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Exhibit (d)(23)
AMENDED AND RESTATED MERGER AGREEMENT
AND PLAN OF REORGANIZATION
BY AND AMONG
BROADCOM CORPORATION,
ALLAYER COMMUNICATIONS
AND
THE OTHER PARTIES SIGNATORY HERETO
Dated as of September 29, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE 1 THE MERGER...................................................................2
1.1 The Merger..............................................................2
1.2 Effective Time..........................................................2
1.3 Effect of the Merger on Constituent Corporations........................2
1.4 Articles of Incorporation and By-Laws of Surviving Corporation..........2
1.5 Directors and Officers of Surviving Corporation.........................3
1.6 Maximum Number of Shares of Broadcom Common Stock to be Issued;
Effect on Outstanding Securities of the Company.........................3
1.7 Reservation of Shares...................................................5
1.8 Adjustments to Exchange Ratios..........................................6
1.9 Fractional Shares.......................................................6
1.10 Dissenting Shares.......................................................6
1.11 Exchange Procedures.....................................................6
1.12 No Further Ownership Rights in Company Capital Stock....................8
1.13 Lost, Stolen or Destroyed Certificates..................................8
1.14 Exemption From Registration; California Permit..........................9
1.15 Taking of Necessary Action; Further Action..............................9
1.16 Earn-Out................................................................9
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................12
2.1 Organization and Qualification.........................................12
2.2 Authority Relative to this Agreement...................................12
2.3 Capital Stock..........................................................13
2.4 No Subsidiaries........................................................15
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TABLE OF CONTENTS (CONTINUED)
PAGE
2.5 Directors and Officers.................................................15
2.6 No Conflicts...........................................................15
2.7 Books and Records; Organizational Documents............................16
2.8 Company Financial Statements...........................................16
2.9 Absence of Changes.....................................................16
2.10 No Undisclosed Liabilities.............................................21
2.11 Taxes..................................................................21
2.12 Legal Proceedings......................................................24
2.13 Compliance with Laws and Orders........................................24
2.14 Plans; ERISA...........................................................25
2.15 Real Property..........................................................28
2.16 Tangible Personal Property.............................................29
2.17 Intellectual Property..................................................29
2.18 Contracts..............................................................34
2.19 Insurance..............................................................35
2.20 Affiliate Transactions.................................................35
2.21 Employees; Labor Relations.............................................36
2.22 Environmental Matters..................................................38
2.23 Substantial Customers and Suppliers....................................39
2.24 Accounts Receivable....................................................39
2.25 Inventory..............................................................39
2.26 Other Negotiations; Brokers; Third Party Expenses......................40
2.27 Banks and Brokerage Accounts...........................................40
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TABLE OF CONTENTS (CONTINUED)
PAGE
2.28 Warranty Obligations...................................................40
2.29 Foreign Corrupt Practices Act..........................................41
2.30 Tax-Free Reorganization................................................41
2.31 Financial Projections/Operating Plan...................................41
2.32 Approvals..............................................................42
2.33 Compliance.............................................................42
2.34 Takeover Statutes......................................................43
2.35 Permit Application; Information Statement..............................43
2.36 No Solicitation........................................................43
2.37 Disclosure.............................................................43
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BROADCOM..................................44
3.1 Organization and Qualification.........................................44
3.2 Authority Relative to this Agreement...................................44
3.3 Issuance of Broadcom Common Stock......................................44
3.4 SEC Documents; Broadcom Financial Statements...........................45
3.5 No Conflicts...........................................................45
3.6 Information to be Supplied by Broadcom.................................46
3.7 Investment Advisors....................................................46
3.8 Tax-Free Reorganization................................................46
ARTICLE 4 CONDUCT PRIOR TO THE EFFECTIVE TIME.........................................46
4.1 Conduct of Business of the Company.....................................46
4.2 No Solicitation........................................................49
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TABLE OF CONTENTS (CONTINUED)
PAGE
ARTICLE 5 ADDITIONAL AGREEMENTS.......................................................51
5.1 Information Statement; Permit Application..............................51
5.2 Shareholder Approval...................................................53
5.3 Access to Information..................................................53
5.4 Confidentiality........................................................54
5.5 Expenses...............................................................54
5.6 Public Disclosure......................................................54
5.7 Approvals..............................................................54
5.8 FIRPTA Compliance......................................................55
5.9 Notification of Certain Matters........................................55
5.10 Company Affiliate Agreements...........................................55
5.11 Additional Documents and Further Assurances; Cooperation...............55
5.12 Indemnification........................................................56
5.13 Form S-8...............................................................56
5.14 NNM Listing of Additional Shares Application...........................56
5.15 Company's Auditors.....................................................56
5.16 Termination of 401(k) Plans............................................56
5.17 Takeover Statutes......................................................57
5.18 Treatment as Reorganization............................................57
5.19 Company Repurchases....................................................57
5.20 Information Technology Access..........................................57
5.21 Change of Merger Form..................................................58
5.22 Intellectual Property..................................................58
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TABLE OF CONTENTS (CONTINUED)
PAGE
5.23 Delivery of Stock Ledger and Minute Book of the Company................59
5.24 Certain Actions Relating to the Holders of Warrants (if any) and
Preferred Stock........................................................59
5.25 Third Party Consents...................................................59
5.26 Faraday Agreement......................................................59
5.27 Capitalization Table...................................................60
ARTICLE 6 CONDITIONS TO THE MERGER....................................................60
6.1 Conditions to Obligations of Each Party to Effect the Merger...........60
6.2 Additional Conditions to Obligations of the Company....................60
6.3 Additional Conditions to the Obligations of Broadcom...................61
ARTICLE 7 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS;
ESCROW PROVISIONS......................................................65
7.1 Survival of Representations, Warranties, Covenants and Agreements......65
7.2 Escrow Provisions......................................................65
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER...........................................73
8.1 Termination............................................................73
8.2 Effect of Termination..................................................74
8.3 Amendment..............................................................75
8.4 Extension; Waiver......................................................75
ARTICLE 9 MISCELLANEOUS PROVISIONS....................................................75
9.1 Notices................................................................75
9.2 Entire Agreement.......................................................76
9.3 Further Assurances; Post-Closing Cooperation...........................76
9.4 Waiver.................................................................77
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TABLE OF CONTENTS (CONTINUED)
PAGE
9.5 Third Party Beneficiaries..............................................77
9.6 No Assignment; Binding Effect..........................................77
9.7 Headings...............................................................77
9.8 Invalid Provisions.....................................................77
9.9 Governing Law..........................................................77
9.10 WAIVER OF TRIAL BY JURY................................................78
9.11 Construction...........................................................78
9.12 Counterparts...........................................................78
9.13 Specific Performance...................................................78
ARTICLE 10 DEFINITIONS................................................................78
10.1 Definitions............................................................78
10.2 Construction...........................................................93
EXHIBIT A FORM OF SUPPORT AGREEMENT
EXHIBIT B FORM OF COMPANY AFFILIATE AGREEMENT
EXHIBIT C FORM OF NON-COMPETITION AGREEMENT
EXHIBIT D FORM OF AGREEMENT OF MERGER
EXHIBIT E FORM OF SHAREHOLDER CERTIFICATE
EXHIBIT F [INTENTIONALLY OMITTED]
EXHIBIT G [INTENTIONALLY OMITTED]
EXHIBIT H-1 FORM OF BROADCOM OFFICER'S CERTIFICATE
EXHIBIT H-2 FORM OF BROADCOM SECRETARY'S CERTIFICATE
EXHIBIT I FORM OF BROADCOM COUNSEL LEGAL OPINION
EXHIBIT J-1 FORM OF COMPANY OFFICER'S CERTIFICATE
EXHIBIT J-2 FORM OF COMPANY SECRETARY'S CERTIFICATE
EXHIBIT K FORM OF COMPANY COUNSEL LEGAL OPINION
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AMENDED AND RESTATED MERGER AGREEMENT
AND PLAN OF REORGANIZATION
This AMENDED AND RESTATED MERGER AGREEMENT AND PLAN OF REORGANIZATION is
made and entered into as of September 29, 2000, by and among Broadcom
Corporation, a California corporation ("Broadcom"), and Allayer Communications,
a California corporation (the "Company"), and, with respect to Article 7 and
Article 9 only, Xxxxx-xxxxx Shih, as Shareholder Agent and U.S. Stock Transfer
Corporation, as Depositary Agent. Capitalized terms used and not otherwise
defined herein have the meanings set forth in Article 10.
RECITALS
A. The Boards of Directors of each of Broadcom and the Company believe
it is in the best interests of Broadcom and the Company (as applicable) and
their respective shareholders that Broadcom acquire the Company through the
merger of the Company with and into Broadcom (the "Merger") and, in furtherance
thereof, have approved the Merger, this Agreement and the transactions
contemplated hereby.
B. Pursuant to the Merger, among other things, and subject to the terms
and conditions of this Agreement, (i) all of the shares of capital stock of the
Company which are issued and outstanding immediately prior to the Effective Time
of the Merger shall be converted into the right to receive shares of Class A
Common Stock, par value $0.0001 per share, of Broadcom ("Broadcom Common Stock")
and (ii) all Company Options and Company Stock Purchase Rights (if any) then
outstanding (whether vested or unvested) will become exercisable for Broadcom
Common Stock, on the terms and subject to the conditions set forth herein.
C. As a condition and an inducement to the willingness of Broadcom to
enter into this Agreement, certain shareholders of the Company have concurrently
herewith entered (i) into Support Agreements with Broadcom in substantially the
form attached hereto as Exhibit A (the "Support Agreements") pursuant to which,
among other things, such shareholders have agreed to vote the shares of Company
Capital Stock owned by them in favor of the Merger and (ii) Company Affiliate
Agreements in substantially the form attached hereto as Exhibit B (the "Company
Affiliate Agreements").
D. As a condition and a further inducement to Broadcom to enter into
this Agreement, certain employees of the Company have entered into
Non-Competition Agreements substantially in the form attached hereto as Exhibit
C (the "Non-Competition Agreements"), each of which shall become effective at
the Effective Time.
E. Broadcom and the Company intend that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, and in furtherance thereof intend that this Agreement shall be a "plan of
reorganization" within the meaning of Sections 354(a) and 361(a) of the Internal
Revenue Code.
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F. The Company and Broadcom desire to make certain representations,
warranties, covenants and agreements in connection with the Merger.
G. A portion of the shares of Broadcom Common Stock otherwise issuable
or reserved for issuance by Broadcom in connection with the Merger shall be
placed in escrow by Broadcom, the release of which amount shall be contingent
upon certain events and conditions, all as set forth in Article 7.
NOW, THEREFORE, in consideration of the covenants, promises,
representations and warranties set forth herein, and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
the parties), intending to be legally bound hereby, the parties agree as
follows:
ARTICLE 1
THE MERGER
1.1 The Merger. At the Effective Time and upon the terms and subject to
the conditions of this Agreement and the applicable provisions of the California
Code, the Company shall be merged with and into Broadcom, the separate corporate
existence of the Company shall cease, and Broadcom shall continue as the
surviving corporation. Broadcom is sometimes referred to herein as the
"Surviving Corporation."
