to Acquiror or its counsel a copy, if
any, of the Company's standard form of customer contract for each product or
service it offers to customers, and all the Company's customer relationships are
governed by such standard contracts. The Company has no oral contracts or
agreements to deliver products or provide services.
4.9 Accounts Payable; Major Suppliers.
(a) Section 4.9 of the Disclosure Schedule (i) provides an accurate
and complete breakdown and aging of the Company's accounts payable as of March
31, 2000; (ii) provides an accurate and complete breakdown of all customer
deposits and other deposits held by the Company as of March 31, 2000; and (iii)
provides an accurate and complete breakdown of the Company's long term debt as
of the date of this Agreement.
(b) Section 4.9 of the Disclosure Schedule accurately identifies,
and provides an accurate and complete breakdown of, the amounts paid to each
supplier or other Person, that received more than $50,000 from the Company in
the fiscal year ended December 31, 1999 or the period from January 1, 2000 to
April 15, 2000, other than amounts paid to employees or consultants and
described in Section 4.15(a) or (b) of the Disclosure Schedule.
4.10 Proprietary Assets.
(a) Schedule 4.10 of the Disclosure Schedule sets forth each of the
following Proprietary Assets owned by or licensed to the Company or otherwise
used in connection with the Company's business: all United States and foreign
(i) patent and patent applications; (ii) registered trademarks and trademark
applications; (iii) registered copyrights and applications for copyright
registration; (iv) mask work registrations and applications to register mask
works; and (v) any other such Proprietary Asset that is the subject of an
application to, or certificate or registration issued by, any state, government
or other public legal authority.
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<PAGE> 18
(b) All material designs, drawings, specifications, schematics,
designs, source code, object code, scripts, documentation, flow charts,
diagrams, data lists, databases, compilations and information incorporating,
embodying or reflecting any of the Proprietary Assets of the Company at any
stage of their development were written, developed and created solely and
exclusively by employees of the Company without the assistance of any third
party or entity or were created by third parties who assigned ownership of their
rights to the Company by means of valid and enforceable consultant
confidentiality and invention assignment agreements, copies of which have been
made available to Acquiror or its counsel. The Company has taken reasonable
measures and precautions necessary to protect the confidentiality and value of
each Proprietary Asset that is owned by or licensed to the Company or that is
otherwise used in connection with the Company's business.
(c) The Company has not granted any third party any right to
manufacture, reproduce, license, use, distribute, market or exploit any of its
Proprietary Assets or any adaptations, translations, or derivative works based
on the Proprietary Assets or any portion thereof. No Proprietary Asset is a
"derivative work" of any original work currently owned by a third party as the
term "derivative work" is defined in the United States Copyright Act, Title 17,
U.S.C. Section 101.
(d) All current and former employees and consultants of the Company
have executed a Proprietary Information and Inventions Agreement substantially
in the form attached as Exhibit D. Such agreements constitute valid and binding
obligations of the Company and such person, enforceable in accordance with their
respective terms. To the Knowledge of the Company, no such employee or
consultant is in violation thereof. The Company does not believe it is or will
be necessary to utilize any inventions, trade secrets or proprietary information
of any Company employees made prior to their employment by the Company, except
for inventions, trade secrets or proprietary information identified in Schedule
4.10(c) of the Disclosure Schedule, which have been assigned to the Company.
(e) None of the Proprietary Assets owned or used by the Company
violate or infringe or, if used in the Company's business as currently proposed
to be conducted, would violate or infringe, any license, patent, copyright,
service mark, trademark, trade name, trade secret or other intellectual property
right of others. The Company is not infringing and has not at any time infringed
or received any notice or other communication (in writing or otherwise) of any
actual, alleged, possible or potential infringement of any Proprietary Asset
owned or used by any other Person. To the Company's Knowledge, no Person is
infringing, and no Proprietary Asset owned or used by any other Person infringes
or conflicts with, any Proprietary Asset owned or used by Company. The Company
has not entered into any agreement to indemnify any other Person against any
charge of infringement, misappropriation or other conflict with respect to any
Proprietary Asset.
(f) There are no royalties, honoraria, fees or other payments
payable by the Company to any person by reason of the ownership, use, license,
sale or disposition of any Proprietary Asset of the Company.
(g) The Proprietary Assets owned by or licensed to the Company
include all Proprietary Assets necessary to conduct the Company's business to
the same extent and in the same manner as currently conducted and currently
anticipated by the Company to be conducted. Such ownership or right to use, and
to license others to use, are free and clear of, and without liability under,
all claims and right of third parties (other than the licensor).
(h) All proprietary software developed by the Company and currently
sold, licensed or otherwise used by the Company in its business is free from
significant programming errors, operates in substantial conformity with its user
documentation and other descriptions and standards applicable thereto provided
by the Company, and does not contain any virus, timer, clock, counter, or other
limiting design,
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<PAGE> 19
instruction or routine, that would, without the user's knowledge and consent,
erase data or programming code or cause such software to become inoperable or
otherwise incapable of being used in the full manner for which it was designed
and created.
4.11 Contracts.
(a) Section 4.11 of the Disclosure Schedule lists each of the
following Company Contracts:
(i) any Company Contract or series of related Company Contracts
requiring in the aggregate payments after the date hereof by or to the Company
of more than $50,000;
(ii) any Company Contract with or for the benefit of any current
or former officer, director, stockholder, employee or consultant of the Company;
(iii) any Company Contract with any labor union or association
representing any employee of the Company;
(iv) any Company Contract for the purchase or sale of materials,
supplies, equipment, merchandise or services that contain an escalation,
renegotiation or redetermination clause or that obligate the Company to purchase
all or substantially all of its requirements of a particular product from a
supplier, or for periodic minimum purchases of a particular product from a
supplier;
(v) any Company Contract for sale of any of the assets or
properties, other than its securities, of the Company other than in the Ordinary
Course of Business or for the grant to any Person of any options, rights of
first refusal, or preferential or similar rights to purchase any such assets or
properties;
(vi) any agreement of surety, guarantee or indemnification,
other than agreements in the Ordinary Course of Business with respect to
obligations in an aggregate amount not in excess of $10,000;
(vii) any Company Contract containing covenants of the Company
not to compete in any line of business, in any geographic area or with any
Person or covenants of any other Person not to compete with the Company or in
any line of business of the Company;
(viii) any Company Contract granting or restricting the right of
the Company to use any Proprietary Assets;
(ix) any Company Contract with customers or suppliers for the
sharing of fees, the rebating of charges or other similar arrangements;
(x) any Company Contract with any holder of securities of the
Company as such (including, without limitation, any Company Contract containing
an obligation to register any of such securities under any federal or state
securities laws);
(xi) any Company Contract obligating the Company to deliver
services or product enhancements or containing a "most favored nation" pricing
clause;
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(xii) any Company Contract relating to the acquisition by the
Company of any operating business or the capital stock of any other person;
(xiii) any Company Contract requiring the payment to any Person
of a brokerage or sales commission or a finder's or referral fee (other than
arrangements to pay commission or fees to employees in the Ordinary Course of
Business);
(xiv) any Company Contract or note relating to or evidencing
outstanding indebtedness for borrowed money;
(xv) any lease, sublease or other Company Contract under which
the Company is lessor or lessee of any real property or equipment or other
tangible property with respect to obligations in excess of $50,000; and
(xvi) any other material Company Contract whether or not made in
the ordinary course of business.
(xvii) Each Company Contract is valid and in full force and
effect, and is enforceable by the Company in accordance with its material terms,
except as enforceability may be limited by bankruptcy and other similar laws and
general principles of equity.
(b) Each Company Contract is valid and in full force and effect, and
is enforceable by the Company in accordance with its material terms, except as
enforceability may be limited by bankruptcy and other similar laws and general
principles of equity.
(c) Neither the Company nor any party to a Company Contract is in
default under any Company Contract. No event has occurred, and no circumstance
or condition exists, that likely would (with or without notice or lapse of time)
(A) result in a violation or breach of any of the provisions of any Company
Contract, (B) give any Person the right to declare a default or exercise any
remedy or hinder any Company Contract, (C) give any Person the right to
accelerate the maturity or performance of any Company Contract, or (D) give any
Person the right to cancel, terminate or modify any Company Contract. The
Company has not waived any of its rights under any Company Contract, except in
the Ordinary Course of Business.
(d) To the Company's Knowledge, each Person against which the
Company has or may acquire any rights under any Company Contract is solvent and
is able to satisfy all of such Person's current and future monetary obligations
and other obligations and Liabilities to the Company.
(e) (i) The Company has never guaranteed or otherwise agreed to
cause, insure or become liable for, and has never pledged any of its assets to
secure, the performance or payment of any obligation or other Liability of any
other Person except in the Ordinary Course of Business; and (ii) the Company has
never been a party to or bound by (A) any joint venture agreement, partnership
agreement, profit sharing agreement, cost sharing agreement, loss sharing
agreement or similar Contract, or (B) any Contract that creates or grants to any
Person, or provides for the creation or grant of, any stock appreciation right,
phantom stock right or similar right or interest.
(f) To the Knowledge of the Company, the performance of the Company
Contracts will not result in any violation of or failure to comply with any
Legal Requirement.
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<PAGE> 21
(g) No Person is materially renegotiating, nor has the contractual
right to materially renegotiate, any amount paid or payable to the Company under
any Company Contract or any other material term or provision of any Company
Contract.
(h) Schedule 4.11(h) of the Disclosure Schedule identifies and
provides an accurate and brief description of each proposed Contract as to which
any bid, offer, written proposal, term sheet or similar document has been
submitted or received by the Company that would commit the Company to deliver
goods or provide services with a value in excess of $100,000 and is outstanding.
(i) No party to any Company Contract has notified the Company or
made a claim to the effect that the Company has failed to perform an obligation
thereunder. In addition, to the Knowledge of the Company, there is no plan,
intention or indication of any contracting party to any Company Contract to
cause the termination, cancellation or modification of such Contract or to
reduce or otherwise change its activity thereunder so as to adversely affect the
benefits derived or expected to be derived therefrom by the Company.
4.12 Compliance With Legal Requirements.
(a) The Company is in compliance with each Legal Requirement that is
applicable to it or to the conduct of its business or the ownership or use of
any of its assets, except where the failure to so comply would not have a
material adverse effect on the Company.
(b) To the Knowledge of the Company, no event has occurred, and no
condition or circumstance exists, that likely would (with or without notice or
lapse of time) constitute or result directly or indirectly in a violation by the
Company of, or a failure on the part of the Company to comply with, any Legal
Requirement.
(c) The Company has not received at any time any notice or other
communication (in writing or otherwise) from any Governmental Body, or any other
Person, regarding (i) any actual, alleged, possible or potential violation of,
or failure to comply with, any Legal Requirement, or (ii) any actual, alleged,
possible or potential obligation on the part of the Company to undertake, or to
bear all or any portion of the cost of, any cleanup or any remedial, corrective
or response action of any nature.
(d) To the Knowledge of the Company, no Governmental Body has
proposed or is considering any Legal Requirement (other than any Legal
Requirement that would be applicable generally to the semiconductor industry)
that, if adopted or otherwise put into effect, would specifically affect the
Company and (i) may have a material adverse effect on the Company's business,
condition, assets, liabilities, operations, financial performance, results of
operations or prospects or on the ability of the Company to comply with or
perform any covenant or obligation under this Agreement or any of the other
Transactional Agreements, or (ii) may have the effect of preventing, delaying,
making illegal or otherwise interfering with any of the Transactions.