1.2 Effective Time. Unless this Agreement is earlier terminated pursuant
to Section 8.1, the closing of the Merger (the "Closing") will take place no
later than five (5) Business Days following satisfaction or waiver of the
conditions set forth in Article 6, at the offices of Xxxxxxx, Phleger & Xxxxxxxx
LLP, 2200 Geng Road, Palo Alto, California, unless another place or time is
agreed to by Broadcom and the Company. The date upon which the Closing actually
occurs is herein referred to as the "Closing Date." On the Closing Date, the
parties hereto shall cause the Merger to be consummated by filing a California
Agreement of Merger (or like instrument), in substantially the form attached
hereto as Exhibit D (the "Agreement of Merger"), with the Secretary of State of
the State of California, in accordance with the relevant provisions of
applicable law (the time of acceptance by the Secretary of State of the State of
California of such filing or such later time as may be agreed to by the parties
and set forth in the Certificate of Merger being referred to herein as the
"Effective Time").
1.3 Effect of the Merger on Constituent Corporations. At the Effective
Time, the effect of the Merger shall be as provided in the applicable provisions
of the California Code. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the property, rights, privileges,
powers and franchises of Broadcom and the Company shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of Broadcom and the Company shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving Corporation.
1.4 Articles of Incorporation and By-Laws of Surviving Corporation.
(a) At the Effective Time, the Articles of Incorporation of
Broadcom, as in effect immediately prior to the Effective Time, shall be the
articles of incorporation of the
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Surviving Corporation until thereafter amended as provided by law, such articles
of incorporation and by-laws of the Surviving Corporation.
(b) The by-laws of Broadcom, as in effect immediately prior to
the Effective Time, shall be the by-laws of the Surviving Corporation until
thereafter amended as provided by such by-laws, the articles of incorporation of
the Surviving Corporation and applicable law.
1.5 Directors and Officers of Surviving Corporation. The directors of
Broadcom immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, each to hold office in accordance with the articles of
incorporation and bylaws of the Surviving Corporation. The officers of Broadcom
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, each to hold office in accordance with the bylaws of the Surviving
Corporation.
1.6 Maximum Number of Shares of Broadcom Common Stock to be Issued;
Effect on Outstanding Securities of the Company. The maximum number of shares of
Broadcom Common Stock to be issued (including Broadcom Common Stock to be
reserved for issuance upon exercise of any of the Company Options, Company
Warrants (if any) or Company Stock Purchase Rights (if any) to be assumed by
Broadcom as provided herein) in exchange for the acquisition by Broadcom of all
shares of Company Capital Stock which are issued and outstanding immediately
prior to the Effective Time and all vested and unvested Company Options, Company
Warrants (if any) and Company Stock Purchase Rights (if any) which are then
outstanding shall not exceed the Aggregate Share Number. Except as expressly
provided in Section 1.8, no adjustment shall be made in the number of shares of
Broadcom Common Stock issued in the Merger as a result of any consideration (in
any form whatsoever) received by the Company from the date hereof to the
Effective Time as a result of any exercise, conversion or exchange of Company
Options, Company Warrants (if any) or Company Stock Purchase Rights (if any). On
the terms and subject to the conditions of this Agreement, at the Effective
Time, by virtue of the Merger and without any action on the part of Broadcom,
the Company or the holder of any shares of the Company Capital Stock or Company
Options, Company Warrants (if any) or Company Stock Purchase Rights (if any),
the following shall occur:
(a) Conversion of Company Capital Stock. Each share of Company
Capital Stock issued and outstanding immediately prior to the Effective Time
(other than any shares of Company Capital Stock to be canceled pursuant to
Section 1.6(b) and any Dissenting Shares (as provided in Section 1.10)) shall be
converted automatically into the right to receive, following the expiration or
early termination of any waiting period under the HSR Act which is applicable to
the holder of such share, that number of shares of Broadcom Common Stock equal
to the Series A Exchange Ratio, the Series B Exchange Ratio, the Series C
Exchange Ratio, the Series D Exchange Ratio or the Common Stock Exchange Ratio,
as the case may be (except as provided in Section 1.9).
(b) Cancellation of Broadcom-Owned and Company-Owned Stock. Each
share of Company Capital Stock owned by Broadcom or the Company or any
Subsidiary of Broadcom or the Company immediately prior to the Effective Time
shall be automatically
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canceled and extinguished without any conversion thereof and without any further
action on the part of Broadcom or the Company.
(c) Capital Stock of Broadcom. Each share of Broadcom Common
Stock and share of Class A Common Stock, par value $0.0001 per share, and Class
B Common Stock, par value $0.0001 per share, of Broadcom which is issued and
outstanding immediately prior to the Effective Time shall remain outstanding as
one validly issued, fully paid and nonassessable share of the same class of
common stock of the Surviving Corporation, with identical rights and privileges.
From and after the Effective Time, each share certificate of Broadcom
theretofore evidencing ownership of any such shares shall continue to evidence
ownership of such shares of capital stock of the Surviving Corporation.
(d) Company Options and Company Stock Plan. All unexpired and
unexercised Company Options, Company Warrants (if any) and Company Stock
Purchase Rights (if any), then outstanding, whether vested or unvested, together
with the Company Stock Plan, shall be assumed by Broadcom in accordance with
provisions set forth below.
(i) Each unexpired and unexercised Company Option,
Company Warrant (if any) and Company Stock Purchase Right (if any) then
outstanding, whether vested or unvested, shall be, in connection with the
Merger, assumed by Broadcom, together with the Company Stock Plan. Each Company
Option, Company Warrant (if any) and Company Stock Purchase Right (if any) so
assumed by Broadcom under this Agreement shall continue to have, and be subject
to, the same terms and conditions as were applicable to such Company Option,
Company Warrant (if any) or Company Stock Purchase Right (if any) immediately
prior to the Effective Time (including any repurchase rights or vesting
provisions), provided that (A) such Company Option, Company Warrant (if any) or
Company Stock Purchase Right (if any), as the case may be, shall be exercisable
for that number of whole shares of Broadcom Common Stock equal to the product of
the number of shares of Company Capital Stock that were issuable upon exercise
of such Company Option, Company Warrant (if any) or Company Stock Purchase Right
(if any) immediately prior to the Effective Time multiplied by the Exchange
Ratio applicable to the series of Company Capital Stock subject to such Company
Option, Company Warrant (if any) or Company Stock Purchase Right (if any)
(rounded down to the nearest whole number of shares of Broadcom Common Stock)
and (B) the per share exercise price for the shares of Broadcom Common Stock
issuable upon exercise of such assumed Company Option, Company Warrant (if any),
Company Stock Purchase Right (if any), as the case may be, shall be equal to the
quotient determined by dividing the exercise price per share of Company Capital
Stock at which such Company Option, Company Warrant (if any) or Company Stock
Purchase Right (if any) was exercisable immediately prior to the Effective Time
by the Exchange Ratio applicable to the series of Company Capital Stock subject
to such Company Option, Company Warrant (if any) or Company Stock Purchase Right
(if any) (rounded up to the nearest whole cent). It is the intention of the
parties that the Company Options assumed by Broadcom shall qualify following the
Effective Time as incentive stock options as defined in Section 422 of the
Internal Revenue Code to the same extent the Company Options qualified as
incentive stock options immediately prior to the Effective Time and the
provisions of this Section 1.6(d) shall be applied consistent with this intent.
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(ii) Broadcom shall assume the Company's obligations,
and shall be assigned the Company's repurchase rights and purchase options,
under any Restricted Stock Purchase Agreements entered into pursuant to the 1997
Equity Incentive Plan (the "Company Stock Plan") and the other restricted stock
purchase agreements listed on Schedule 1.6(d)(ii), true and correct copies of
which have been made available by the Company to Broadcom. Except as provided in
Section 1.6(d)(iii), any and all restrictions on the Company Restricted Stock
issued pursuant to the Company Stock Plan or such other agreements which do not
lapse in accordance with their terms (as in effect on August 7, 2000) shall
continue in full force and effect until such restrictions lapse pursuant to the
terms of such agreements, and any repurchase rights or repurchase options which
the Company has with respect to the Company Restricted Stock shall also continue
in full force and effect. In the event that Broadcom issues any shares of
Broadcom Common Stock in the First Earn-Out or Second Earn-Out pursuant to
Section 1.16, the per share repurchase price for the shares of Broadcom Common
Stock that were issued in exchange for shares of Company Common Stock subject to
any such repurchase right or purchase option shall be adjusted accordingly.
(iii) The Company agrees to take all actions necessary
or advisable to cause all Company Options, Company Stock Purchase Rights (if
any) and Company Restricted Stock to remain unchanged except (A) for the
conversion into options or rights to purchase shares of Broadcom Common Stock as
provided for in this Section 1.6(d), (B) that any acceleration of vesting,
continuation of vesting after termination of employment or other special vesting
(whether with the passage of time, upon the occurrence of certain events or
otherwise) that might occur, result from or be related to the transactions
contemplated by this Agreement and the Ancillary Agreements shall be prevented
from occurring through the modification, in a manner acceptable to Broadcom, of
the applicable Company Option, Company Stock Purchase Right (if any) or Company
Restricted Stock (and any employment agreement or other agreement providing for
such acceleration) prior to the date of this Agreement, provided, however, that
in lieu of receiving or accepting new offers of employment from Broadcom and
executing and delivering to Broadcom a Non-Competition Agreement, the foregoing
provisions in clause (B) of this Section 1.6(d)(iii) shall not apply to Company
Options, Company Stock Purchase Rights (if any) or Company Restricted Stock
owned by the individuals named in Schedule 1.6(d)(iii).
(iv) In the event of an increase pursuant to Section
1.16 in the number of shares of Broadcom Common Stock for which a Company Option
is exercisable, the exercise price shall be adjusted accordingly and such
additional shares (A) shall be subject to the same forfeiture provisions, the
same limitations on exercise and the same rights of repurchase in favor of the
Company (as assigned pursuant to this Agreement to Broadcom) as the other shares
underlying such Company Option and (B) shall vest proportionately with the other
shares underlying such Company Option in accordance with the same vesting
schedule applicable to such other shares.
1.7 Reservation of Shares. Broadcom will reserve sufficient shares of
Broadcom Common Stock for issuance pursuant to Section 1.6.
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1.8 Adjustments to Exchange Ratios. The Exchange Ratios shall be
equitably adjusted to reflect fully the effect of any stock split, reverse
split, stock combination, stock dividend (including any dividend or distribution
of securities convertible into Broadcom Common Stock or Company Capital Stock),
reorganization, reclassification, recapitalization or other like change with
respect to Broadcom Common Stock or Company Capital Stock the effective date of
which occurs after the date hereof and prior to the Effective Time.
1.9 Fractional Shares. No fraction of a share of Broadcom Common Stock
will be issued in the Merger, but in lieu thereof, each holder of shares of
Company Capital Stock who would otherwise be entitled to a fraction of a share
of Broadcom Common Stock (after aggregating all fractional shares of Broadcom
Common Stock to be received by such holder) shall be entitled to receive from
Broadcom an amount of cash (rounded to the nearest whole cent) equal to the
product of (a) such fraction, multiplied by (b) the Closing Price.
1.10 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of Company Capital Stock held by a holder who has demanded
and perfected appraisal rights for such shares in accordance with the California
Code and who, as of the Effective Time, has not effectively withdrawn or lost
such appraisal or dissenters' rights ("Dissenting Shares") shall not be
converted into or represent a right to receive Broadcom Common Stock pursuant to
Section 1.6, but the holder thereof shall only be entitled to such rights as are
granted by the California Code.
(b) Notwithstanding the provisions of Section 1.10(a), if any
holder of shares of Company Capital Stock who demands appraisal of such shares
under the California Code shall effectively withdraw or lose (through failure to
perfect or otherwise) the right to appraisal, then, as of the later of (i) the
Effective Time or (ii) the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive Broadcom
Common Stock as provided in Section 1.6, without interest thereon, upon
surrender to the Company of the certificate representing such shares in
accordance with Section 1.11.
(c) The Company shall give Broadcom (i) prompt notice of its
receipt of any written demands for appraisal of any shares of Company Capital
Stock, withdrawals of such demands, and any other instruments relating to the
Merger served pursuant to the California Code and received by the Company and
(ii) the opportunity to participate in all negotiations and proceedings with
respect to demands for appraisal under the California Code. The Company shall
not, except with the prior written consent of Broadcom or as may be required
under applicable law, voluntarily make any payment with respect to any demands
for appraisal of Company Capital Stock or offer to settle or settle any such
demands.
1.11 Exchange Procedures.
(a) Broadcom Common Stock. On the Closing Date, Broadcom shall
deposit with the Exchange Agent, for exchange in accordance with this Article 1,
the
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aggregate number of shares of Broadcom Common Stock then issuable in exchange
for outstanding shares of Company Capital Stock, and as promptly as reasonably
practicable following the final determination of the amount (if any) of the
First Earn-Out and the Second Earn-Out, Broadcom shall deposit with the Exchange
Agent, for distribution in accordance with Section 1.16, the aggregate number of
additional shares of Broadcom Common Stock then issuable pursuant to Section
1.16, together, in each case, with cash in an amount sufficient to permit the
payment of cash in lieu of fractional shares pursuant to Section 1.9; provided,
however, that, on behalf of the holders of Company Capital Stock, Broadcom shall
deposit into an escrow account a number of shares of Broadcom Common Stock equal
to the Escrow Amount. The portion of the Escrow Amount contributed on behalf of
each holder of Company Capital Stock shall be in proportion to the aggregate
number of shares of Broadcom Common Stock which such holder would otherwise be
entitled to receive pursuant to Section 1.6 or Section 1.16 by virtue of
ownership of outstanding shares of Company Capital Stock or right (if any) to
acquire shares of Company Capital Stock, as the case may be.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Surviving Corporation shall cause to be mailed to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Capital Stock (the
"Certificates") and which shares were converted into the right to receive shares
of Broadcom Common Stock pursuant to Section 1.6, (i) a letter of transmittal in
customary form (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Broadcom may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of Broadcom Common Stock and cash in lieu of fractional
shares. Upon surrender of a Certificate for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by Broadcom, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the holder of such Certificate shall be entitled
to receive, in exchange therefor, a certificate representing the number of whole
shares of Broadcom Common Stock to which such holder is initially entitled
pursuant to Section 1.6 (without giving effect to either the First Earn-Out or
the Second Earn-Out), less the number of shares of Broadcom Common Stock to be
deposited in the Escrow Fund on such holder's behalf pursuant to Article 7, plus
the amount of cash in lieu of fractional shares to which such holder is entitled
pursuant to Section 1.9, and the Certificate so surrendered shall be canceled.
Promptly following the final determination of the amount (if any) of the First
Earn-Out and the Second Earn-Out, the person who immediately prior to the
Effective Time was the holder of a Certificate shall be entitled to receive a
certificate representing the number of additional whole shares of Broadcom
Common (if any) to which such holder is entitled pursuant to Section 1.16, less
the number of additional shares of Broadcom Common Stock (if any) to be
deposited in the Escrow Fund on such holder's behalf pursuant to Article 7, plus
the amount of cash in lieu of fractional shares to which such holder is entitled
pursuant to Section 1.9. As soon as practicable after the Effective Time, the
date of the First Earn-Out and the date of the Second Earn-Out, and subject to
and in accordance with the provisions of Article 7, Broadcom shall cause to be
distributed to the Depositary Agent a certificate or certificates (in such
denominations as may be requested by the
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Depositary Agent) representing a number of shares of Broadcom Common Stock
equal, in the aggregate, to the Escrow Amount, which certificate or certificates
shall be registered in the name of the Depositary Agent. Such shares shall be
beneficially owned by the holders on whose behalf such shares were deposited
into the Escrow Fund and shall be available to compensate Broadcom as provided
in Article 7. Until surrendered, each outstanding Certificate that, prior to the
Effective Time, represented shares of Company Capital Stock will be deemed from
and after the Effective Time, for all corporate purposes, other than the payment
of dividends, to evidence the ownership of the number of full shares of Broadcom
Common Stock into which such shares of Company Capital Stock shall have been so
converted (subject only to, if applicable, the expiration or early termination
of any waiting period under the HSR Act which is applicable to the holder of
such shares) and cash in lieu of fractional shares.
(c) Distributions With Respect to Unexchanged Shares of Company
Capital Stock. No dividends or other distributions with respect to Broadcom
Common Stock declared or made after the Effective Time and with a record date
after the Effective Time will be paid to the holder of any unsurrendered
Certificate with respect to the shares of Broadcom Common Stock represented
thereby until the holder of record of such Certificate shall surrender such
Certificate. Subject to applicable law, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing whole shares of Broadcom Common Stock issued in exchange therefor,
without interest, at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore
payable (but for the provisions of this Section 1.11(c)) with respect to such
whole shares of Broadcom Common Stock.
(d) Transfers of Ownership. If any certificate for shares of
Broadcom Common Stock is to be issued pursuant to this Agreement in a name other
than that in which the Certificate surrendered in exchange therefor is
registered, it will be a condition of the issuance thereof that the Certificate
so surrendered will be properly endorsed and otherwise in proper form for
transfer and that the person requesting such exchange will have paid to Broadcom
or any agent designated by it any transfer or other taxes required by reason of
the issuance of a certificate for shares of Broadcom Common Stock in any name
other than that of the registered holder of the Certificate surrendered, or
established to the satisfaction of Broadcom or any agent designated by it that
such tax has been paid or is not payable.
1.12 No Further Ownership Rights in Company Capital Stock. All shares of
Broadcom Common Stock issued upon the surrender for exchange of shares of
Company Capital Stock in accordance with the terms hereof (including any cash in
lieu of fractional shares) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Capital Stock,
and there shall be no further registration of transfers on the records of the
Company of shares of Company Capital Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article 1.
1.13 Lost, Stolen or Destroyed Certificates. In the event any
certificates evidencing shares of Company Capital Stock shall have been lost,
stolen or destroyed, the
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Exchange Agent shall issue certificates representing such shares of Broadcom
Common Stock and cash in lieu of fractional shares in exchange for such lost,
stolen or destroyed Certificates, upon the making of an affidavit of that fact
by the holder thereof; provided, however, that Broadcom or the Exchange Agent
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed Certificates to provide an
indemnity or deliver a bond in such sum as it may reasonably direct as indemnity
against any claim that may be made against Broadcom or the Exchange Agent with
respect to the Certificates alleged to have been lost, stolen or destroyed.
1.14 Exemption From Registration; California Permit. The shares of
Broadcom Common Stock to be issued pursuant to Section 1.6 in connection with
the Merger will be issued in a transaction exempt from registration under the
Securities Act of 1933, as amended, and the rules and regulations promulgated by
the SEC thereunder (the "Securities Act"), by reason of Section 3(a)(10) thereof
or, pursuant to Section 5.1(c), by reason of Section 4(2) of the Securities Act.
Subject to the provisions of Section 5.1(c), the shares of Broadcom Common Stock
to be issued pursuant to Section 1.6 in connection with the Merger will be
qualified under the California Code, pursuant to Section 25121 thereof, after a
fairness hearing has been held pursuant to the authority granted by Section
25142 of such law, and (if deemed necessary by Broadcom in its good faith
judgment) such fairness hearing shall also address the assumption by Broadcom of
all Company Options pursuant to Section 1.6 hereof. Each of Broadcom and the
Company shall use commercially reasonable efforts (i) to file, within five (5)
Business Days after the execution and delivery of this Agreement, an application
for issuance of a permit pursuant to Section 25121 of the California Code to
issue such securities and (if deemed necessary by Broadcom in its good faith
judgment) to assume such Company Options (the "California Permit") and (ii) to
obtain the California Permit as promptly as practicable.
1.15 Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company, or to effect the assignment to the
Surviving Corporation of any and all Company Intellectual Property created by a
founder, employee or consultant of the Company (including Intellectual Property
created by any of the Company's founders prior to the creation of the Company),
or to complete and prosecute all domestic and foreign patent filings related to
such Company Intellectual Property, the officers and directors of the Surviving
Corporation are fully authorized to take, and will take, all such lawful and
necessary action.
1.16 Earn-Out.
(a) First Earn-Out. If the Surviving Corporation meets the
milestones set forth in Schedule 1.16(a) to this Agreement, the persons who
immediately prior to the Effective Time were holders of either
(i) Company Preferred Stock (but only to the extent that
such persons have not theretofore received the full
number of shares of Broadcom Common Stock issuable (and
cash in lieu of fractional
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shares payable) to such persons in connection with the
Merger pursuant to Section 3 of Article III.D of the
Company's Restated Articles of Incorporation), or
(ii) Company Common Stock or Options (to the extent that
the Aggregate Common Amount and the Common Stock
Exchange Ratio are increased as a result of the First
Earn-Out)
shall be entitled to receive additional shares of Broadcom Common Stock (or
additional options thereon, as the case may be) in an aggregate amount equal to
(x) one hundred fifty thousand (150,000) minus (y) two thousand (2,000) for each
day after December 31, 2000 until the milestones set forth in Schedule 1.16(a)
to this Agreement are achieved (the "First Earn-Out"). The additional shares and
options (if any) comprising the First Earn-Out shall be allocated among such
holders in accordance with the increase in the applicable Exchange Ratio
resulting from the First Earn-Out and shall be distributed in accordance with
the procedures set forth in Section 1.11(b) (in the case of shares) or reserved
for issuance in accordance with Section 1.6(d) and Section 1.7 (in the case of
options).