4.13 Governmental Authorizations.
(a) Section 4.13 of the Disclosure Schedule identifies (i) each
Governmental Authorization that is held by the Company; and (ii) each other
Governmental Authorization that, to the Knowledge of the Company, is held by any
of the Company's employees and is used in connection with the Company's
business. The Company has delivered or made available to Acquiror or its counsel
accurate and complete copies of all of the Governmental Authorizations
identified in Section 4.13 of the Disclosure Schedule, including all renewals
thereof and all amendments thereto. Each Governmental
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<PAGE> 22
Authorization identified or required to be identified in Section 4.13 of the
Disclosure Schedule is valid and in full force and effect.
(b) The Governmental Authorizations identified in Section 4.13 of
the Disclosure Schedule constitute all of the Governmental Authorizations
necessary (i) to enable the Company to conduct its business in the manner in
which its business is currently being conducted and (ii) to permit the Company
to own and use its assets in the manner in which they are currently owned and
used.
4.14 Tax Matters.
(a) Each Tax required to have been paid, or, to the Company's
Knowledge, claimed by any Governmental Body to be payable, by the Company
(whether pursuant to any Tax Return or otherwise) has been duly paid in full on
a timely basis. Any Tax required to have been withheld or collected by the
Company has been duly withheld and collected, and (to the extent required) each
such Tax has been paid to the appropriate Governmental Body.
(b) Section 4.14(b) of the Disclosure Schedule accurately identifies
all Tax Returns required to be filed by or on behalf of the Company with any
Governmental Body with respect to any taxable period ending on or before the
date hereof ("Company Returns"). All Company Returns (i) have been or will be
filed when due or has obtained a valid extension, and (ii) have been, or will be
when filed, accurately and completely prepared in material compliance with all
applicable Legal Requirements. All amounts shown on the Company Returns to be
due on or before the date hereof, and all amounts otherwise payable in
connection with the Company Returns on or before the date hereof, have been
paid. The Company has delivered to Acquiror or its counsel accurate and complete
copies of Company Returns filed by the Company.
(c) The Company's liability for unpaid Taxes for all periods ending
on or before the date of the Financial Statements does not, in the aggregate,
exceed the amount of the current liability accruals for Taxes (excluding
reserves for deferred taxes) reported in the Financial Statements. The Company
has established in the Ordinary Course of Business reserves for the payment of
all Taxes for the period from the date of the Financial Statements through the
date hereof and has disclosed the dollar amount of such reserves to the
Acquiror.
(d) Section 4.14(d) of the Disclosure Schedule accurately identifies
each examination or audit of any Company Return that has been conducted by any
Governmental Body. The Company has delivered to Acquiror or its counsel accurate
and complete copies of all audit reports and similar documents relating to
Company Returns. No extension or waiver of the limitation period applicable to
any of the Company Returns has been granted (by the Company or any other
Person), and no such extension or waiver has been requested from the Company.
The Company has disclosed on its federal income tax returns all positions taken
therein that could give rise to a substantial understatement penalty within the
meaning of Code Section 6662.
(e) No claim or other Proceeding is pending or to the Company's
Knowledge has been threatened against or with respect to Company in respect of
any Tax. There are no unsatisfied Liabilities for Taxes (including liabilities
for interest, additions to tax and penalties thereon and related expenses) with
respect to any notice of deficiency or similar document received by the Company.
The Company has not entered into or become bound by any agreement or consent
pursuant to Section 341(f) of the Code. The Company has not been, and will not
be, required to include any adjustment in taxable income for any tax period (or
portion thereof) pursuant to Section 481 or 263A of the Code or any comparable
provision under state or foreign Tax laws as a result of transactions or events
occurring, or accounting methods employed, prior to the Closing. The Company is
in compliance with the terms and
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conditions of any applicable Tax exemptions, Tax agreements or Tax orders of any
Governmental Body to which it may be subject or which it may have claimed, and
the transactions contemplated by this Agreement will not have any adverse affect
on such compliance. The Company is not a party to any safe harbor lease within
the meaning of Section 168(f)(8) of the Code, as in effect prior to amendment by
the Tax Equity and Fiscal Responsibility Act of 1982. The Company has not been
the "distributing corporation" (within the meaning of Section 355(c)(2) of the
Code) with respect to a transaction described in Section 355 of the Code within
the 3-year period ending as of the date of this Agreement. The Company has not
participated in an international boycott as defined in Code Section 999. The
Company does not have a permanent establishment in any foreign country, as
defined in any applicable Tax treaty or convention between the United States of
America and such foreign country.
(f) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of the Company that, individually or collectively, could
give rise directly or indirectly to the payment of any amount that would not be
deductible pursuant to Section 280G or Section 162 of the Code.
(g) All stock options that the Company has treated as incentive
stock options under Section 421 of the Code meet the requirements of Section 422
of the Code.
(h) The Company has no net operating losses or other tax attributes
presently subject to limitation under Code Sections 382, 383, or 384.
(i) The Company is not liable for Taxes incurred by any individual,
trust, corporation, partnership or other entity other than Company, either as a
transferee or pursuant to Treasury Regulations Section 1.1502-6, or pursuant to
any other provision of federal, state or local law or regulation. The Company is
not, and has never been, a party to or bound by any tax indemnity agreement, tax
sharing agreement, tax allocation agreement or similar Contract.
(j) The Company is not a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code and has not been
a United States real property holding corporation within the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
(k) The Company is not a party to any joint venture, partnership or
other arrangement or contract which could be treated as a partnership for United
States federal income tax purposes.
4.15 Employee and Labor Matters.
(a) Section 4.15(a) of the Disclosure Schedule accurately sets
forth, with respect to each employee of the Company (including any employee of
the Company who is on a leave of absence or on layoff status) (i) the name of
such employee and the date as of which such employee was originally hired by the
Company; (ii) such employee's title; (iii) such employee's annualized
compensation as of the date of this Agreement; (iv) all bonuses and other
incentive compensation received by such employee since January 1, 1999, and any
accrual for such bonuses and incentive compensation; (v) each Current Benefit
Plan in which such employee participates or is eligible to participate; and (vi)
any Governmental Authorization that is held by such employee and that is used in
connection with the Company's business.
(b) Schedule 4.15(b) of the Disclosure Schedule contains a list of
individuals who are currently performing services for the Company and are
classified as "consultants" or "independent contractors," and the respective
compensation of each such "consultant" or "independent contractor."
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(c) There is no former employee of the Company who is receiving or
is scheduled to receive (or whose spouse or other dependent is receiving or is
scheduled to receive) any benefits (whether from the Company or otherwise)
relating to such former employee's employment with the Company.
(d) The Company is not a party to or bound by any employment
agreement or any union contract, collective bargaining agreement or similar
Contract.
(e) The employment of each of the Company's employees is terminable
by the Company at will. The Company has delivered or made available to Acquiror
or its counsel accurate and complete copies of all employee manuals and
handbooks, disclosure materials, policy statements, employment agreements and
other materials relating to the employment of the current employees of the
Company.
(f) To the Knowledge of the Company (i) no employee of the Company
intends to terminate his or her employment with the Company and the Company does
not have a present intention to terminate the employment of any employee; (ii)
no employee of the Company has received since March 1, 2000, nor is currently
considering, an offer to join a business that likely would be competitive with
the Company's business; and (iii) no employee of the Company is a party to or is
bound by any confidentiality agreement, noncompetition agreement or other
Contract (with any Person) that likely would have an adverse effect on (A) the
performance by such employee of any of his or her duties or responsibilities as
an employee of the Company, or (B) the Company's business or operations.
(g) To the Company's Knowledge, the Company is not engaged, and has
never been engaged, in any unfair labor practice of any nature. There has never
been any slowdown, work stoppage, labor dispute or union organizing activity, or
any similar activity or dispute, affecting the Company or any of its employees.
There is not now pending, and to the Knowledge of the Company no Person has
threatened to commence, any such slowdown, work stoppage, labor dispute or union
organizing activity or any similar activity or dispute, nor has any event
occurred, nor does any condition or circumstance exist, that likely would
directly or indirectly give rise to or provide a basis for the commencement of
any such slowdown, work stoppage, labor dispute or union organizing activity or
any similar activity or dispute.
(h) To the Company's Knowledge, each employee of the Company is in
compliance with all applicable visa and work permit requirements. No visa or
work permit held by an employee of the Company will expire during the six (6)
month period beginning at the date of this Agreement.
4.16 Benefit Plans; ERISA.
(a) Section 4.16 of the Disclosure Schedule lists (i) all Employee
Benefit Plans, (ii) all employment agreements, including, but not limited to,
any individual benefit arrangement, policy or practice with respect to any
current or former employee or director of the Company or any ERISA Affiliate,
and (iii) all other employee benefit, bonus or other incentive compensation,
stock option, stock purchase, stock appreciation, severance pay, lay-off or
reduction in force, change in control, sick pay, vacation pay, salary
continuation, retainer, leave of absence, educational assistance, service award,
employee discount, fringe benefit plans, arrangements, policies or practices,
whether legally binding or not, which the Company or any ERISA Affiliate
maintains, contributes to or has any obligation to or liability for
(collectively, the "Plans").
(b) None of the Plans is a Defined Benefit Plan, and neither the
Company nor any ERISA Affiliate has ever sponsored, maintained or contributed
to, or ever been obligated to contribute to, a Defined Benefit Plan.
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(c) None of the Plans is a Multiemployer Plan, and neither the
Company nor any ERISA Affiliate has ever contributed to, or ever been obligated
to contribute to, a Multiemployer Plan.
(d) The Company does not maintain or contribute to any welfare
benefit plan that provides health benefits to an employee after the employee's
termination of employment or retirement except as required under Section 4980B
of the Code and Sections 601 through 608 of ERISA.
(e) Each Plan that is an Employee Benefit Plan complies by its terms
and in operation with the requirements provided by any and all statutes, orders
or governmental rules or regulations currently in effect and applicable to the
Plan, including but not limited to ERISA and the Code.
(f) All reports, forms and other documents required to be filed with
any Governmental Body with respect to any Plan (including without limitation,
summary plan descriptions, Forms 5500 and summary annual reports) have been
timely filed and are accurate.
(g) Each Plan intended to qualify under Section 401(a) of the Code
is the subject of a favorable determination letter issued by the Internal
Revenue Service that provides that it so qualifies through the last day of the
"TRA 86 Remedial Amendment Period," as such term is defined in Section 3.02 of
Revenue Procedure 96-55 issued by the Internal Revenue Service and that its
related trust is exempt from taxation under Section 501 of the Code. To the
Company's Knowledge, nothing has occurred since the date of the Internal Revenue
Service's favorable determination letter that could adversely affect the
qualification of such Plan or the tax exempt status of its related trust.
(h) All contributions for all periods ending prior to the Closing
(including periods from the first day of the current plan year to the Closing)
have been made prior to the Closing by the Company in accordance with past
practice and the recommended contribution in any applicable actuarial report.
(i) All insurance premiums have been paid in full, subject only to
normal retrospective adjustments in the ordinary course, with regard to the
Plans for plan years ending on or before the Closing.
(j) With respect to each Plan:
(i) no prohibited transactions (as defined in Section 406 or 407
of ERISA or Section 4975 of the Code) have occurred for which a statutory
exemption is not available;
(ii) no action or claims (other than routine claims for benefits
made in the ordinary course of Plan administration for which Plan administrative
review procedures have not been exhausted) are pending, threatened or imminent
against or with respect to the Plan, any employer who is participating (or who
has participated) in any Plan or any fiduciary (as defined in Section 3(21) of
ERISA) of the Plan;
(iii) neither the Company nor any fiduciary has any Knowledge of
any facts which could give rise to any such action or claim; and
(iv) it provides that it may be amended or terminated at any
time and, except for benefits protected under Section 411(d) of the Code, all
benefits payable to current, terminated employees or any beneficiary may be
amended or terminated by the Company at any time without liability.