(b) Second Earn-Out. If the Surviving Corporation is awarded
"Significant Design Wins" in calendar year 2001 that meet the milestones and
definition set forth in Schedule 1.16(b) to this Agreement on or before December
31, 2001, the persons who immediately prior to the Effective Time were holders
of either
(i) Company Preferred Stock (but only to the extent that
such persons have not theretofore received the full
number of shares of Broadcom Common Stock issuable (and
cash in lieu of fractional shares payable) to such
persons in connection with the Merger pursuant to
Section 3 of Article III.D of the Company's Restated
Articles of Incorporation), or
(ii) Company Common Stock or Company Options (to the
extent that the Aggregate Common Amount is increased as
a result of the Second Earn-Out)
shall be entitled to receive additional shares of Broadcom Common Stock (or
additional options thereon, as the case may be) in the aggregate amount provided
in Schedule 1.16(b) (which amount shall not exceed an aggregate of one hundred
fifty thousand (150,000) shares and options) (the "Second Earn-Out"). The
additional shares and options (if any) comprising the Second Earn-Out shall be
allocated among such holders in accordance with the increase in the applicable
Exchange Ratio resulting from the Second Earn-Out and shall be distributed in
accordance with the procedures set forth in Section 1.11(b) (in the case of
shares) or reserved for issuance in accordance with Section 1.6(d) and Section
1.7 (in the case of options).
(c) Illustrative Examples. The provisions of this Agreement
relating to the First Earn-Out and the Second Earn-Out shall be interpreted and
applied in a manner consistent with the examples set forth in Schedule 1.16(c)
to this Agreement.
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(d) Procedure. No later than ten (10) Business Days following
each Earn-Out Date, Broadcom shall provide to the Shareholder Agent either (i) a
statement that the relevant conditions have been satisfied (in whole or in part)
or (ii) a statement that the relevant conditions have not been satisfied (each,
in case of either clause (i) or (ii), an "Earn-Out Determination"). If the
Earn-Out Determination indicates that the applicable conditions have been
satisfied in full and that the applicable number of shares of Broadcom Common
Stock will be issued (or, in the case of Company Options, reserved for
issuance), then no action on the part of the Shareholder Agent shall be
necessary and such Earn-Out Determination shall be deemed final (a "Final
Earn-Out Amount"). In any other case, the Shareholder Agent shall notify
Broadcom in writing within ten (10) Business Days of receipt of such Earn-Out
Determination whether the Shareholder Agent disputes any such determination,
setting forth in reasonable detail the basis for the dispute (each an "Earn-Out
Dispute Notice"). If the Shareholder Agent does not deliver an Earn-Out Dispute
Notice within ten (10) Business Days of receipt of an Earn-Out Determination or
if the Shareholder Agent accepts such amount in writing, such Earn-Out
Determination shall be deemed a Final Earn-Out Amount. In the event an Earn-Out
Dispute Notice is delivered, Broadcom and the Shareholder Agent shall meet
within ten (10) Business Days of the delivery of such Earn-Out Dispute Notice to
attempt to resolve such dispute in good faith. If a final resolution of such
dispute is reached, the agreed upon amount shall be deemed to be the Final
Earn-Out Amount. If no final resolution is determined within fifteen (15)
Business Days of the delivery of such Earn-Out Dispute Notice after good faith
negotiation, the final determination of the Final Earn-Out Amount shall be
submitted to arbitration in accordance with the procedures set forth in Section
7.2(g)(ii) and (iii). The determination of the arbitrators shall be final,
binding and conclusive upon each holder of Company Common Stock, Company
Options, Company Warrants (if any) or Company Stock Purchase Rights (if any),
the Shareholder Agent and Broadcom.
(e) Shareholder Agent. The provisions of Sections 7.2(h), (i)
and (k) shall apply to any and all acts by the Shareholder Agent in connection
with this Section 1.16. Any decision, act, consent or instruction of the
Shareholder Agent in connection this Section 1.16 shall constitute a decision of
all the Company shareholders and shall be final, binding and conclusive upon
each of such shareholders and Broadcom may rely upon any such decision, act,
consent or instruction of the Shareholder Agent as being the decision, act,
consent or instruction of every such holder. Broadcom is hereby relieved from
any liability to any Person for any acts done by it in accordance with such
decision, act, consent or instruction of the Shareholder Agent.
(f) Company Warrants. Notwithstanding any other provisions of
this Agreement to the contrary, the holders of Company Warrants (if any) shall
not have any right to receive the First Earn-Out (if any) or the Second Earn-Out
(if any).
(g) No Assignment of Earn-Out Rights. No interest in the First
Earn-Out or the Second Earn-Out or any portion thereof, no right to participate,
in whole or in part, in the First Earn-Out or the Second Earn-Out pursuant to
Section 1.16, and no right to receive any distribution of cash or securities in
connection therewith pursuant to Section 1.11 may be assigned or transferred to
any Person (whether by operation of law, or in connection with any sale,
assignment or other transfer of any shares of Company Common Stock, Company
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Preferred Stock or Company Options (or any Broadcom securities issued in
exchange therefor pursuant to Section 1.6), or otherwise), and any attempt to do
so will be void. The First Earn-Out, the Second Earn-Out and the provisions of
Section 1.11 and Section 1.16 relating to the First Earn-Out and the Second
Earn-Out are intended solely for the benefit of the persons who immediately
prior to the Effective Time were holders of Company Common Stock, Company
Preferred Stock or Company Options. The right (if any) to receive distributions
in connection with the First Earn-Out and the Second Earn-Out shall be personal
to the persons who immediately prior to the Effective Time were holders of
Company Common Stock, Company Preferred Stock and Company Options, and such
right shall not (x) attach to or run with such stock or options or any Broadcom
securities issued in exchange therefor) or (y) inure to the benefit of any
purchaser, assignee or other transferee either of such stock or options or such
Broadcom securities.
(h) No Interest. No interest shall accrue or be paid on any
portion of the First Earn-Out or Second Earn-Out or any payment or distribution
pursuant to Section 1.16 or the provisions of Section 1.11 relating to the First
Earn-Out and the Second Earn-Out.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Broadcom, subject to such
exceptions as are specifically disclosed with respect to specific numbered and
lettered sections and subsections of this Article 2 in the disclosure schedule
and schedule of exceptions (the "Company Disclosure Schedule") delivered
herewith and dated as of the date hereof, and numbered with corresponding
numbered and lettered sections and subsections, as follows:
2.1 Organization and Qualification. Each of the Company and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the state or country of its incorporation, and has
full corporate power and authority to conduct its business as now conducted and
as currently proposed to be conducted by the Company and to own, use, license
and lease its Assets and Properties. Each of the Company and each of its
Subsidiaries is duly qualified, licensed or admitted to do business and is in
good standing as a foreign corporation in each jurisdiction in which the
ownership, use, licensing or leasing of its Assets and Properties, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for such failures to be so duly qualified, licensed
or admitted and in good standing that could not reasonably be expected to have a
material adverse effect on the Business or Condition of the Company and its
Subsidiaries, taking the Company together with its Subsidiaries as a whole.
Section 2.1 of the Company Disclosure Schedule sets forth each jurisdiction
where each of the Company and its Subsidiaries is so qualified, licensed or
admitted to do business and separately lists each other jurisdiction in which
each of the Company and its Subsidiaries owns, uses, licenses or leases its
Assets and Properties, or conducts business or has employees or engages
independent contractors.
2.2 Authority Relative to this Agreement. Subject only to the requisite
approval of the Merger and this Agreement by the shareholders of the Company,
the Company has
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full corporate power and authority to execute and deliver this Agreement and the
other agreements which are attached (or forms of which are attached) as exhibits
hereto (the "Ancillary Agreements") to which the Company is a party, to perform
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The Company's Board of Directors has approved
this Agreement and declared its advisability. The execution and delivery by the
Company of this Agreement and the Ancillary Agreements to which the Company is a
party and the consummation by the Company of the transactions contemplated
hereby and thereby, and the performance by the Company of its obligations
hereunder and thereunder, have been duly and validly authorized by all necessary
action by the Board of Directors of the Company, and no other action on the part
of the Board of Directors of the Company is required to authorize the execution,
delivery and performance of this Agreement and the Ancillary Agreements to which
the Company is a party and the consummation by the Company of the transactions
contemplated hereby and thereby. This Agreement and the Ancillary Agreements to
which the Company is a party have been or will be, as applicable, duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof (and, in the case of the Ancillary
Agreements to which Broadcom is a party, thereof) by Broadcom, each constitutes
or will constitute, as applicable, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its respective terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar Laws relating
to the enforcement of creditors' rights generally and by general principles of
equity.
2.3 Capital Stock.
(a) The authorized capital stock of the Company consists only of
75,000,000 shares of Common Stock, no par value ("Company Common Stock"), of
which 8,734,315 shares of Common Stock are issued and outstanding as of the date
hereof, and 16,038,606 shares of Preferred Stock, no par value ("Company
Preferred Stock"), of which 14,842,543 shares of Preferred Stock are issued and
outstanding as of the date hereof. The designation and status of the Company
Preferred Stock is as follows: (i) 5,065,102 shares are designated as Series A
Preferred Stock ("Company Series A Preferred Stock"), all of which are issued
and outstanding as of the date hereof, (ii) 3,309,964 shares are designated as
Series B Preferred Stock ("Company Series B Preferred Stock"), all of which are
issued and outstanding as of the date hereof, (iii) 2,663,540 shares are
designated as Series C Preferred Stock ("Company Series C Preferred Stock"), all
of which are issued and outstanding as of the date hereof, and (iv) 5,000,000
shares are designated as Series D Preferred Stock ("Company Series D Preferred
Stock"), 3,803,937 of which are issued and outstanding as of the date hereof.
All of the issued and outstanding shares of Company Common Stock and Company
Preferred Stock are validly issued, fully paid and nonassessable, and have been
issued in compliance with all applicable federal, state and foreign securities
Laws. Except as set forth in Section 2.3(a) of the Company Disclosure Schedule,
no shares of Company Common Stock or Company Preferred Stock are held in
treasury or are authorized or reserved for issuance.
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(b) Section 2.3(b) of the Company Disclosure Schedule lists the
name and state of residence of each holder of Company Common Stock and Company
Preferred Stock provided to the Company by such holder.
(c) With respect to any Company Common Stock or Company
Preferred Stock that has been issued subject to a repurchase option on the part
of the Company, Section 2.3(c) of the Company Disclosure Schedule sets forth the
holder thereof, the number and type of securities covered thereby, and the
vesting schedule thereof (including a description of the circumstances under
which such vesting schedule can or will be accelerated).
(d) Except as set forth in Section 2.3(d) of the Company
Disclosure Schedule, there are no outstanding Company Options, Company Warrants,
Company Stock Purchase Rights, Restricted Stock Purchase Agreements or shares of
Company Restricted Stock or agreements, arrangements or understandings to which
the Company is a party (written or oral) to issue any Options with respect to
the Company. With respect to each Company Option, Company Warrant (if any),
Company Stock Purchase Right (if any), Restricted Stock Purchase Agreement or
share of Company Restricted Stock or agreements, arrangements or understandings
to which the Company is a party (written or oral) to issue any Options or any
other equity securities with respect to the Company, Section 2.3(d) of the
Company Disclosure Schedule sets forth the holder thereof, the number and type
of securities issuable thereunder, and, if applicable, the exercise price
therefor, the exercise period and vesting schedule thereof (including a
description of the circumstances under which such vesting schedule can or will
be accelerated). All of the Company Options, Company Warrants (if any) and
Company Stock Purchase Rights (if any) were issued in compliance with all
applicable federal, state and foreign securities Laws.