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(k) Neither the Company nor any ERISA Affiliate has any liability or
is threatened with any liability (whether joint or several) (i) for any excise
tax imposed by Sections 4971, 4975, 4976, 4977 or 4979 of the Code, or (ii) to a
fine under Section 502 of ERISA.
(l) All of the Plans listed in the Disclosure Schedule, to the
extent applicable, are in compliance with the continuation of group health
coverage provisions contained in Section 4980B of the Code and Sections 601
through 608 of ERISA.
(m) True, correct and complete copies of all documents creating or
evidencing any Plan listed in the Disclosure Schedule have been delivered to
Acquiror, and true, correct and complete copies of all reports, forms and other
documents required to be filed with any governmental entity (including, without
limitation, summary plan descriptions, Forms 5500 and summary annual reports for
all plans subject to ERISA) have been delivered to Acquiror. There are no
negotiations, demands or proposals which are pending or have been made which
concern matters now covered, or that would be covered, by the type of agreements
listed in the Disclosure Schedule.
(n) All expenses and liabilities relating to all of the Plans
described in the Disclosure Schedule have been, and will on the Closing be fully
and properly accrued on the Company's books and records and disclosed in
accordance with generally accepted accounting principles and in Plan financial
statements.
4.17 Environmental Matters. To the Knowledge of the Company, the Company
is and has been at all times in compliance in all material respects with all
Environmental Laws. The Company has not received any notice or other
communication (in writing or otherwise) that alleges that the Company is not in
compliance with any Environmental Law. To the Knowledge of the Company, the
Company has not generated, manufactured, produced, transported, imported, used,
treated, refined, processed, handled, stored, discharged, released, or disposed
of any Hazardous Materials (whether lawfully or unlawfully) at any of the Leased
Premises occupied or controlled by the Company on or at any time prior to the
date hereof other than common household and office products in de minimis
quantities. To the Knowledge of the Company: (a) there are not and have not been
any releases or threatened releases of any Hazardous Materials in any quantity
(other than common household and office products in de minimis quantities) at,
on, or from the Leased Premises, (b) there are no circumstances that may prevent
or interfere with the Company's compliance with any Environmental Law, and (c)
no former owner or user of the Leased Premises engaged in any type of
manufacturing or commercial activity which might be reasonably expected to
generate, manufacture, produce, transport, import, use, treat, refine, process,
handle, store, discharge, release, or dispose of any Hazardous Materials
(whether lawfully or unlawfully) on the Leased Premises.
4.18 Insurance.
(a) Section 4.18 of the Disclosure Schedule accurately sets forth,
with respect to each insurance policy maintained by or at the expense of, or for
the direct or indirect benefit of, the Company:
(i) the name of the insurance carrier that issued such
policy and the policy number of such policy;
(ii) whether such policy is a "claims made" or an
"occurrences" policy;
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(iii) a description of the coverage provided by such
policy and the material terms and provisions of
such policy (including all applicable coverage
limits, deductible amounts and co-insurance
arrangements); and
(iv) the annual premium payable with respect to such
policy, and the cash value (if any) of such policy.
4.19 Related Party Transactions.
(a) No Related Party has, and no Related Party has at any time since
January 1, 1999, had, any material direct or indirect interest of any nature in
any asset used in or otherwise relating to the business of the Company;
(b) no Related Party is, or has at any time since January 1, 1999,
has been, indebted to the Company;
(c) since January 1, 1999, no Related Party has entered into, or has
had any direct or indirect financial interest in, any Contract, transaction or
business dealing of any nature involving the Company and no such Contract,
transaction or business dealing of any nature is necessary to operate the
business of the Company as it is currently conducted;
(d) to the Company's Knowledge, no Related Party is competing, or
has at any time since January 1, 1999, competed, directly or indirectly, with
the Company in any market served by the Company;
(e) no Related Party has any claim or right against the Company; and
(f) to the Knowledge of the Company, no event has occurred, and no
condition or circumstance exists, that likely would (with or without notice or
lapse of time) directly or indirectly give rise to or serve as a basis for any
claim or right in favor of any Related Party against the Company.
4.20 Proceedings; Orders.
(a) To the Knowledge of the Company, there is no pending Proceeding,
and no Person has threatened to commence any Proceeding (i) that involves the
Company or that otherwise relates to or likely would affect the Company's
business or any of the assets owned or used by the Company (whether or not the
Company is named as a party thereto); or (ii) that challenges, or that may have
the effect of preventing, delaying, making illegal or otherwise interfering
with, any of the Transactions. To the Knowledge of the Company, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
likely would directly or indirectly give rise to or serve as a basis for the
commencement of any such Proceeding which could reasonably have a material
adverse effect on the Company.
(b) No Proceeding has ever been commenced by or against the Company,
and no Proceeding otherwise involving or relating to the Company has been
pending at any time.
(c) The Company has delivered to Acquiror or its counsel accurate
and complete copies of all pleadings, correspondence and other written materials
to which the Company has access that relate to the Proceedings identified in
Section 4.20 of the Disclosure Schedule.
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(d) To the Company's Knowledge, there is no Order to which the
Company, or any of the assets owned or used by the Company, is subject.
(e) To the Knowledge of the Company, no officer or employee of the
Company is subject to any Order that prohibits such officer or employee from
engaging in or continuing any conduct, activity or practice relating to the
Company's business.
(f) To the Knowledge of the Company, there is no Order that, or
proposed Order (other than any proposed Order that would be applicable generally
to the semiconductor industry) that, if issued or otherwise put into effect, (i)
likely would have an adverse effect on the Company's business, condition,
assets, liabilities, operations, financial performance, net income or prospects
(or on any aspect or portion thereof) or on the ability of the Company to comply
with or perform any covenant or obligation under this Agreement or any of the
other Transactional Agreements, or (ii) may have the effect of preventing,
delaying, making legal or otherwise interfering with any of the Transactions.
4.21 Non-Contravention; Consents. Neither the execution and delivery of
this Agreement or the other Transactional Agreements, nor the consummation or
performance of any of the Transactions, will directly or indirectly (with or
without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of the Company's Certificate of Incorporation or bylaws, or (ii)
any resolution adopted by the Company's stockholders, the Company's board of
directors or any committee of the Company's board of directors, if any;
(b) to the Knowledge of the Company, contravene, conflict with or
result in a violation of, or give any Governmental Body or other Person the
right to challenge any of the Transactions or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which the Company, or
any of the assets owned or used by the Company, is subject;
(c) cause the Company to become subject to, or to become liable for
the payment of, any Tax;
(d) cause any of the material assets owned or used by the Company to
be reassessed or revalued by any taxing authority or other Governmental Body;
(e) to the Knowledge of the Company, contravene, conflict with or
result in a violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or
modify, any Governmental Authorization that is held by the Company or any of its
employees or that otherwise relates to the Company's business or to any of the
assets owned or used by the Company;
(f) contravene, conflict with or result in a violation or breach of,
or result in a default under, any material provision of any of the Company
Contracts;
(g) give any Person the right to (i) declare a default or exercise
any remedy under any Company Contract, (ii) accelerate the maturity or
performance of any Company Contract, or (iii) cancel, terminate or modify any
Company Contract;
(h) give any Person the right to any payment by the Company or give
rise to any acceleration or change in the award, grant, vesting or determination
of options, warrants, rights, severance payments or other contingent obligations
of any nature whatsoever of the Company in favor of any
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Person, in any such case as a result of the change in control of the Company or
otherwise resulting from the Transactions; or
(i) result in the imposition or creation of any Encumbrance upon or
with respect to any asset owned or used by the Company.
Except as set forth in Section 4.21 of the Disclosure Schedule, and as otherwise
contemplated by this Agreement, the Company will not be required to make any
filing with or give any notice to, or obtain any Consent from, other than the
Company's stockholders, any Person in connection with the execution and delivery
of this Agreement and the other Transactional Agreements or the consummation or
performance of any of the Transactions. As of the date hereof, all such filings,
notices and Consents have been duly made, given or obtained and are in full
force and effect, other than those which by their nature are required to be
made, given or obtained after the execution of this Agreement, all of which
shall be made, given or obtained within the time required therefor.
4.22 Brokers. The Company has not agreed or become obligated to pay, or
taken any action that likely would result in any Person claiming to be entitled
to receive, any brokerage commission, finder's fee or similar commission or fee
in connection with any of the Transactions.
4.23 Tax Treatment. Neither the Company nor any of its affiliates has
taken any action or knows of any fact, agreement, plan or other circumstance
that could pose a material risk to the status of the Merger as a reorganization
under the provisions of Section 368(a) of the Code.
4.24 Full Disclosure.
(a) Neither this Agreement (including all Schedules and Exhibits
hereto), nor any of the Transactional Agreements, contains any untrue statement
of material fact or omits to state any fact necessary to make any of the
representations, warranties or statements contained therein on behalf of the
Company or any of the Stockholders not misleading.
(b) As of the date of this Agreement, the Company has provided
Acquiror and Acquiror's Representatives with full and complete access to all of
the Company's records and other documents and data requested by them.
(c) There is no fact within the Knowledge of Company (other than
publicly known facts relating exclusively to political or economic matters of
general applicability or related to the semiconductor industry) that (i) may
have a material adverse effect on the Company's business, condition, assets,
liabilities, operation, financial performance, net income (in or any aspect or
portion thereof) or on the ability of the Company to comply with or perform any
covenant or obligation under this Agreement or any of the other Transactional
Agreements, or (ii) may have the effect of preventing, delaying, making illegal
or otherwise interfering with any of the Transactions.
(d) All of the information set forth in the Disclosure Schedule, and
all other information regarding the Company and its business, condition, assets,
liabilities, operation, financial performance, net income that has been
furnished to Acquiror or any of its Representatives by or on behalf of Company
or any of the Company's Representatives, is accurate and complete in all
material respects.
4.25 Powers of Attorney. The Company has not given a power of attorney
to any Person.
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4.26 Voting Arrangements. There are no outstanding stockholder
agreements, voting trusts, proxies or other arrangements or understandings
relating to the voting of any shares of the capital stock of the Company.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB
Acquiror and Merger Sub represent and warrant to the Company as follows:
5.1 Due Organization; Good Standing; Authority; Binding Nature of
Agreements.
(a) Acquiror is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and has all necessary
corporate power and authority to enter into and perform its obligations under
the Transactional Agreements to which it is a party. Merger Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all necessary corporate power and authority to enter
into and perform its obligations under the Transactional Agreements to which it
is a party. Acquiror has all necessary corporate power and authority to conduct
its business in the manner in which its business is currently being conducted
and in the manner in which its business is proposed to be conducted. Neither
Acquiror nor Merger Sub are in violation of any provision of their respective
Certificates of Incorporation.
(b) The execution, delivery and performance of each of the
Transactional Agreements to which it is a party have been duly authorized by all
necessary action on the part of each of Acquiror and Merger Sub and their
respective boards of directors and the sole stockholder of Merger Sub. The
approval of the stockholders of the Acquiror is not required for the issuance of
the Acquiror Common Stock in the Merger.
(c) Each of the Transactional Agreements to which it is a party
constitutes the legal, valid and binding obligation of Acquiror and Merger Sub,
enforceable against Acquiror and Merger Sub in accordance with its terms.
5.2 Capitalization; Ownership of Stock. As of March 31, 2000:
(a) The authorized capital stock of the Acquiror consists of Thirty
Million (30,000,0000) shares of Common Stock, $0.001 par value per share. The
outstanding capital of the Acquiror consists of (i) Twenty One Million Nine
Hundred Eighty Six Thousand Two Hundred Sixty One (21,986,261) shares of Common
Stock and (ii) options to purchase One Million Eight Hundred Ninety Three
Thousand Three Hundred Sixty Seven (1,893,367) shares of Common Stock.
5.3 Brokers. The Acquiror has not agreed or become obligated to pay, or
taken any action that likely would result in any Person claiming to be entitled
to receive, any brokerage commission, finder's fee or similar commission or fee
in connection with any of the Transactions.
5.4 Non-Contravention; Consents. Neither the execution and delivery of
this Agreement or the Transactional Agreements to which Acquiror or Merger Sub,
as the case may be, is a party, nor the consummation or performance of any of
the Transactions, will directly or indirectly (with or without notice or lapse
of time) contravene, conflict with or result in a violation of (i) any of the
provisions of Acquiror's or Merger Sub's respective certificate of incorporation
or bylaws, (ii) any resolution adopted by Acquiror's or Merger Sub's
stockholders, Acquiror's or Merger Sub's board of directors or any committee of
Acquiror's or Merger Sub's board of directors, or (iii) any Legal Requirement
applicable to Acquiror or Merger Sub or their respective Assets or Properties.
With the exception of the filing of the
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Certificate of Merger in the State of Delaware and any necessary filings
pursuant to federal and state securities laws or the rules of other regulatory
bodies, Acquiror and Merger Sub will not be required to make any filing with or
give any notice to, or to obtain any Consent from, any Person in connection with
the execution and delivery of this Agreement or the consummation or performance
of any of the Transactions.
5.5 Tax Treatment. Neither Acquiror nor any of its affiliates has taken
any action or knows of any fact, agreement, plan or other circumstance that
could pose a material risk to the status of the Merger as a reorganization under
the provisions of Section 368(a) of the Code.
5.6 SEC Documents. Since January 1, 2000, Acquiror has filed all reports
required to be filed by it with the SEC pursuant to the Securities Act and the
Exchange Act (all such reports filed since January 1, 2000 and amendments
thereto, collectively, the "Acquiror SEC Reports"). To the Acquiror's Knowledge,
none of the Acquiror SEC Reports, as of their respective dates (as amended
through the date hereof), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective filing dates, such Acquiror SEC
Reports and all Acquiror SEC Reports filed after the date hereof but before the
Closing complied with or will comply in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the SEC thereunder, as the case may be. Each of the financial
statements (including the related notes) included in the Acquiror SEC Reports
fairly presents the consolidated financial position of Acquiror and its
subsidiaries as of the date thereof, and the other related statements (including
the related notes) included therein fairly present the results of operations and
the changes in cash flows of Acquiror and its subsidiaries for the respective
periods set forth therein, all in conformity with GAAP consistently applied
during the periods involved, except as otherwise noted therein and subject, in
the case of the unaudited interim financial statements, to (i) normal year end
adjustments which would not in the aggregate be material in amount or effect and
(ii) the permitted exclusion of all footnotes that would otherwise be required
by GAAP. Except as reflected or reserved against in the Acquiror's financial
statements, Acquiror has no material liabilities, except for liabilities and
obligations (i) incurred in the ordinary course of business since the date of
the most recent financial statements of the Acquiror or (ii) that would not be
required to be reflected or reserved against in the balance sheet of Acquiror
prepared in accordance with GAAP. Acquiror has filed all Acquiror SEC Reports
required to be filed by it under the Exchange Act and the Securities Act in a
timely manner.
5.7 Ownership of Merger Sub; No Prior Activities. As of the date hereof
and the Effective Time, except for obligations or liabilities incurred in
connection with its incorporation or organization and the transactions
contemplated by this Agreement and except for this Agreement and any other
agreements or arrangements contemplated by this Agreement, Merger Sub has not
and will not have incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or engaged in any business activities
of any type or kind whatsoever or entered into any agreements or arrangements
with any Person.
ARTICLE 6
CONDUCT OF BUSINESS PRIOR TO EFFECTIVE TIME
6.1 Conduct of Business of the Company. During the period commencing on
the date hereof and continuing until the Effective Time, the Company agrees that
the Company, except as otherwise expressly contemplated by this Agreement or
agreed to in writing by the Acquiror:
(a) will carry on its business only in the ordinary course and
consistent with past practice;
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(b) will not declare or pay any dividend on or make any other
distribution (however characterized) in respect of shares of its capital stock;
(c) will not, directly or indirectly, redeem or repurchase, or agree
to redeem or repurchase, any shares of its capital stock except from employees;
(d) will not amend its Certificate of Incorporation or By-Laws;
(e) will not issue, or agree to issue, any shares of its capital
stock, or any options, warrants or other rights to acquire shares of its capital
stock, or any securities convertible into or exchangeable for shares of its
capital stock;
(f) will not combine, split or otherwise reclassify any shares of
its capital stock;
(g) will not form a subsidiary;
(h) will use its commercially reasonable best efforts to preserve
intact its present business organization, keep available the services of its
officers and key employees and preserve its relationships with clients and
others having business dealings with it to the end that its goodwill and ongoing
business shall not be materially impaired at the Effective Time;
(i) will not (i) make any capital expenditures individually in
excess of $5,000 or in the aggregate in excess of $25,000, (ii) enter into any
license, distribution, OEM, reseller, joint venture or other similar agreement,
(iii) enter into or terminate any lease of, or purchase or sell, any real
property, (iv) enter into any leases of personal property involving individually
in excess of $5,000 annually or in the aggregate in excess of $25,000 annually,
(v) incur or guarantee any additional indebtedness for borrowed money except for
that certain Multiple Advance Transaction Note executed by the Company in favor
of the Acquiror and the Security Agreement by and between the Acquiror and the
Company (the "Acquiror's Loan"), (vi) create or permit to become effective any
security interest, mortgage, lien, charge or other encumbrance on its properties
or assets except for the Acquiror's Loan, or (vii) enter into any agreement to
do any of the foregoing;
(j) other than the grant of options to purchase Two Million Four
Hundred Thirty Eight Thousand One Hundred Eighty Eight (2,438,188) shares of
Common Stock, will not adopt or amend any Employee Benefit Plan for the benefit
of its employees, or increase the salary or other compensation (including,
without limitation, bonuses or severance compensation) payable or to become
payable to its employees or accelerate, amend or change the period of
exercisability or the vesting schedule of options granted under any stock option
plan or agreements except as specifically required by the terms of such plans or
agreements, or enter into any agreement to do any of the foregoing;
(k) will not accelerate receivables or delay payables;
(l) will promptly advise the Acquiror of the commencement of, or
threat of (to the extent that such threat comes to the knowledge of the Company)
any claim, action, suit, proceeding or investigation against, relating to or
involving the Company or any of its directors, officers, employees, agents or
consultants in connection with their businesses or the transactions contemplated
hereby that could reasonably be expected to have a material adverse effect;
(m) will use its commercially reasonable efforts to maintain in full
force and effect all insurance policies maintained by the Company on the date
hereof;
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(n) will not enter into any agreement to dissolve, merge,
consolidate or, except in the ordinary course, sell any material assets of the
Company, or acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership or
other business organization or division, or otherwise acquire or agree to
acquire any assets in excess of $5,000 in the aggregate; and
(o) will not change the Company's method of accounting and will not
make any Tax elections that would adversely affect Acquiror or its subsidiaries
without the consent of Acquiror.
6.2 Other Negotiations. Neither the Company nor any of the Stockholders
will (nor will they permit any of their respective officers, directors,
employees, agents, partners and affiliates on their behalf to) take any action
to solicit, initiate, seek, encourage or support any inquiry, proposal or offer
from or participate in any negotiations with, any corporation, partnership,
person or other entity or group (other than Acquiror) regarding any acquisition
of the Company, any merger or consolidation with or involving the Company, or
any acquisition of any material portion of the stock or assets of the Company,
or any equity or debt financing of the Company or any material license of
Proprietary Assets (any of the foregoing being referred to in this Agreement as
an "Acquisition Transaction") or enter into an agreement concerning any
Acquisition Transaction with any party other than Acquiror. If between the date
of this Agreement and the termination of this Agreement pursuant to Article 10,
the Company receives from a third party any offer to negotiate or consummate an
Acquisition Transaction, the Company shall (i) notify Acquiror immediately
(orally and in writing) of such offer, including the identity of such party and
the terms of any proposal therein, and (ii) notify such third party of the
Company's obligations under this Agreement.
ARTICLE 7
ADDITIONAL AGREEMENTS AND ACQUIROR
7.1 Access to Properties and Records. The Company and the Acquiror will
provide each other and their respective accountants, counsel and other
authorized advisors, with reasonable access, during business hours, to their
premises and properties and their books and records (including, without
limitation, contracts, leases, insurance policies, litigation files, minute
books, accounts, working papers and tax returns filed and in preparation) and
will cause its officers to furnish to each other and their respective authorized
advisors such additional financial, tax and operating data and other information
pertaining to their respective businesses as the Company or the Acquiror, as the
case may be, shall from time to time reasonably request. All of such data and
information shall be kept confidential by Acquiror and the Company unless and
until the Merger is consummated.
7.2 Transfer of Shares. The Stockholders agree that they (i) shall not
dispose of or in any way encumber their shares prior to the consummation of the
transactions contemplated hereby, (ii) shall use their best efforts to cause,
and take no action inconsistent with, the approval and consummation of said
transactions and (iii) as soon as practicable after the Closing shall surrender
the stock certificates representing all shares of Company Stock owned by them,
duly endorsed for transfer.
7.3 Section 16. Assuming that the Company delivers to Acquiror the
Section 16 Information (as defined below) in a timely fashion, the Board of
Directors of the Acquiror, or a committee of two or more "non-employee
directors" thereof (as such item is defined for purposes of Rule 16b-3 under the
Exchange Act), shall adopt resolutions prior to the consummation of the Merger,
providing that the receipt by the Company Insiders (as defined below) of
Acquiror Common Stock in exchange for Company Common Stock, and of options and
warrants for Acquiror Common Stock upon conversion of outstanding options and
warrants of the Company, in each case pursuant to the transactions contemplated
hereby and to the extent such securities are listed in the Section 16
Information, are intended to be exempt
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from liability pursuant to Section 16(b) under the Exchange Act. Such
resolutions shall comply with the approval conditions of Rule 16b-3 under the
Exchange Act for purposes of such Section 16(b) exemption, including, but not
limited to, specifying the name of the Company Insiders, the number of equity
securities to be acquired or disposed of for each such person, the material
terms of any derivative securities, and that the approval is intended to make
the receipt of such securities exempt pursuant to Rule 16b-3(d). "Section 16
Information" shall mean information accurate in all respects regarding the
Company Insiders, the number of Company Common Stock (or options or warrants
therefor, the "Options") held by each such Company Insider and expected to be
exchanged for Company Common Stock in the Merger, and the number and description
of the Options held by each such Company Insider and expected to be converted
into options for Acquiror Common Stock in connection with the Merger. "Company
Insiders" shall mean those officers, directors and 10% stockholders of the
Company who will be subject to the reporting requirements of Section 16(b) of
the Exchange Act with respect to the Acquiror and who are listed in the Section
16 Information.
7.4 Reasonable Efforts; etc. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use his/its reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including obtaining any consents, authorizations, exemptions and approvals from,
and making all filings with, any governmental or regulatory authority, agency or
body which are necessary in connection with the transactions contemplated by
this Agreement.
7.5 Obligations of the Company. From and after the Effective Time,
Acquiror will cause the Surviving Corporation to fulfill and honor in all
respects the obligations of the Company pursuant to any indemnification
agreements between the Company and its directors and officers existing prior to
the date hereof (copies of which have been provided to Acquiror).