(e) Except as set forth in Section 2.3(e) of the Company
Disclosure Schedule, there are no preemptive rights or agreements, arrangements
or understandings to issue preemptive rights with respect to the issuance or
sale of Company Capital Stock created by statute, the Articles of Incorporation
or Bylaws of the Company, or any agreement or other arrangement to which the
Company is a party (written or oral) or to which it is bound and there are no
agreements, arrangements or understandings to which the Company is a party
(written or oral) pursuant to which the Company has the right to elect to
satisfy any Liability by issuing Company Common Stock or Equity Equivalents.
(f) The terms of the Company Stock Plan and the applicable stock
option agreements related to the outstanding Company Options permit the
assumption or substitution of options to purchase Broadcom Common Stock as
provided in this Agreement, without the consent or approval of the holders of
such securities, Company Shareholder Action or otherwise and without any
acceleration of the exercise schedule or vesting provisions in effect for those
options. True and complete copies of all agreements and instruments relating to
or issued under the Company Stock Plan have been provided to Broadcom and such
agreements and instruments have not been amended, modified or supplemented, and
there are no agreements to amend, modify or supplement such agreements or
instruments in any case from the form provided to Broadcom. Except for the
Support Agreements, the Company is not a party or subject to any agreement or
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understanding, and, to the Company's knowledge, there is no agreement,
arrangement or understanding between or among any Persons which affects,
restricts or relates to voting, giving of written consents, dividend rights or
transferability of shares with respect to the Company Capital Stock, including
any voting trust agreement or proxy. Except as set forth in Section 2.3(f) of
the Company Disclosure Schedule, no debt securities of the Company are issued
and outstanding.
2.4 No Subsidiaries. Except as set forth in Section 2.4 of the Company
Disclosure Schedule, the Company has no (and prior to the Closing will have no)
Subsidiaries and does not (and prior to the Closing will not) otherwise hold any
equity, membership, partnership, joint venture or other ownership interest in
any Person.
2.5 Directors and Officers. The names of each director and officer of
the Company and each of its Subsidiaries on the date hereof, and his or her
position with the Company and each of its Subsidiaries, are listed in Section
2.5 of the Company Disclosure Schedule.
2.6 No Conflicts. The execution and delivery by the Company of this
Agreement and the Ancillary Agreements to which the Company is a party does not,
and the performance by the Company of its obligations under this Agreement and
the Ancillary Agreements to which the Company is a party and the consummation of
the transactions contemplated hereby and thereby do not and will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the Articles of Incorporation or Bylaws
of the Company or any of its Subsidiaries;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Section 2.6(b) of the
Company Disclosure Schedule, if any, conflict with or result in a violation of
any Law or Order applicable to the Company or any of its Subsidiaries or any of
their respective Assets and Properties; or
(c) except as disclosed in Section 2.6(c) of the Company
Disclosure Schedule, (i) conflict with or result in a violation or breach of,
(ii) constitute a default (or an event that, with or without notice or lapse of
time or both, would constitute a default) under, (iii) require the Company or
any of its Subsidiaries to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the terms of
(except for (A) the filing of the Agreement of Merger, together with the
required officer's certificate(s); (B) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state or federal securities laws; and (C) such filings as may be
required under the HSR Act), (iv) result in or give to any Person any right of
termination, cancellation, acceleration or modification in or with respect to,
(v) result in or give to any Person any additional rights or entitlement to
increased, additional, accelerated or guaranteed payments or performance under,
(vi) result in the creation or imposition of (or the obligation to create or
impose) any Lien upon the Company, any of its Subsidiaries or any of their
respective Assets and Properties under or (vii) result in the loss of any
material benefit under, any of the terms, conditions or provisions of any
Contract or
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License to which the Company or any of its Subsidiaries is a party or by which
any of the their respective Assets and Properties is bound.
2.7 Books and Records; Organizational Documents. The minute books and
stock record books and other similar records of the Company and its Subsidiaries
have been provided or made available to Broadcom or its counsel prior to the
execution of this Agreement, are complete and correct in all material respects.
Such minute books contain a true and complete record, in all material respects,
of all actions taken at all meetings and by all written consents in lieu of
meetings of the directors, shareholders and committees of the Board of Directors
of the Company and its Subsidiaries from their respective dates of incorporation
through the date hereof. The Company and each of its Subsidiaries have prior to
the execution of this Agreement delivered to Broadcom true and complete copies
of their respective articles of incorporation and bylaws, both as amended
through the date hereof. Neither the Company nor any of its Subsidiaries is in
violation of any provisions of their respective articles of incorporation or
bylaws.
2.8 Company Financial Statements. Section 2.8(a) of the Company
Disclosure Schedule sets forth the Company Financials. The Company Financials
delivered to Broadcom are correct and complete in all material respects and have
been prepared in accordance with GAAP, applied on a basis consistent throughout
the periods indicated and consistent with each other (except as may be indicated
in the notes thereto as delivered to Broadcom prior to the date hereof, and, in
the case of the Interim Financial Statements, subject to normal year-end
adjustments, which adjustments will not be material in amount or significance).
The Company Financials present fairly and accurately the financial condition and
operating results of the Company and its Subsidiaries, on a consolidated basis,
as of the dates and during the periods indicated therein, subject, in the case
of the Interim Financial Statements, to normal year-end adjustments, which
adjustments will not be material in amount or significance. Except as set forth
in Section 2.8(b) of the Company Disclosure Schedule, since January 1, 1995,
there has been no change in any accounting policies, principles, methods or
practices, including any change with respect to reserves (whether for bad debts,
contingent liabilities or otherwise), of the Company or any of its Subsidiaries.
2.9 Absence of Changes. Since the Audited Financial Statement Date,
except as set forth in Section 2.9 of the Company Disclosure Schedule, there has
not been any material adverse effect on the Business or Condition of the Company
and its Subsidiaries, or any occurrence or event which, individually or in the
aggregate, could be reasonably expected to have any material adverse effect on
the Business or Condition of the Company and its Subsidiaries, in each case
taking the Company together with its Subsidiaries as a whole. Since the
beginning of its 2000 fiscal year, the Company has operated its business in
accordance with the 2000-01 Operating Plan (a true, correct and complete copy of
which has been provided to and approved by Broadcom prior to the date of this
Agreement). In addition, without limiting the generality of the foregoing,
except as expressly contemplated by this Agreement and except as disclosed in
Section 2.9 of the Company Disclosure Schedule, since the Audited Financial
Statement Date:
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(a) neither the Company nor any of its Subsidiaries has entered
into any Contract, commitment or transaction or incurred any Liabilities outside
of the ordinary course of business consistent with past practice;
(b) neither the Company nor any of its Subsidiaries has entered
into any Contract in connection with any transaction involving a Business
Combination;
(c) neither the Company nor any of its Subsidiaries has altered
in any material respect, or entered into any Contract or other commitment to
alter in any material respect, its interest in any corporation, association,
joint venture, partnership or business entity in which the Company or its
Subsidiaries directly or indirectly holds any equity interest (or any right to
acquire any equity interest) on the date hereof;
(d) neither the Company nor any of its Subsidiaries has entered
into any strategic alliance, joint development or joint marketing Contract;
(e) there has not been any material amendment or other material
modification (or agreement to make any material amendment or other material
modification) or breach of the terms of, any of the Contracts set forth or
described in the Company Disclosure Schedule;
(f) neither the Company nor any of its Subsidiaries has entered
into any transaction with any officer, director, shareholder, Affiliate or
Associate of the Company or any of its Subsidiaries, other than pursuant to any
Contract in effect on the Audited Financial Statement Date and disclosed to
Broadcom pursuant to (and so identified in) Section 2.9(f), Section 2.18(a)(1),
Section 2.18(a)(2) or Section 2.20 of the Company Disclosure Schedule or other
than pursuant to any contract of employment and listed pursuant to Section
2.18(a)(1) or Section 2.18(a)(2) of the Company Disclosure Schedule;
(g) neither the Company nor any of its Subsidiaries has entered
into or amended in any material respect any Contract pursuant to which any other
Person is granted manufacturing, marketing, distribution, licensing or similar
rights of any type or scope with respect to any product of the Company or any of
its Subsidiaries or any Company Intellectual Property other than as contemplated
by the Contracts and Licenses disclosed in Section 2.9(g) of the Company
Disclosure Schedule;
(h) no Action or Proceeding has been commenced or, to the
knowledge of the Company and its Subsidiaries, threatened by or against the
Company or any of its Subsidiaries;
(i) the Company has not declared or set aside or paid any
dividends on or made any other distributions (whether in cash, stock or
property) in respect of any Company Capital Stock or Equity Equivalents, or
effected or approved any split, combination or reclassification of any Company
Capital Stock or Equity Equivalents or issued or authorized the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
Company Capital Stock or Equity Equivalents, or repurchased, redeemed or
otherwise acquired, directly or indirectly, any shares of Company Capital Stock
or Equity Equivalents, except repurchases of Company Capital Stock pursuant to
agreements with Company
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employees, officers, directors and consultants relating to repurchases at cost
upon termination of service with the Company;
(j) except for (i) the issuance of shares of Company Capital
Stock upon exercise or conversion of then-outstanding Company Options, Company
Warrants (if any), Company Stock Purchase Rights (if any) or Company Preferred
Stock listed in Section 2.3(d) of the Company Disclosure Schedule, (ii) the
issuance of options available for grant under the Company's existing Company
Stock Plan, (iii) the Permitted Grants or (iv) the Series D Financing, (A) the
Company has not issued, granted, delivered, sold or authorized or proposed to
issue, grant, deliver or sell, or purchased or proposed to purchase, any shares
of Company Capital Stock or Equity Equivalents, (B) the Company has not modified
or amended the rights of any holder of any outstanding shares of Company Capital
Stock or Equity Equivalents (including to reduce or alter the consideration to
be paid to the Company upon the exercise of any outstanding Company Options,
Company Warrants (if any), Company Stock Purchase Rights (if any) or other
Equity Equivalents), (C) there have not been any agreements, arrangements, plans
or understandings with respect to any such modification or amendment; and (D)
the Company has not granted any Options with an exercise price of less than the
fair market value of Company Common Stock on the date the Option was granted as
determined reasonably and in good faith by the Company's board of directors.