(a) Acquiror shall (i) assume, as of the Effective Time, and shall
perform, for a period of three (3) years from and after the Effective Time, all
obligations of the Company under Article VI of the Company Restated Certificate,
as amended, and (ii) shall pay all amounts that become due and payable under
such provision (or would become due under such provision if such provision had
remained in force during such three-year period).
(b) This Section 7.5 shall survive the consummation of the Merger,
is intended to benefit the Company, the Surviving Company and each indemnified
party, shall be binding, jointly and severally, on all successors and assigns of
the Surviving Corporation and Acquiror, and shall be enforceable by the
indemnified persons.
7.6 Control of Operations. Nothing contained in this Agreement shall
give Acquiror, directly or indirectly, the right to convert or direct the
operations of the Company prior to the Effective Time. Prior to the Effective
Time, the Company shall exercise, consistent with the terms and conditions of
this Agreement, complete control and supervision over its operations.
7.7 Employee Offers. The Company hereby consents to the Acquiror (or an
affiliate designated by the Acquiror) extending offers of employment to the
employees listed on Schedule 7.7 (the "Key Employees"), such offers to be
contingent upon the Closing. The Company will use its best reasonable efforts to
retain the Key Employees as employees through the Closing Date and assist
Acquiror in securing the employment, commencing on the Closing Date, of the Key
Employees. The Company hereby waives, with respect to the employment by
Acquiror, any claims or rights the Company may have against the Acquiror with
respect to such offer of employment.
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7.8 Registration Statement on Form S-8. Acquiror shall file a
registration statement on Form S-8 for the shares of Acquiror Common Stock
issuable with respect to assumed Company Options to the extent the shares of
Acquiror Common Stock issuable upon exercise of such Company Options qualify for
registration on Form S-8 as soon as practicable following the Effective Time.
7.9 Registration Statement on Form S-3. Subject to a Shelf Registration
Agreement (as defined below), Acquiror will, no later than the later of (i)
forty-five (45) days following the Closing or (ii) ten (10) days after
Acquiror's next quarterly filing following the Closing, file a registration
statement with the SEC for the resale of shares of Common Stock (the
"Registrable Securities") held by the individuals listed on Schedule 7.9 (the
"Registrable Holders"); and Acquiror will use its best efforts to cause such
registration statement to be declared effective on or before thirty (30) days
following the filing or as soon thereafter as is practicable. Acquiror will use
its best efforts to maintain the effectiveness of such registration statement
(or any appropriate replacement registration statement) until the earlier of the
date on which all of the Registrable Securities are sold and ninety (90) days
following the effective date of the Shelf Registration. This filing is subject
to a Shelf Registration Agreement in substantially the form set forth in Exhibit
E that Acquiror will enter into with the Registrable Holders; provided, however,
that only Registrable Holders who enter into and comply with the Shelf
Registration Agreement (and their permitted transferees under such agreement)
will be entitled to sell shares of Acquiror Common Stock under such registration
statement.
7.10 Voting Agreement; Proxies. The Company shall use its best efforts,
on behalf of Acquiror, and pursuant to the request of Acquiror, to cause certain
stockholders of the Company who collectively hold more than eighty-five percent
(85%) of the outstanding Company Stock to execute and deliver to Acquiror a
Voting Agreement substantially in the form of Exhibit F concurrently with the
execution of this Agreement and in any event prior to the time that the
Information Statement is mailed to the stockholders of the Company.
7.11 Stock Options and Warrants.
(a) As of the Effective Time, any Company Stock Options or warrants
exercisable for Company Stock, which are outstanding as of the date hereof and
have not expired as of the Effective Time, shall be assumed by Acquiror and
converted into options or warrants, as the case may be, such that each Company
Stock Option shall be converted into an option to purchase such shares of
Acquiror Stock as the holder thereof would have received in the Merger had such
option been exercised prior to the Effective Time, at an aggregate purchase
price equal to the aggregate purchase price applicable prior to such conversion;
provided, however, that in the case of any Company Stock Option to which Section
421 of the Code applies by reason of its qualification under Section 422 of the
Code, the conversion formula shall be adjusted, if necessary, to comply with
Section 424(a) of the Code to the effect that the number of shares shall be
rounded down to the nearest whole share and the exercise price shall be rounded
up to the nearest cent. Except as provided above, the converted stock options or
warrants, as the case may be, shall be subject to the same terms and conditions
(including, without limitation, expiration date, vesting, acceleration and
exercise provisions) as were applicable to the Company Stock Options or
warrants, as the case may be, immediately prior to the Effective Time. It is the
intention of the parties that the options so assumed by Acquiror qualify at the
Effective Time as incentive stock options as defined in Section 422 of the Code
to the extent such options qualified as incentive stock options prior to the
Effective Time. Within ten (10) business days after the Effective Time, Acquiror
will issue to each person who immediately prior to the Effective Time was a
holder of an outstanding option under the Company Stock Option Plan a document
in form and substance satisfactory to the Company evidencing the foregoing
assumption of such option by Acquiror.
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(b) No such option or warrant shall be converted into a stock option
or warrant to purchase a partial share of Acquiror Stock.
(c) The consummation of the Merger shall not be treated as a
termination of employment for purposes of such stock options or warrants.
(d) Acquiror shall reserve a number of shares of Acquiror Stock
sufficient to cover the issuance of Acquiror Stock pursuant to the exercise of
Company Stock Options or warrants assumed pursuant to this Section 7.11.
7.12 Certain Employee Benefit Matters. Each employee of the Company at
the Effective Time will be provided with employee benefits by the Surviving
Corporation or Acquiror which in the aggregate are no less favorable to such
employee than those provided from time to time by Acquiror to similarly situated
employees. From and after the Effective Time, Acquiror shall grant Company
employees as of the Effective Time credit for all service (to the same extent as
service with Acquiror is taken into account with respect to similarly situated
employees of Acquiror) with the Company prior to the Effective Time for (i)
eligibility and vesting purposes and (ii) for purposes of vacation accrual after
the Effective Time as if such service with the Company was service with
Acquiror. Acquiror and the Company agree that where applicable with respect to
any medical or dental benefit plan of Acquiror, Acquiror shall provide that any
covered expenses incurred on or before the Effective Time by a Company employee
or a Company employee's covered dependents shall be taken into account for
purposes of satisfying applicable deductible, coinsurance and maximum
out-of-pocket provisions after the Effective Time to the same extent as such
expenses are taken into account for the benefit of similarly situated employees
of Acquiror.
7.13 Expenses. All costs and expenses incurred in connection with the
Transactional Agreements and the transactions contemplated hereby and thereby
shall be paid by the party incurring such expenses, provided that the amount by
which the aggregate legal, accounting and investment banking fees, if any,
incurred by the Company exceeds One Hundred Thousand Dollars ($100,000) shall be
assumed and paid by the Stockholders.
7.14 Public Announcements. Each of the Company and Acquiror acknowledges
the importance of appropriate disclosures in positioning the relationship
between the two companies to the investment community, the press, customers and
others. Each of the Company and Acquiror agree to make no press releases or
other public announcements regarding this Agreement without the other party's
consent, except to the extent required by applicable law.
7.15 Additional Agreements. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and/or directors of Acquiror and the Company (or
of the Surviving Corporation on behalf of the Company) shall take all such
necessary action.
ARTICLE 8
CONDITIONS TO CONSUMMATION OF THE MERGER
8.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to consummate the Merger and to take the
other actions required to be taken by it at the Closing shall be subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by both the Company and Acquiror, in whole or in
part):
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(a) All necessary approvals under federal and state securities laws
and other authorizations relating to the issuance of the Acquiror Stock to be
issued to Company stockholders in connection with the Merger shall have been
received.
(b) This Agreement, the Merger and the other actions contemplated
hereby shall have been approved by the requisite vote of the stockholders of the
Company under applicable law.
(c) The Company and Acquiror shall have delivered to each other a
certificate regarding the calculation of the Exchange Ratio and the number of
share of Acquiror Stock to be received by each holder of Company Stock.
(d) Acquiror's Board of Directors shall have received the written
opinion of Alliant Partners, financial advisor to Acquiror, dated the date of
this Agreement, to the effect that the Exchange Ratio is fair to the Acquiror
from a financial point of view.
8.2 Additional Conditions to Acquiror's and Merger Sub's Obligation to
Consummate the Merger. Acquiror's and Merger Sub's obligations to consummate the
Merger and to take the other actions required to be taken by Acquiror and Merger
Sub at the Closing is subject to the satisfaction of each of the following
conditions (any of which may be waived by Acquiror, in whole or in part):
(a) Acquiror's Board of Directors shall have ratified or approved
the execution of this Agreement and the other Transactional Agreements by
Acquiror and shall have approved the consummation of the Transactions.
(b) In addition to the documents required to be received under this
Section 8.2, Acquiror shall also have received the following documents:
(i) the opinion letter from Brobeck, Phleger & Harrison,
counsel to the Company, dated the date hereof, in the form
attached as Exhibit G;
(ii) a certificate, duly executed by the Company, certifying
that (A) each of the representations and warranties made
by the Company and the Stockholders in this Agreement is
accurate in all respects as of the date hereof and (except
for any such representations and warranties which are made
as of and relate solely to a particular date) as of the
Closing Date with the same force and effect as though made
on and as of the Closing Date, (B) each of the covenants
and obligations that the Company are required to have
complied with or performed pursuant to this Agreement or
any of the other Transactional Agreements at or prior to
the Closing has been duly complied with and performed in
all respects, and (C) each of the conditions set forth in
Section 8.2 has been satisfied in all respects;
(iii) such other documents as Acquiror may reasonably request in
good faith for the purpose of otherwise facilitating the
consummation or performance of any of the Transactions;
(iv) copies of resolutions of the Company, certified by the
Secretary of the Company, authorizing the execution,
delivery and performance of the Transactional Agreements
and the Transactions, and copies of resolutions of the
meeting of stockholders of the Company (or written consent
in lieu thereof), certified by the Secretary of the
Company,
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authorizing the execution, delivery and performance of the
Transactional Agreements and the Transactions; and
(v) executed amendments to the option agreement of Jamshid
Basiji and Jack Regula, and such amendments shall have
terms that are consistent with the terms of Schedule 8.2.
(c) Each Person (other than Acquiror and Merger Sub) shall have
executed and delivered all Transactional Agreements to which it is a party.
(d) The holders of no more than one percent (1%) of the outstanding
shares of Company Stock shall have demanded and not lost or withdrawn, or shall
be eligible to demand, dissenters' rights.
(e) The holders of Series C Preferred Stock and Series C-1 Preferred
Stock shall have converted their Series C Preferred Stock and Series C-1
Preferred Stock into Company Common Stock as provided in Article IV Section B.5
of the Company's Certificate of Incorporation.
(f) The New Options shall have been granted pursuant to Section 3.2.
(g) Acquiror shall have received acceptances from the Key Employees
to the employee offers pursuant to Section 7.7.
8.3 Additional Conditions to the Company's Obligation to Consummate the
Merger. The Company's obligation to consummate the Merger and to take the other
actions required to be taken by the Company at the Closing shall be subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by the Company, in whole or in part):
(a) The Company shall have received the following documents:
(i) the opinion letter from Morrison & Foerster LLP, counsel
to Acquiror and Merger Sub, dated the date hereof, in the
form attached as Exhibit H;
(ii) a certificate, duly executed by Acquiror, certifying that
(A) each of the representations and warranties made by
Acquiror in this Agreement is accurate in all respects as
of the date hereof and (except for any such
representations and warranties which are made as of and
relate solely to a particular date) as of the Closing Date
with the same force and effect as though made on and as of
the Closing Date, (B) each of the covenants and
obligations that Acquiror is required to have complied
with or performed pursuant to this Agreement or any of the
other Transactional Agreements at or prior to the Closing
has been duly complied with and performed in all respects,
and (C) each of the conditions set forth in Section 8.3
has been satisfied in all respects; and
(iii) such other documents as the Company may reasonably request
in good faith for the purpose of otherwise facilitating
the consummation or performance of any of the
Transactions.
(b) Subject to the terms and conditions of this Agreement, each of
Acquiror and Merger Sub shall have executed and delivered all Transactional
Agreements to which it is a party.
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ARTICLE 9
ESCROW AND INDEMNIFICATION
9.1 Indemnification.
(a) By the Company. From and after the Effective Time and subject to
the limitations contained in Sections 9.2 and 9.3, the Stockholders will,
severally and pro rata, in accordance with and in no event more than their Pro
Rata Portion, indemnify and hold Acquiror harmless against any loss, expense,
liability or other damage, including reasonable attorneys' fees and expenses to
be paid by the Stockholders pursuant to Section 7.13, to the extent of the
amount of such loss, expense, liability or other damage (collectively,
"Damages") that Acquiror has incurred by reason of the breach by the Company of
any representation, warranty, covenant or agreement of the Company contained in
this Agreement that occurs during the Escrow Period. Such indemnification shall
be Acquiror's sole and exclusive remedy for any such breach of this Agreement by
the Company, provided, however, that nothing in this Agreement shall be
construed as limiting the several liability of any Stockholder for any Damages
relating to such Stockholder's willful misconduct in connection with the
representations and warranties set forth herein and the transactions
contemplated under this Agreement or fraud.
(b) By Acquiror. From and after the Effective Time and subject to
the limitations contained in Section 9.2, Acquiror will indemnify and hold the
Stockholders harmless against any Damage that the Stockholders have incurred by
reason of the breach by Acquiror or Merger Sub of any representation, warranty,
covenant or agreement of Acquiror or Merger Sub contained in this Agreement that
occurs during the Escrow Period. A release of Escrow Shares in the amount of
such Damages (and corresponding offset against any Damages otherwise assertable
by Acquiror against Escrow Shares) shall be the Stockholders' sole and exclusive
remedy for any such breach by Acquiror or Merger Sub, provided, however, that
nothing in this Agreement shall be construed as limiting the liability of the
Acquiror for any Damages relating to Acquiror's willful misconduct in connection
with the representations and warranties set forth herein and the transactions
contemplated under this Agreement or fraud.
9.2 Escrow Fund. As security for the indemnities in Section 9.1, the
Escrow Shares shall be deposited with the Escrow Agent within ten (10) days of
the Closing, such deposit to be governed by the terms set forth in this Article
9 and in the Escrow Agreement. Notwithstanding the foregoing, the
indemnification obligations of each of Acquiror, Merger Sub and the Stockholders
pursuant to this Article 9 shall be limited to the pro rata amount of the assets
deposited and present in the Escrow Fund and the sole recourse of Acquiror,
Merger Sub and the Stockholders shall be to make claims against the Escrow Fund
in accordance with the terms of the Escrow Agreement or to make claims for the
reduction of the Escrow Fund, as the case may be (except for cases involving
willful misconduct or fraud or Damages).
9.3 Damage Threshold.
(a) Acquiror's Damages. Notwithstanding the foregoing, the
Stockholders shall have no liability under Section 9.1 and Acquiror may not
receive any shares from the Escrow Fund unless and until an Officer's
Certificate or Certificates for an aggregate amount of Damages in excess of
$100,000 has been delivered to the Stockholders' Agent and to the Escrow Agent;
provided, however, that after an Officer's Certificate or Certificates for an
aggregate of $100,000 in Damages has been delivered, Acquiror shall be entitled
to receive Escrow Shares equal in value to the full amount of Damages identified
in such Officer's Certificate or Certificates.
(b) Stockholders' Damages. Notwithstanding the foregoing, Acquiror
shall have no liability under Section 9.1 and the Escrow Fund shall not be
reduced unless and until a Stockholders'
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Agent Certificate or Certificates for an aggregate amount of Damages in excess
of $100,000 has been delivered to the Acquiror and to the Escrow Agent;
provided, however, that after a Stockholders' Agent Certificate or Certificates
for an aggregate of $100,000 in Damages has been delivered, the Escrow Fund
shall be reduced in the full amount of Damages identified in such Stockholders'
Agent Certificate or Certificates.
9.4 Escrow Periods. The Escrow Fund shall commence on the date hereof
and terminate on the first anniversary of the Closing (the "Escrow Period"),
provided, however, that the number of Escrow Shares, which, in the reasonable
judgment of Acquiror, subject to the objection of the Stockholders' Agent and
the subsequent resolution of the matter in the manner provided in Section 9.8,
are necessary to satisfy any unsatisfied claims specified in any Officer's
Certificate theretofore delivered to the Escrow Agent and the Stockholders'
Agent prior to termination of the Escrow Period with respect to Damages incurred
or litigation pending prior to expiration of the Escrow Period, shall remain in
the Escrow Fund until such claims have been finally resolved, or, if earlier,
until released in accordance with Section 9.1 above and 9.5(b) below.
9.5 Claims Upon Escrow Fund.
(a) Claims by Acquiror. Upon receipt by the Escrow Agent on or
before the last day of the Escrow Period of a certificate signed by any
appropriately authorized officer of Acquiror (an "Officer's Certificate"):
(i) Stating the aggregate amount of Acquiror's Damages or an
estimate thereof and that the threshold amount referred to
in Section 9.3 has been met, in each case to the extent
known or determinable at such time, and
(ii) Specifying in reasonable detail the individual items of
such Damages included in the amount so stated, the date
each such item was paid or properly accrued or arose, and
the nature of the misrepresentation, breach or claim to
which such item is related, and
(iii) The Escrow Agent shall, subject to the provisions of
Sections 9.3, 9.7 and 9.8 hereof, deliver to Acquiror out
of the Escrow Fund, as promptly as practicable, Escrow
Shares having a value equal to such Damages all in
accordance with the Escrow Agreement and Section 9.6
below. Amounts paid or distributed from the Escrow Fund
shall be paid or distributed pro rata among the Holders
(as defined in the Escrow Agreement) based upon their
respective percentage interests therein at the time.
Notwithstanding anything herein to the contrary, no Escrow
Shares shall be distributed to Acquiror until the first
anniversary of the Closing and after giving effect to any
offsets due pursuant to Section 9.1(b).
(b) Claims by Stockholders. Upon receipt by the Escrow Agent on or
before the last day of the Escrow Period of a certificate signed by the
Stockholders' Agent (a "Stockholders' Agent Certificate"):
(i) Stating the aggregate amount of the Stockholders' Damages
or an estimate thereof, in each case to the extent known
or determinable at such time, and
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(ii) Specifying in reasonable detail the individual items of
such Damages included in the amount so stated, the date
each such item was paid or properly accrued or arose, and
the nature of the misrepresentation, breach or claim to
which such item is related, the amount available in the
Escrow Fund shall be reduced by the amount of such
Damages, and the Escrow Agent shall release from the
Escrow Fund to the Stockholders all or a portion of the
Escrow Shares which have a value equal to the amount of
such Damages. The amount by which the Escrow Fund is
reduced shall be distributed pro rata among the
Stockholders based upon their respective percentage
interests therein at the time.
9.6 Valuation. For the purpose of compensating Acquiror or the
Stockholders for their respective Damages pursuant to this Agreement, the value
per share of the Escrow Shares shall be equal to $30.00. In determining the
amount of any indemnity, there shall be taken into account any insurance
proceeds or other similar recovery or offset realized, directly or indirectly.
9.7 Objections to Claims.
(a) At the time of delivery of any Officer's Certificate to the
Escrow Agent, a duplicate copy of such Officer's Certificate shall be delivered
to the Stockholders' Agent and for a period of thirty (30) days after such
delivery, the Escrow Agent shall make no delivery of Escrow Shares pursuant to
Section 9.5 unless the Escrow Agent shall have received written authorization
from the Stockholders' Agent to make such delivery. After the expiration of such
thirty (30) day period, the Escrow Agent shall make delivery of the Escrow
Shares in the Escrow Fund in accordance with Section 9.5, provided that no such
delivery may be made if the Stockholders' Agent shall object in a written
statement to the claim made in the Officer's Certificate, and such statement
shall have been delivered to the Escrow Agent and to Acquiror prior to the
expiration of such thirty (30) day period.
(b) At the time of delivery of any Stockholders' Agent Certificate
to the Escrow Agent, a duplicate copy of such Stockholders' Agent Certificate
shall be delivered to the Acquiror and for a period of thirty (30) days after
such delivery, the Escrow Agent shall not deliver any Escrow Shares to Acquiror
for any Damages incurred by Acquiror to the extent of the claim set forth in
such Stockholders' Agent Certificate and shall not release any Escrow Shares to
the Stockholders, unless the Escrow Agent shall have received written
authorization from Acquiror to deliver or release the Escrow Shares to the
Stockholders. After the expiration of such thirty (30) day period, the Escrow
Agent shall deliver such Escrow Shares to Acquiror or Stockholders, as
applicable, provided that no delivery or release may be made if Acquiror shall
object in a written statement to the claim made in the Stockholders' Agent
Certificate, and such statement shall have been delivered to the Escrow Agent
and to the Stockholders' Agent prior to the expiration of such thirty (30) day
period.
9.8 Resolution of Conflicts.
(a) In case the Stockholders' Agent or Acquiror, as applicable shall
so object in writing to any claim or claims made in any Acquiror's Officer's
Certificate or Stockholders' Agent Certificate, the non-objecting party shall
have thirty (30) days to respond in a written statement to the objection. If
after such thirty (30) day period there remains a dispute as to any claims, the
Stockholders' Agent and Acquiror shall attempt in good faith for thirty (30)
days to agree upon the rights of the respective parties with respect to each of
such claims. If the Stockholders' Agent and Acquiror should so agree, a
memorandum setting forth such agreement shall be prepared and signed by both
parties and shall be furnished to the Escrow Agent. The Escrow Agent shall be
entitled to rely on any such memorandum
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and shall distribute the Escrow Shares from the Escrow Fund in accordance with
the terms of the memorandum.
(b) If no such agreement can be reached after good faith
negotiation, either Acquiror or the Stockholders' Agent may, by written notice
to the other, demand arbitration of the matter unless the amount of the damage
or loss is at issue in pending litigation with a third party, in which event
arbitration shall not be commenced until such amount is ascertained or both
parties agree to arbitration; and in either such event the matter shall be
settled by arbitration conducted by three (3) arbitrators. Within fifteen (15)
days after such written notice is sent, Acquiror (on the one hand) and the
Stockholders' Agent (on the other hand) shall each select one arbitrator, and
the two arbitrators so selected shall select a third arbitrator. The decision of
the arbitrators as to the validity and amount of any claim in such Officer's
Certificate or Stockholders' Agent Certificate shall be binding and conclusive
upon the parties to this Agreement, and notwithstanding anything in Sections 9.1
through 9.5, the Escrow Agent shall be entitled to act in accordance with such
decision and make or withhold payments out of the Escrow Fund in accordance with
such decision.
(c) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Santa Clara County, California under the commercial rules then in effect of the
American Arbitration Association. The non-prevailing party to an arbitration
shall pay its own expenses, the fees of each arbitrator, the administrative fee
of the American Arbitration Association, and the expenses, including, without
limitation, the reasonable attorneys' fees and costs, incurred by the prevailing
party to the arbitration.