(k) except in connection with the Series D Financing, there has
not been any amendment to the articles of incorporation or bylaws of the Company
or any of its Subsidiaries;
(l) there has not been any transfer (by way of a License or
otherwise) to any Person of rights to any Company Intellectual Property other
than non-exclusive transfers to the Company's customers, distributors or other
licensees as of August 7, 2000 in the ordinary course of business consistent
with past practice;
(m) neither the Company nor any of its Subsidiaries has made or
agreed to make any disposition or sale of, waiver of rights to, license or lease
of, or incurrence of any Lien on, any Assets and Properties of the Company or
any of its Subsidiaries, other than dispositions of inventory, or nonexclusive
licenses of products to Persons to whom the Company or any of its Subsidiaries
had granted licenses of its products at the Audited Financial Statement Date, in
the ordinary course of business of the Company and its Subsidiaries consistent
with past practice;
(n) neither the Company nor any of its Subsidiaries has made or
agreed to make any purchase of any Assets and Properties of any Person other
than (i) acquisitions of inventory, or licenses of products, in the ordinary
course of business of the Company and its Subsidiaries consistent with past
practice and (ii) other acquisitions in an amount not exceeding one hundred
thousand dollars ($100,000) in the case of any individual item or two hundred
thousand dollars ($200,000) in the aggregate;
(o) neither the Company nor any of its Subsidiaries has made or
agreed to make any capital expenditures or commitments for additions to
property, plant or equipment
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of the Company or any of its Subsidiaries constituting capital assets
individually or in the aggregate in an amount exceeding one hundred thousand
dollars ($100,000);
(p) neither the Company nor any of its Subsidiaries has made or
agreed to make any write-off or write-down, any determination to write off or
write-down, or revalue, any of the Assets and Properties of the Company or any
of its Subsidiaries, or change any reserves or liabilities associated therewith,
individually or in the aggregate in an amount exceeding one hundred thousand
dollars ($100,000);
(q) neither the Company nor any of its Subsidiaries has made or
agreed to make payment, discharge or satisfaction, in an amount in excess of
fifty thousand dollars ($50,000), in any one case, or one hundred thousand
dollars ($100,000) in the aggregate, of any claim, Liability or obligation
(whether absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business of Liabilities reflected or reserved against in the Company Financials;
(r) neither the Company nor any of its Subsidiaries has failed
to pay or otherwise satisfy any Liabilities presently due and payable of the
Company or any of its Subsidiaries, except such Liabilities which are being
contested in good faith by appropriate means or procedures and which,
individually or in the aggregate, are immaterial in amount;
(s) neither the Company nor any of its Subsidiaries has incurred
any Indebtedness or guaranteed any Indebtedness in an aggregate amount exceeding
one hundred thousand dollars ($100,000) or issued or sold any debt securities of
the Company or its Subsidiaries or guaranteed any debt securities of others,
other than any debt securities converted into equity in connection with the
Series D Financing (none of which debt securities remain outstanding);
(t) neither the Company nor any of its Subsidiaries has granted
any severance or termination pay to any director, officer, employee or
consultant, except payments made pursuant to written Contracts outstanding on
the date hereof, copies of which have been delivered to Broadcom and the terms
of which are disclosed in Section 2.9(t) of the Company Disclosure Schedule;
(u) except pursuant to a Contract disclosed to Broadcom pursuant
to Section 2.9(f) or Section 2.18 of the Company Disclosure Schedule, neither
the Company nor any of its Subsidiaries has granted or approved any increase of
greater than five percent (5%) in salary, rate of commissions, rate of
consulting fees or any other compensation of any current or former officer,
director, shareholder, employee, independent contractor or consultant of the
Company or its Subsidiaries;
(v) neither the Company nor any of its Subsidiaries has paid or
approved the payment of any consideration of any nature whatsoever (other than
salary, bonuses, commissions or consulting fees and other customary benefits
paid to any current or former officer, director, shareholder, employee or
consultant of the Company or any of its Subsidiaries, in each case in amounts,
on terms and of a type consistent with the Company's
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past practices) to any current or former officer, director, shareholder,
employee, independent contractor or consultant of the Company or its
Subsidiaries;
(w) neither the Company nor any of its Subsidiaries has
established or modified any (i) targets, goals, pools or similar provisions
under any Plan, employment Contract or other employee compensation arrangement
or independent contractor Contract or other compensation arrangement or (ii)
salary ranges, increased guidelines or similar provisions in respect of any
Plan, employment Contract or other employee compensation arrangement or
independent contractor Contract or other compensation arrangement;
(x) neither the Company nor any of its Subsidiaries has adopted,
entered into, amended, modified or terminated (partially or completely) any
Plan;
(y) neither the Company nor any of its Subsidiaries has paid or
agreed or made any commitment to pay any discretionary or stay bonus;
(z) to the knowledge of the Company after Good Faith
Consultation with the Company's independent accountants, the Company has not
taken or approved any action, including the acceleration of vesting of any
Company Options, Company Warrants (if any), other rights to acquire shares of
Company Capital Stock (if any) or Company Stock Purchase Rights (if any), which
could reasonably be expected to jeopardize the status of the Merger as a
tax-free reorganization;
(aa) neither the Company nor any of its Subsidiaries has made or
changed any material election in respect of Taxes, adopted or changed any
accounting method in respect of Taxes, entered into any tax allocation
agreement, tax sharing agreement, tax indemnity agreement or closing agreement,
settlement or compromise of any claim or assessment in respect of Taxes, or
consented to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes with any Taxing Authority or otherwise;
(bb) neither the Company nor any of its Subsidiaries has made
any change in accounting policies, principles, methods, practices or procedures
(including for bad debts, contingent liabilities or otherwise, respecting
capitalization or expense of research and development expenditures, depreciation
or amortization rates or timing of recognition of income and expense);
(cc) other than in the ordinary course of business, neither the
Company nor any of its Subsidiaries has made any representation or proposal to,
or engaged in substantive discussions with, any of the holders (or their
representatives) of any Indebtedness (if any), or to or with any party which has
issued a letter of credit which benefits the Company or any of its Subsidiaries;
(dd) neither the Company nor any of its Subsidiaries has
commenced or terminated, or made any change in, any line of business;
(ee) neither the Company nor any of its Subsidiaries has failed
to renew any insurance policy; no insurance policy of the Company or any of its
Subsidiaries has
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been canceled or materially amended; and the Company and its Subsidiaries have
given all notices and presented all claims (if any) under all such policies in a
timely fashion;
(ff) there has been no material amendment or non-renewal of any
of the Company's and its Subsidiaries' Approvals, and the Company and its
Subsidiaries have used commercially reasonable efforts to maintain such
Approvals and have observed in all material respects all Laws and Orders
applicable to the conduct of the Company's and its Subsidiaries' respective
businesses or their respective Assets and Properties;
(gg) the Company has taken all commercially reasonable actions
required to procure, maintain, renew, extend or enforce any Company Intellectual
Property, including submission of required documents or fees during the
prosecution of patent, trademark or other applications for Registered
Intellectual Property rights;
(hh) there has been no physical damage, destruction or other
casualty loss (whether or not covered by insurance) affecting any of the real or
personal property or equipment of the Company and its Subsidiaries individually
or in the aggregate in an amount exceeding one hundred thousand dollars
($100,000).
(ii) neither the Company nor any of its Subsidiaries has
repurchased, canceled or modified the terms of any Company Capital Stock, Equity
Equivalents, Company Options, Company Warrants (if any), Company Stock Purchase
Rights (if any) or other financial instrument that derives value from its
convertibility into Company Capital Stock or Equity Equivalents, other than
transactions entered into in the ordinary course of business and pursuant to
either (i) contractual provisions or (ii) the Company Stock Plan, in each case
as in effect at the time of execution and delivery of this Agreement;
(jj) neither the Company nor any of its Subsidiaries has entered
into or approved any contract, arrangement or understanding or acquiesced in
respect of any arrangement or understanding, to do, engage in or cause or having
the effect of any of the foregoing, including with respect to any Business
Combination not otherwise restricted by the foregoing paragraphs.
2.10 No Undisclosed Liabilities. Except as reflected or reserved against
in the Company Financials (including the notes thereto) or as disclosed in
Section 2.10 of the Company Disclosure Schedule, there are no Liabilities of,
relating to or affecting the Company or any of its Subsidiaries or any of their
respective Assets and Properties, other than Liabilities incurred in the
ordinary course of business consistent with past practice since the Audited
Financial Statement Date and in accordance with the provisions of this Agreement
which, individually and in the aggregate, are not material to the Business or
Condition of the Company and its Subsidiaries, taking the Company together with
its Subsidiaries as a whole, and are not for tort or for breach of contract.
2.11 Taxes.
(a) All Tax Returns required to have been filed by or with
respect to the Company, its Subsidiaries and each affiliated, consolidated,
combined, unitary or similar group of which the Company or any of its
Subsidiaries is or was a member (a "Relevant
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Group") have been duly and timely filed (including any extensions), and each
such Tax Return correctly and completely reflects Tax liability and all other
information required to be reported thereon. All such Tax Returns are true,
complete and correct in all material respects. All Taxes due and payable by the
Company or any of its Subsidiaries or any member of a Relevant Group, whether or
not shown on any Tax Return, or claimed to be due by any Tax Authority, for
periods (or portions of periods) covered by the Company Financials, have been
paid or accrued on the balance sheet included in the Company Financials.
(b) Neither the Company nor any of its Subsidiaries has incurred
any material liability for Taxes in the period after the date of the Company
Financials. The unpaid Taxes of the Company and its Subsidiaries (i) did not, as
of the most recent fiscal month end, exceed by any material amount the reserve
for Liability for Income Tax (other than the reserve for deferred taxes
established to reflect timing differences between book and tax income) or Other
Tax set forth on the face of the balance sheet included in the Company
Financials and (ii) will not exceed by any material amount such reserve as
adjusted for operations and transactions in the ordinary course of business
through the Closing Date.
(c) Neither the Company nor any of its Subsidiaries is a party
to any agreement extending the time within which to file any Tax Return or an
extension resulting from the filing of a Tax Return after its original due date
in the ordinary course of business. No claim has ever been made by a Taxing
Authority of any jurisdiction in which the Company or any of its Subsidiaries or
any member of any Relevant Group does not file Tax Returns that the Company or
any of its Subsidiaries or such member is or may be subject to taxation by that
jurisdiction.
(d) The Company, its Subsidiaries and each member of any
Relevant Group have withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, creditor or
independent contractor.
(e) Neither the Company nor any of its Subsidiaries has received
written notification of any action by any Taxing Authority in connection with
assessing additional Taxes against or in respect of it or any Relevant Group for
any past period. There is no dispute or claim concerning any Tax Liability of
the Company or any of its Subsidiaries either (i) threatened, claimed or raised
by any Taxing Authority or (ii) of which the Company or any of its Subsidiaries
is otherwise aware. There are no Liens for Taxes upon the Assets and Properties
of the Company and its Subsidiaries other than Liens for Taxes not yet due and
payable. Section 2.11(e) of the Company Disclosure Schedule indicates those Tax
Returns, if any, of the Company, its Subsidiaries and each member of any
Relevant Group that have been audited or examined by Taxing Authorities, and
indicates those Tax Returns of the Company, its Subsidiaries and each member of
any Relevant Group that currently are the subject of audit or examination. The
Company and its Subsidiaries have delivered to Broadcom complete and correct
copies of all federal, state, local and foreign income Tax Returns filed by, and
all Tax examination reports and statements of deficiencies assessed against or
agreed to by, the Company, its Subsidiaries and each member of any Relevant
Group since the fiscal year ended December 31, 1997.