9.9 Stockholders' Agent.
(a) Jack Regula shall be constituted and appointed as agent (the
"Stockholders' Agent") for and on behalf of the Stockholders to give and receive
notices and communications, to authorize delivery to Acquiror of the Escrow
Shares or other property from the Escrow Fund in satisfaction of claims by
Acquiror, to object to such deliveries, to agree to, negotiate, enter into
settlements and compromises of, and demand arbitration and comply with orders of
courts and awards of arbitrators with respect to such claims, and to take all
actions necessary or appropriate in the judgment of the Stockholders' Agent for
the accomplishment of the foregoing. Such agency may be changed by the holders
of a majority in interest of the Escrow Shares from time to time upon not less
than ten (10) days' prior written notice to Acquiror. No bond shall be required
of the Stockholders' Agent, and the Stockholders' Agent shall receive no
compensation for services. Notices or communications to or from the
Stockholders' Agent shall constitute notice to or from each of the Stockholders.
In the event that any claim, agreement, negotiation, settlement, compromise or
demand for arbitration shall relate solely to the Stockholders of a specific
class or series of Escrow Shares, then the Stockholders' Agent shall act with
respect to such claim, agreement, negotiation, settlement, compromise or demand
for arbitration in accordance with the instructions of the Stockholders of a
majority of shares of such class or series of Escrow Shares.
(b) The Stockholders' Agent shall not be liable for any act done or
omitted hereunder as Stockholders' Agent while acting in good faith and in the
exercise of reasonable judgment, and any act done or omitted pursuant to the
advice of counsel shall be conclusive evidence of such good faith. The
Stockholders shall severally and pro rata, in accordance with their Pro Rata
Portion, indemnify the Stockholders' Agent and hold him harmless against any
loss, liability or expense incurred without gross negligence or bad faith on the
part of the Stockholders' Agent and arising out of or in connection with the
acceptance or administration of his duties under this Agreement or the Escrow
Agreement, provided, that the Stockholders' Agent shall be reimbursed for
counsel fees and other out-of-pocket expenses incurred by such Stockholder Agent
in connection with the administration of his duties under
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this Agreement or the Escrow Agreement or the Escrow Agreement from the proceeds
of the sale of Escrow Shares by the Stockholder Agent. For such purpose, the
Stockholder Agent shall be authorized to direct the Escrow Agent to deliver or
cause to be delivered to the Stockholder Agent such number of Escrow Shares the
sale of which by the Stockholder Agent in ordinary open-market brokers
transactions is sufficient to cover such out-of-pocket costs.
(c) The Stockholders' Agent shall have reasonable access to
information about Company and Acquiror and the reasonable assistance of
Company's and Acquiror's officers and employees for purposes of performing its
duties and exercising its rights under this Article 9, provided that the
Stockholders' Agent shall treat confidentially and not disclose any nonpublic
information from or about Company or Acquiror to anyone (except on a need to
know basis to individuals who agree to treat such information confidentially).
9.10 Actions of the Stockholders' Agent. A decision, act, consent or
instruction of the Stockholders' Agent shall constitute a decision of all of the
Stockholders for whom shares of Acquiror Stock otherwise issuable to them are
deposited in the Escrow Fund and shall be final, binding and conclusive upon
each such Stockholder, and the Escrow Agent and Acquiror may rely upon any
decision, act, consent or instruction of the Stockholders' Agent as being the
decision, act, consent or instruction of each and every such Stockholder. The
Escrow Agent and Acquiror are hereby relieved from any liability to any person
for any acts done by them in accordance with such decision, act, consent or
instruction of the Stockholders' Agent.
9.11 Claims. In the event Acquiror becomes aware of a third-party claim
which Acquiror believes may result in a demand against the Escrow Fund, Acquiror
shall notify the Stockholders' Agent of such claim, and the Stockholders' Agent
and the Stockholders for whom shares of Acquiror Stock otherwise issuable to
them are deposited in the Escrow Fund shall be entitled, at their expense, to
participate in any defense of such claim. Acquiror shall have the right in its
sole discretion to settle any such claim; provided, however, that Acquiror may
not effect the settlement of any such claim without the consent of the
Stockholders' Agent, which consent shall not be unreasonably withheld. In the
event that the Stockholders' Agent has consented to any such settlement, the
Stockholders' Agent shall have no power or authority to object to the amount of
any claim by Acquiror against the Escrow Fund for indemnity with respect to such
settlement, unless such claim is in an amount in excess of any amount consented
to by the Stockholders' Agent.
ARTICLE 10
TERMINATION
10.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by the mutual written consent of the Company and the Acquiror;
(b) by either the Company or the Acquiror
(i) if any court or governmental or regulatory agency,
authority or body shall have enacted, promulgated or
issued any statute, rule, regulation, ruling, writ or
injunction, or taken any other action, restraining,
enjoining or otherwise prohibiting the transactions
contemplated hereby and all appeals and means of appeal
therefrom have been exhausted; or
(ii) if the Effective Time shall not have occurred on or before
June 15, 2000; provided, however, that the right to
terminate this Agreement pursuant to
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this Section 10.1(b)(ii) shall not be available to any
party whose (or whose affiliate(s)') breach of any
representation or warranty or failure to perform or comply
with any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective
Time to occur on or before such date; or
(c) by the Company, if any of the conditions specified in Section
8.3 have not been met or waived prior to such time as such condition can no
longer be satisfied; or
(d) by the Buyer, if any of the conditions specified in Section 8.2
shall not have been met or waived prior to such time as such condition can no
longer be satisfied.
10.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 10.1(c) (and prior to any termination pursuant to
Sections 10.1(a), (b) or (d)) that arises other than due to events or actions
outside of Acquiror's control, then, unless at such time the Company has
materially breached any terms of this Agreement:
(a) Acquiror shall extend the maturity date of that certain Multiple
Advance Transaction Note executed by the Company in favor of the Acquiror to
July 14, 2001; and
(b) Acquiror shall pay on behalf of the Company up to $150,000.00 of
expenses incurred by the Company in connection with or related to the Merger.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 Survival of Representations and Covenants. All representations,
warranties, covenants and agreements of the Company contained in this Agreement
shall survive the Closing and any investigation at any time made by or on behalf
of Acquiror until the end of the Escrow Period. All representations, warranties,
covenants and agreements of Acquiror contained in this Agreement shall survive
the Closing and any reasonable investigation at any time made by or on behalf of
the Company until the end of the Escrow Period. If shares or other assets are
retained in the Escrow Fund beyond expiration of the period specified in the
Escrow Agreement, then because and to the extent of a timely claim being
asserted against the Escrow Fund (notwithstanding the expiration of such time
period) the representation, warranty, covenant or agreement applicable to such
claim shall survive until, but only for purposes of, the resolution of the claim
to which such retained shares or other assets relate.
11.2 Attorneys' Fees. If any legal action or other legal proceeding
relating to this Agreement or the other Transactional Agreements in connection
herewith is brought against any party hereto, the prevailing party shall be
entitled to recover reasonable attorneys' fees, costs and disbursements (in
addition to any other relief to which the prevailing party may be entitled).
11.3 Transfer Taxes. Each Stockholder shall be individually responsible
for his, her or its respective sales, use and transfer taxes, including but not
limited to any value added, stock transfer, gross receipts, stamp duty and real,
personal or intangible property transfer taxes, due by reason of the
consummation of the Transactions, including but not limited to any interest or
penalties in respect thereof.
11.4 Notices. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by telecopier) to the
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address or telecopier number set forth beneath the name of such party below (or
to such other address or telecopier number as such party shall have specified in
a written notice given to the other parties hereto):
if to the Company:
Sebring Systems, Inc.
200 East Hacienda Avenue
Campbell, CA 95008
Attention: Jim Basiji
Telefax: (408) 374-2652
with a copy to:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, CA 94303
Attention: David A. Makerechian, Esq.
Telefax: (650) 496-2715
if to Acquiror or Merger Sub:
PLX Technology, Inc.
390 Potrero Avenue
Sunnyvale, CA 94086
Attention: Michael Salameh
Telefax: (408) 774-2166
with a copy to:
Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, California 94304
Attention: Stephen J. Schrader, Esq.
Telefax: 650-494-0792
11.5 Time of the Essence. Time is of the essence in the performance of
each of the terms hereof with respect to the obligations and rights of each
party hereto.
11.6 Headings. The headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
11.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
11.8 Governing Law. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of
California (without giving effect to principles of conflicts of laws).
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11.9 Waiver.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise or waiver of any such power, right, privilege or
remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
11.10 Amendments. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of Acquiror, Merger Sub and the Company.
11.11 Severability. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
11.12 Parties in Interest. Except for the provisions of Article 9 hereof
applicable to the Stockholders, none of the provisions of this Agreement is
intended to provide any rights or remedies to any Person other than the parties
hereto and their respective successors and assigns (if any).
11.13 Entire Agreement. The Transactional Agreements (including
Schedules and Exhibits thereto) set forth the entire understanding of the
parties relating to the subject matter thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter thereof.
11.14 Construction.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
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(d) Except as otherwise indicated, all references in this Agreement
to "Sections," "Exhibits" and "Schedules" are intended to refer to Sections of
this Agreement and Exhibits and Schedules to this Agreement.
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IN WITNESS WHEREOF, each of Acquiror, Merger Sub, and the Company has
caused this Agreement to be executed on its behalf by its officers thereunto
duly authorized, all as of the date first above written.
PLX TECHNOLOGY, INC.
By: /s/ MICHAEL SALAMEH
-------------------------------
Name: Michael Salameh
Title: President
OKW TECHNOLOGY ACQUISITION CORPORATION
By: /s/ MICHAEL SALAMEH
--------------------------------
Name: Michael Salameh
Title: President
SEBRING SYSTEMS, INC.
By: /s/ JIM BASIJI
--------------------------------
Name: Jim Basiji
Title: President & CEO
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INDEX OF SCHEDULES AND EXHIBITS
A. Certain Definitions
B. Escrow Agreement
C. Financial Statements
D. Proprietary Information and Inventions Agreement
E. Shelf Registration Agreement
F. Voting Agreement
G. Opinion from Company Counsel
H. Opinion from Acquiror's Counsel
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUIROR. "Acquiror" shall have the meaning specified in the first
paragraph of the Agreement.
ACQUIROR STOCK. "Acquiror Stock" shall have the meaning specified in
Section 3.1(a) of the Agreement.
AFFILIATE. "Affiliate" shall have the meaning specified in Rule 12b-2
under the Securities Exchange Act of 1934, as amended.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger to
which this Exhibit A is attached (including the Disclosure Schedule and all
Exhibits), as it may be amended from time to time.
BEST EFFORTS. "Best Efforts" shall mean the efforts that a prudent
Person desiring to achieve a particular result would use in order to ensure that
such result is achieved as expeditiously as possible. An obligation to use "Best
Efforts" under this Agreement does not require the Person subject to that
obligation to take actions that would result in a materially adverse change in
the benefits to such Person of this Agreement, the other Transactional
Agreements and the Transactions.
CERTIFICATE. "Certificate" shall have the meaning specified in Section
3.1(a) of the Agreement.
CERTIFICATE OF MERGER. "Certificate of Merger" shall have the meaning
specified in Section 1.2 of the Agreement.
CLOSING. "Closing" shall have the meaning specified in Section 3.9 of
the Agreement.
CODE. "Code" shall have the meaning specified in the Recitals of the
Agreement.
COMPANY. The "Company" shall mean Sebring Systems, Inc., a California
corporation.