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(f) There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Returns required to be
filed by, or which include or are treated as including, the Company or any of
its Subsidiaries or with respect to any Tax assessment or deficiency affecting
the Company, any of its Subsidiaries or any Relevant Group.
(g) Neither the Company nor any of its Subsidiaries has received
any written ruling related to Taxes or entered into any agreement with a Taxing
Authority relating to Taxes.
(h) Neither the Company nor any of its Subsidiaries has any
liability for the Taxes of any Person other than the Company and its
Subsidiaries (i) under Section 1.1502-6 of the Treasury regulations (or any
similar provision of state, local or foreign Law), (ii) as a transferee or
successor, (iii) by Contract or (iv) otherwise.
(i) Neither the Company nor any of its Subsidiaries (i) has
agreed to make nor is required to make any adjustment under Section 481 of the
Internal Revenue Code by reason of a change in accounting method or (ii) is a
"consenting corporation" within the meaning of Section 341(f)(1) of the Internal
Revenue Code.
(j) Neither the Company nor any of its Subsidiaries is a party
to or bound by any obligations under any tax sharing, tax allocation, tax
indemnity or similar agreement or arrangement.
(k) Neither the Company nor any of its Subsidiaries is involved
in, subject to, or a party to any joint venture, partnership, Contract or other
arrangement that is treated as a partnership for federal, state, local or
foreign Income Tax purposes.
(l) Neither the Company nor any of its Subsidiaries was included
and is includible in the Tax Return of any Relevant Group with any corporation
other than a return of which the Company or its Subsidiaries is the common
parent corporation.
(m) Neither the Company nor any of its Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any contract,
agreement or arrangement covering any current or former employee or consultant
of the Company or any of its Subsidiaries that under certain circumstances could
require it to make or give rise to any payments that are not deductible as a
result of the provisions set forth in Section 280G of the Internal Revenue Code
or the treasury regulations thereunder or would result in an excise tax to the
recipient of any such payment under Section 4999 of the Internal Revenue Code.
(n) There is currently no limitation on the utilization of the
net operating losses, built-in losses, capital losses, Tax credits or other
similar items of the Company and its Subsidiaries under (i) Section 382 of the
Internal Revenue Code, (ii) Section 383 of the Internal Revenue Code, (iii)
Section 384 of the Internal Revenue Code, and (iv) Section 1502 of the Internal
Revenue Code and Treasury regulations promulgated thereunder.
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(o) Each material election with respect to income Taxes
affecting the Company or any of its Subsidiaries are set forth in Section
2.11(o) of the Company Disclosure Schedule.
(p) Neither the Company nor any of its Subsidiaries is or has it
ever been a United States real property holding corporation within the meaning
of Section 897(c)(1)(A)(ii) of the Internal Revenue Code.
2.12 Legal Proceedings.
(a) Except as set forth in Section 2.12(a) of the Company
Disclosure Schedule:
(i) there are no Actions or Proceedings pending or, to
the knowledge of the Company or any of its Subsidiaries, threatened against,
relating to or affecting the Company or any of its Subsidiaries or any of their
respective Assets and Properties;
(ii) there are no facts or circumstances known to the
Company or any of its Subsidiaries that could reasonably be expected to give
rise to any Action or Proceeding against, relating to or affecting the Company
or any of its Subsidiaries or any of their respective Assets and Properties;
(iii) neither the Company nor any of its Subsidiaries
has received notice, and otherwise have knowledge of any Orders outstanding
against the Company or its Subsidiaries; and
(iv) neither the Company nor any of its Subsidiaries has
received notice and otherwise have knowledge of any defects, dangerous or
substandard conditions in the products or materials sold, distributed, or
currently proposed to be sold or distributed by the Company or any of its
Subsidiaries that could cause bodily injury, sickness, disease, death or damage
to property, or result in loss of use of property, or any claim, suit, demand
for arbitration or notice seeking damages for bodily injury, sickness, disease,
death, or damage to property, or loss of use of property.
(b) Prior to the execution of this Agreement, the Company and
its Subsidiaries have delivered to Broadcom all responses of counsel for the
Company to auditor's requests for information for the preceding three (3) years
(together with any updates provided by such counsel) regarding Actions or
Proceedings pending or threatened against, relating to or affecting the Company
or any of its Subsidiaries. Section 2.12(b) of the Company Disclosure Schedule
sets forth all Actions or Proceedings relating to or affecting, or, to the
knowledge of the Company or any of its Subsidiaries, threatened against, the
Company or any of its Subsidiaries or any of their respective Assets and
Properties during the three (3) year period prior to the date hereof.
2.13 Compliance with Laws and Orders. Neither the Company or any of its
Subsidiaries nor any of their respective directors, officers, Affiliates, agents
or employees has violated in any material respect since the respective dates of
incorporation of the
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Company and its Subsidiaries, or is currently in default or violation in any
material respect under, any Law or Order applicable to the Company or any of its
Subsidiaries or any of their respective Assets and Properties, and neither the
Company nor any of its Subsidiaries is aware of any claim of violation, or of
any actual violation, in any material respect of any such Laws and Orders by the
Company or any of its Subsidiaries since the respective dates of incorporation
of the Company and its Subsidiaries.
2.14 Plans; ERISA.
(a) Existence of Plans. Except as disclosed in Section 2.14(a)
of the Company Disclosure Schedule, (i) neither the Company, any Subsidiary nor
any of their respective ERISA Affiliates maintains or sponsors (or ever
maintained or sponsored), or makes or is required to make contributions to, any
Plans, (ii) none of the Plans is or was a "multi-employer plan", as defined in
Section 3(37) of ERISA, (iii) none of the Plans is or was a "defined benefit
pension plan" within the meaning of Section 3(35) of ERISA, (iv) none of the
Plans provides or provided post-retirement medical or health benefits, (v) none
of the Plans is or was a "welfare benefit fund," as defined in Section 419(e) of
the Internal Revenue Code, or an organization described in Sections 501(c)(9) or
501(c)(20) of the Internal Revenue Code, (vi) neither the Company nor any of its
Subsidiaries nor any of their respective ERISA Affiliates is or was a party to
any collective bargaining agreement, and (vii) neither the Company nor any of
its Subsidiaries nor any of their respective ERISA Affiliates has announced or
otherwise made any commitment to create or amend any Plan. Notwithstanding any
statement or indication in this Agreement to the contrary, there are no Plans
(A) as to which Broadcom will be required to make any contributions or with
respect to which Broadcom shall have any obligation or liability whatsoever,
whether on behalf of any of the current employees of the Company or any
Subsidiary or on behalf of any other person, after the Closing, or (B) which
Broadcom, the Surviving Corporation and their respective Subsidiaries will not
be able to terminate immediately after the Closing in accordance with their
terms and ERISA. With respect to each of such Plans, at the Closing there will
be no unrecorded liabilities with respect to the establishment, implementation,
operation, administration or termination of any such Plan, or the termination of
the participation in any such Plan by the Company or any of its Subsidiaries or
any of their respective ERISA Affiliates. The Company has delivered to Broadcom
true and complete copies of: (I) each of the Plans and any related funding
agreements thereto (including insurance contracts) including all amendments, all
of which are legally valid and binding and in full force and effect and there
are no defaults thereunder, (II) the currently effective Summary Plan
Description pertaining to each of the Plans, (III) all annual reports for each
of the Plans (including all related schedules), (IV) the most recently filed
PBGC Form 1 (if applicable), (V) the most recent Internal Revenue Service
determination letter, opinion, notification or advisory letter (as the case may
be) for each Plan which is intended to constitute a qualified plan under Section
401 of the Internal Revenue Code and each amendment to each of the foregoing
documents, and (VI) for each unfunded Plan, financial statements consisting of
(a) the consolidated statement of assets and liabilities of such Plan as of its
most recent valuation date, and (b) the statement of changes in fund balance and
in financial position or the statement of changes in net assets available for
benefits under such Plan for the most recently-ended plan year, which such
financial statements shall fairly
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present the financial condition and the results of operations of such Plan in
accordance with GAAP, consistently applied, as of such dates.
(b) Present Value of Benefits. The present value of all accrued
benefits under any Plan subject to Title IV of ERISA shall not, as of the
Closing Date, exceed the value of the assets of such Plans allocated to such
accrued benefits, based upon the applicable provisions of the Internal Revenue
Code and ERISA, and each such Plan shall be capable of being terminated as of
the Closing Date in a "standard termination" under Section 4041(b) of ERISA.
With respect to each Plan that is subject to Title IV of ERISA, (i) no amount is
due or owing from the Company, any of its Subsidiaries or any of their
respective ERISA Affiliates to the PBGC or to any "multi-employer Plan" as
defined in Section 3(37) of ERISA on account of any withdrawal therefrom and
(ii) no such Plan has been terminated other than in accordance with ERISA or at
a time when the Plan was not sufficiently funded. The transactions contemplated
hereunder, including the termination of any Plan at or prior to the Closing,
shall not result in any such withdrawal or other liability under any applicable
Laws.
(c) Penalties; Reportable Events. Neither the Company nor any of
its Subsidiaries nor any of their respective ERISA Affiliates is subject to any
material liability, tax or penalty whatsoever to any person or agency whomsoever
as a result of engaging in a prohibited transaction under ERISA or the Internal
Revenue Code, and neither the Company nor any of its Subsidiaries nor any of
their respective ERISA Affiliates has any knowledge of any circumstances which
reasonably might result in any material liability, tax or penalty, including a
penalty under Section 502 of ERISA, as a result of a breach of any duty under
ERISA or under other Laws. Each Plan which is required to comply with the
provisions of Sections 4980B and 4980C of the Internal Revenue Code, or with the
requirements referred to in Section 4980D of the Internal Revenue Code, has
complied in all material respects. No event has occurred which could subject any
Plan to tax under Section 511 of the Internal Revenue Code. None of the Plans
subject to Title IV of ERISA has, since September 2, 1974, been completely or
partially terminated nor has there been any "reportable event", as such term is
defined in Section 4043(b) of ERISA, with respect to any of the Plans since the
effective date of ERISA nor has any notice of intent to terminate been filed or
given with respect to any such Plan. There has been no (i) withdrawal by the
Company or any of its Subsidiaries or any of their respective ERISA Affiliates
that is a substantial employer from a single-employer plan which is a Plan and
which has two or more contributing sponsors at least two of whom are not under
common control, as referred to in Section 4063(b) of ERISA, or (ii) cessation by
the Company, any Subsidiary or any of their respective ERISA Affiliates of
operations at a facility causing more than twenty percent (20%) of Plan
participants to be separated from employment, as referred to in Section 4062(f)
of ERISA. Neither the Company nor any of its Subsidiaries nor any of their
respective ERISA Affiliates, nor any other organization of which any of them are
a successor or Broadcom corporation as defined in Section 4069(b) of ERISA, have
engaged in any transaction described in Section 4069(a) of ERISA.