COMPANY COMMON STOCK. "Company Common Stock" shall have the meaning
specified in Section 3.1(a) of the Agreement.
COMPANY CONTRACT. "Company Contract" shall mean any Contract:
(a) to which Company is a party;
(b) by which the Company or any of its assets is or may become bound or
under which the Company has, or may become subject to, any obligation;
(c) under which the Company has or may acquire any right or interest; or
(d) which is not exclusively for the purchase of any Company Stock or
security.
COMPANY PLAN. "Company Plan" shall mean any Current Benefit Plan or Past
Benefit Plan.
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COMPANY RETURNS. "Company Returns" shall have the meaning specified in
Section 4.14(b) of the Agreement.
COMPANY STOCK. "Company Stock" shall have the meaning specified in
Section 3.1(a).
COMPANY STOCK OPTIONS. "Company Stock Options" shall have the meaning
specified in Section 3.2(b).
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean, with respect to any Person, any legally
binding written, oral, implied or other agreement, contract, understanding,
arrangement, instrument, note, guaranty, indemnity, representation, warranty,
deed, assignment, power of attorney, certificate, purchase order, work order,
insurance policy, benefit plan, commitment, covenant, assurance, obligation,
promise or undertaking of any nature to which such Person is a party or by which
its properties or assets maybe bound or affected or under which it or its
business, properties or assets receive benefits.
CURRENT BENEFIT PLAN. "Current Benefit Plan" shall mean any Employee
Benefit Plan that is currently in effect and:
(a) that was established or adopted by the Company or any ERISA
Affiliate or is maintained or sponsored by the Company;
(b) in which the Company participates;
(c) with respect to which the Company or any ERISA Affiliate is or may
be required or permitted to make any contribution; or
(d) with respect to which the Company or any ERISA Affiliate is or may
become subject to any Liability.
DAMAGES. "Damages" shall have the meaning specified in Section 9.1.
DEFINED BENEFIT PLAN. "Defined Benefit Plan" shall mean either a plan
described in Section 3(35) of ERISA or a plan subject to the minimum funding
standards set forth in Section 302 of ERISA and Section 412 of the Code.
DGCL. "DGCL" shall have the meaning specified in Section 1.2 of the
Agreement.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall have the meaning
specified in Article 4 of the Agreement.
DISSENTING SHARES. "Dissenting Shares" shall have the meaning specified
in Section 3.10 of the Agreement.
EFFECTIVE TIME. "Effective Time" shall have the meaning specified in
Section 1.2 of the Agreement.
EMPLOYEE BENEFIT PLAN. "Employee Benefit Plan" shall have the meaning
specified in Section 3(3) of ERISA.
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ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, equity, trust, equitable
interest, claim, preference, right of possession, lease, tenancy, licensee,
encroachment, covenant, infringement, interference, Order, proxy, option, right
of first refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset.
ENTITY. "Entity" shall mean any corporation (including any non profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, society,
political party, union, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
ENVIRONMENTAL LAW. "Environmental Law" shall mean any federal, state, or
local Legal Requirement relating to pollution or protection of human health or
the environment.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974.
ERISA AFFILIATE. "ERISA Affiliate" shall mean any Person that is, was or
would be treated as a single employer with the Company under Section 414 of the
Code.
ESCROW AGENT. "Escrow Agent" shall mean U.S. Bank Trust National
Association, and its successors and assigns.
ESCROW AGREEMENT. "Escrow Agreement" shall have the meaning specified in
Section 3.4 of the Agreement.
ESCROW FUND. "Escrow Fund" shall have the meaning specified in Section
3.4 of the Agreement.
ESCROW SHARES. "Escrow Shares" shall have the meaning specified in
Section 3.4 of the Agreement.
ESCROW PERIOD. "Escrow Period" shall have the meaning specified in
Section 9.4 of the Agreement.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
EXCHANGE AGENT. "Exchange Agent" shall have the meaning specified in
Section 3.3(a) of the Agreement.
EXCHANGE RATIO. "Exchange Ratio" shall have the meaning specified in
Section 3.1(a) of the Agreement.
FINANCIAL STATEMENTS. "Financial Statements" shall have the meaning
specified in Section 4.4 of the Agreement.
GAAP. "GAAP" shall mean Generally Accepted Accounting Principles,
applied on a basis consistent with the basis on which the Financial Statements
were prepared.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any:
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(a) permit, license, certificate, franchise, concession, approval,
consent, ratification, permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or authorization
that is issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal Requirement; or
(b) right under any Contract with any Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any:
(a) nation, principality, state, commonwealth, province, territory,
county, municipality, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi governmental authority of any nature
(including any governmental division, subdivision, department, agency, bureau,
branch, office, commission, council, board, instrumentality, officer, official,
representative, organization, unit, body or Entity and any court or other
tribunal);
(d) multinational organization or body; or
(e) individual, Entity or body exercising, or entitled to exercise, any
executive, legislative, Judicial, administrative, regulatory, police, military
or taxing authority or power of any nature.
HAZARDOUS MATERIAL. "Hazardous Material" shall mean any substance,
chemical, waste or other material which is listed, defined or otherwise
identified as hazardous, toxic or dangerous under any applicable law; as well as
any petroleum, petroleum product or by-product, crude oil, natural gas, natural
gas liquids, liquefied natural gas, or synthetic gas useable for fuel, and
"source," "special nuclear," and "by-product" material as defined in the Atomic
Energy Act of 1954, 42 U.S.C. Sections 2011 et seq.
KNOWLEDGE. An individual shall be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter.
A corporation shall be deemed to have "Knowledge" of a particular fact
or matter only if a director, officer or key employee of such corporation has or
had Knowledge of such fact or matter.
LEASED PREMISES. "Leased Premises" shall have the meaning specified in
Section 4.6(d) of the Agreement.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, ruling, directive,
pronouncement, requirement, specification, determination, decision, opinion or
interpretation that is or has been issued, enacted, adopted, passed, approved,
promulgated, made, implemented or otherwise put into effect by or under the
authority of any Governmental Body that was valid and in effect as of the
particular date that the representation or warranty is being made.
LIABILITY. "Liability" shall mean any debt, obligation, duty or
liability of any nature including any unknown, undisclosed, unmatured,
unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious,
derivative, joint, several or secondary liability, regardless of whether such
debt, obligation, duty or liability would be required to be disclosed on a
balance sheet prepared in accordance with
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generally accepted accounting principles and regardless of whether such debt,
obligation, duty or liability is immediately due and payable.
MERGER. "Merger" shall have the meaning specified in Section 1.1 of the
Agreement.
MERGER SUB. "Merger Sub" shall have the meaning specified in the first
paragraph of the Agreement.
MULTIEMPLOYER PLAN. "Multiemployer Plan" shall mean a plan described in
Section 3(37) of ERISA.
OFFICER'S CERTIFICATE. "Officer's Certificate" shall have the meaning
specified in Section 9.5 of the Agreement.
ORDER. "Order" shall mean any:
(a) order, judgment, injunction, edict, decree, ruling, pronouncement,
determination, decision, opinion, verdict, sentence, subpoena, writ or award
that is issued, made, entered, rendered or otherwise put into effect by or under
the authority of any court, administrative agency or other Governmental Body or
any arbitrator or arbitration panel; or
(b) Contract with any Governmental Body that is entered into in
connection with any Proceeding.
ORDINARY COURSE OF BUSINESS. An action taken by or on behalf of the
Company shall not be deemed to have been taken in the "Ordinary Course of
Business" unless:
(a) such action is recurring in nature, consistent with the Company's
past practices and taken in the ordinary course of the Company's normal day to
day operations;
(b) such action is not required to be authorized by the Company's
stockholders; and
(c) such action is similar in nature and magnitude to actions
customarily taken in the ordinary course of the normal day to day operations of
other Entities that are employed in businesses similar to Company's business.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PROCEEDING. "Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding), prosecution,
contest, hearing, inquiry, inquest, audit, examination or investigation,
commenced, brought, conducted or heard by or before, or otherwise has involved,
any Governmental Body or any arbitrator or arbitration panel.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any patent, patent
application, trademark (whether registered or unregistered and whether or not
relating to a published work), trademark application, trade name, fictitious
business name, service mark (whether registered or unregistered), service mark
application, copyright (whether registered or unregistered), copyright
application, maskwork, maskwork application, trade secret, know how, franchise,
system, computer software (other than third-party "off the shelf" software),
invention, design, blueprint, proprietary product, technology, proprietary right
or other intellectual property right.
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PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. "Proprietary
Information and Inventions Agreement" shall mean an agreement between the
Company and its employees and consultants, substantially in the form of Exhibit
C.
PRO RATA PORTION. "Pro Rata Portion" shall have the meaning specified in
Section 3.4 of the Agreement.
RELATED PARTY. Each of the following shall be deemed to be a "Related
Party":
(a) each individual who is, or who has at any time been, an officer of
the Company;
(b) each member of the family of each of the individuals referred to in
clause "(a)" above;
(c) any Entity (other than the Company) in which any one of the Persons
referred to in clauses "(a)" or "(b)" above holds (or in which more than one of
such individuals collectively hold), beneficially or otherwise, a voting equity
interest equal to or in excess of five percent (5%) of the outstanding Company
Stock.
REPRESENTATIVES. "Representatives" of a specified party shall mean
officers, directors, employees, attorneys, accountants, advisors and
representatives of such party, including, without limitation, in the case of
Company, all subsidiaries of Company and all such Persons with respect to such
subsidiaries. The Related Parties shall be deemed to be "Representatives" of
Company.
SEC. "SEC" shall mean the Securities and Exchange Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933,
as amended.
STOCKHOLDER. "Stockholder" shall mean a stockholder of the Company
immediately prior to the Effective Time.
STOCKHOLDERS' AGENT. "Stockholders' Agent" shall have the meaning
specified in Section 9.9 of the Agreement.
STOCKHOLDERS' AGENT CERTIFICATE. "Stockholders' Agent Certificate" shall
have the meaning specified in Section 9.5 of the Agreement.
SURVIVING CORPORATION. "Surviving Corporation" shall have the meaning
specified in Section 1.1 of the Agreement.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, estimated tax, gross receipts tax, value added tax, surtax,
excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax, business tax, occupation tax, inventory tax, occupancy tax,
withholding tax or payroll tax), levy, assessment, tariff, impost, imposition,
toll, duty (including any customs duty), deficiency or fee, and any related
charge or amount (including any fine, penalty or interest), (a) imposed,
assessed or collected by or under the authority of any Governmental Body, or (b)
payable pursuant to any tax sharing agreement or similar Contract.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information that
is, has been or may in the future be filed with or submitted to, or required to
be filed with or submitted to, any Governmental Body in connection with the
determination, assessment,
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collection or payment of any Tax or in connection with the administration,
implementation or enforcement of or compliance with any Legal Requirement
relating to any Tax.
TRANSACTIONAL AGREEMENTS. "Transactional Agreements" shall mean:
(a) the Agreement;
(b) the Escrow Agreement.
TRANSACTIONS. "Transactions" shall mean (a) the execution and delivery
of the respective Transactional Agreements, and (b) all of the transactions
contemplated by the respective Transactional Agreements, including, without
limitation, the Merger, and the performance by Company, Acquiror, the
Stockholders, and the other parties to the Transactional Agreements of their
respective obligations under the Transactional Agreements.
UNAUDITED INTERIM BALANCE SHEET. "Unaudited Interim Balance Sheet" shall
have the meaning specified in Section 4.4(a)(ii) of the Agreement.
VOTING AGREEMENT. "Voting Agreement" shall mean the Voting Agreement
attached hereto as Exhibit E.
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