(d) Deficiencies; Qualification. None of the Plans nor any trust
created thereunder has incurred any "accumulated funding deficiency" as such
term is defined in Section 412 of the Internal Revenue Code, whether or not
waived, since the effective date of
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said Section 412, and no condition has occurred or exists which by the passage
of time could be expected to result in an accumulated funding deficiency as of
the last day of the current plan year of any such Plan. Furthermore, neither the
Company nor any of its Subsidiaries nor any of their respective ERISA
Affiliates, has any unfunded liability under ERISA in respect of any of the
Plans. Each of the Plans which is intended to be a qualified plan under Section
401(a) of the Internal Revenue Code has received a favorable determination
letter, opinion, notification or advisory letter from the Internal Revenue
Service, and has been operated in accordance with its terms and with the
provisions of the Internal Revenue Code. All of the Plans have been administered
and maintained in substantial compliance with ERISA, the Internal Revenue Code
and all other applicable Laws. All contributions required to be made to each of
the Plans under the terms of that Plan, ERISA, the Internal Revenue Code or any
other applicable Laws have been timely made. Each Plan intended to meet the
requirements for tax-favored treatment under Subchapter B of Chapter 1 of the
Internal Revenue Code is in compliance with such requirements. There are no
Liens against the property of the Company or any of its Subsidiaries or any of
their respective ERISA Affiliates under Section 412(n) of the Internal Revenue
Code or Sections 302(f) or 4068 of ERISA. The Interim Financial Statements
properly reflect all amounts required to be accrued as liabilities to date under
each of the Plans.
(e) Acceleration. Neither the execution of this Agreement nor
the consummation of any of the transactions contemplated hereby (whether alone
or upon the occurrence of any additional or further acts or events) will (i)
result in any obligation or liability (with respect to accrued benefits or
otherwise) on the part of the Company, Broadcom, the Surviving Corporation, or
any of their respective Subsidiaries to the PBGC, to any Plan, or to any present
or former employee, director, officer, shareholder, contractor or consultant of
Broadcom, the Surviving Corporation, or any of their respective Subsidiaries or
any of their dependents, (ii) be a trigger event under any Plan that will result
in any payment (whether of severance pay or otherwise) becoming due to any such
present or former employee, officer, director, shareholder, contractor, or
consultant, or any of their dependents, or (iii) accelerate the time of payment
or vesting, or increase the amount, of any compensation theretofore or
thereafter due or granted to any employee, officer, director, shareholder,
contractor, or consultant of the Company or any of its respective Subsidiaries
or any of their dependents. With respect to any insurance policy which provides,
or has provided, funding for benefits under any Plan, (A) there is and will be
no liability of the Company, Broadcom or any of their respective Subsidiaries in
the nature of a retroactive or retrospective rate adjustment, loss sharing
arrangement, or actual or contingent liability as of the Closing Date, nor would
there be any such liability if such insurance policy were terminated as of the
Closing Date, and (B) no insurance company issuing any such policy is in
receivership, conservatorship, bankruptcy, liquidation, or similar proceeding,
and, to the knowledge of the Company, no such proceedings with respect to any
insurer are imminent.
(f) COBRA. With respect to each Plan which provides health care
coverage, the Company, its Subsidiaries and each of their respective ERISA
Affiliates have complied in all material respects with (i) the applicable health
care continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), and the applicable COBRA
regulations and (ii) the applicable requirements of the Health Insurance
Portability and Accountability Act of 1996 and the regulations
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thereunder, and neither the Company nor any of its Subsidiaries nor any of their
respective ERISA Affiliates has incurred any liability under Section 4980B of
the Internal Revenue Code.
(g) Litigation. Other than routine claims for benefits under the
Plans, there are no pending, or, to the best knowledge of the Company or its
Subsidiaries, threatened, Actions or Proceedings involving the Plans, or the
fiduciaries, administrators, or trustees of any of the Plans or the Company, any
Subsidiary or any of their respective ERISA Affiliates as the employer or
sponsor under any Plan, with any of the IRS, the Department of Labor, the PBGC,
any participant in or beneficiary of any Plan or any other person whomsoever.
Neither the Company nor any of its Subsidiaries knows of any reasonable basis
for any such claim, lawsuit, dispute, action or controversy.
(h) No Liabilities. There are no accrued, contingent or other
Liabilities or obligations pursuant to, under or in connection with the
Representative Stock Bonus Plan or any of Representative Stock Bonus Plan
Agreements listed in Section 2.18(a)(1) of the Company Disclosure Schedule.
2.15 Real Property.
(a) Section 2.15(a) of the Company Disclosure Schedule contains
a true and correct list of (i) each parcel of real property leased, utilized
and/or operated by the Company and its Subsidiaries (as lessor or lessee or
otherwise) (the "Leased Real Property") and (ii) all Liens relating to or
affecting any parcel of real property referred to in clause (i) to which the
Company or any of its Subsidiaries is a party. Neither the Company nor any of
its Subsidiaries owns real property other than owned leasehold improvements, if
any, on the Leased Real Property.
(b) Subject to the terms of their respective leases, the Company
and its Subsidiaries have valid and subsisting leasehold estates in and the
right to quiet enjoyment of the Leased Real Properties for the full term of the
leases (including renewal periods) relating thereto. Each lease referred to in
Section 2.15(a)(i) is a legal, valid and binding agreement, enforceable in
accordance with its terms, of the Company, its Subsidiaries and of each other
Person that is a party thereto, and except as set forth in Section 2.15(b) of
the Company Disclosure Schedule, there is no, and neither the Company nor any of
its Subsidiaries has received notice of any, default (or any condition or event
which, after notice or lapse of time or both, would constitute a default)
thereunder. Neither the Company nor any of its Subsidiaries owe brokerage
commissions or finders fees with respect to any such Leased Real Property,
except to the extent that the Company and its Subsidiaries may renew the term of
any such lease, in which case, any such commissions and fees would be in amounts
that are reasonable and customary for the spaces so leased, given their intended
use and terms.
(c) Except as disclosed in Section 2.15(c) of the Company
Disclosure Schedule, all improvements on the Leased Real Property (A) comply
with and are operated in accordance with applicable laws (including
Environmental Laws) and all applicable Liens, Approvals, Contracts, covenants
and restrictions and (B) are in all material respects in
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good operating condition and in a state of good maintenance and repair, ordinary
wear and tear excepted, and such improvements are in all material respects
adequate and suitable for the purposes for which they are presently being used
and there are no condemnation or appropriation proceedings pending or, to the
knowledge of the Company and its Subsidiaries, threatened against any of such
real property or the improvements thereon.
(d) True and correct copies of the documents under which the
Leased Real Property is leased, subleased (to or by the Company, its
Subsidiaries or otherwise), utilized, and/or operated (the "Lease Documents")
have been delivered to Broadcom. The Lease Documents are unmodified and in full
force and effect, and there are no other Contracts between the Company or any of
its Subsidiaries, on the one hand, and any third party, on the other hand, or by
and among any third party, claiming an interest in the interest of the Company
or its Subsidiaries in the Leased Real Property or otherwise relating to the use
and occupancy of the Leased Real Property.
2.16 Tangible Personal Property. The Company and its Subsidiaries are in
possession of and have good and marketable title to, or have valid leasehold
interests in or valid rights under Contract to use, all tangible personal
property used in the conduct of their respective businesses, including all
tangible personal property reflected on the Company Financials and tangible
personal property acquired since the Audited Financial Statement Date, other
than property disposed of since such date in the ordinary course of business
consistent with past practice. Except as disclosed in Section 2.16 of the
Company Disclosure Schedule, all such tangible personal property (including
plant, property and equipment) are free and clear of all Liens and are adequate
and suitable in all material respects for the conduct by the Company and its
Subsidiaries of their respective businesses as presently conducted, and are in
good working order and condition in all material respects, ordinary wear and
tear excepted, and their use complies in all material respects with all
applicable Laws.
2.17 Intellectual Property.
(a) Section 2.17(a) of the Company Disclosure Schedule lists all
Company Registered Intellectual Property (including all trademarks and service
marks that the Company and its Subsidiaries have used with the intent of
creating or benefiting from any common law rights relating to such marks) and
lists any proceedings or actions pending as of the date hereof before any court
or tribunal (including the PTO or equivalent authority anywhere in the world)
related to any of the Company Registered Intellectual Property.
(b) The Company and its Subsidiaries have all requisite right,
title and interest in or valid and enforceable rights under Contracts or
Licenses to use all Company Intellectual Property necessary to the conduct of
their respective businesses as presently conducted. Each item of Company
Intellectual Property, including all Company Registered Intellectual Property
listed in Section 2.17(a) of the Company Disclosure Schedule, is owned
exclusively by the Company or a Subsidiary of the Company (excluding
Intellectual Property licensed to the Company or a Subsidiary of the Company
under any License) and is free and clear of any Liens. The Company and its
Subsidiaries (i) own exclusively all trademarks, service marks and trade names
used by the Company or any of its Subsidiaries
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in connection with the operation or conduct of their respective businesses,
including the sale of any products or technology or the provision of any
services by the Company and its Subsidiaries; provided, however, that the
Company and its Subsidiaries may use trademarks, service marks and trade names
of third parties which are licensed to the Company, its Subsidiaries or are in
the public domain, and (ii) own exclusively, and have good title to, each
copyrighted work that is a product of the Company or a Subsidiary of the Company
and each other work of authorship that the Company or a Subsidiary of the
Company otherwise purports to own.
(c) To the extent that any Company Intellectual Property has
been developed or created by any Person other than the Company or a Subsidiary
of the Company, either the Company or a Subsidiary of the Company has a written
agreement with such Person with respect thereto and the Company or a Subsidiary
of the Company has either (i) obtained ownership of, and is the exclusive owner
of, all such Intellectual Property by operation of law or by valid assignment of
any such rights or (ii) has obtained a License under or to such Intellectual
Property.
(d) Except pursuant to agreements described in Section 2.17(d)
of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has transferred ownership of or granted any License of or other
right to use or authorized the retention of any rights to use any Intellectual
Property that is or was Company Intellectual Property, to any other Person.
(e) The Company Intellectual Property constitutes all the
Intellectual Property used in and/or necessary to the conduct of the businesses
of the Company and its Subsidiaries as currently conducted or as reasonably
contemplated to be conducted, including the design, development, distribution,
marketing, manufacture, use, import, license, and sale of the products,
technology and services of the Company and its Subsidiaries (including products,
technology, or services currently under development).
(f) Section 2.17(f) of the Company Disclosure Schedule lists all
Contracts and Licenses (including all inbound Licenses) to which either the
Company or a Subsidiary of the Company is a party with respect to any
Intellectual Property. No Person other than the Company or a Subsidiary of the
Company has ownership rights to improvements made by the Company or any of its
Subsidiaries in Intellectual Property which has been licensed to the Company or
any of its Subsidiaries.
(g) Section 2.17(g) of the Company Disclosure Schedule lists all
Contracts, Licenses and agreements between the Company or any of its
Subsidiaries, on the one hand, and any other Person, on the other hand, wherein
or whereby either the Company or a Subsidiary of the Company has agreed to, or
assumed, any obligation or duty to warrant, indemnify, reimburse, hold harmless,
guaranty or otherwise assume or incur any obligation or Liability or provide a
right of rescission with respect to the infringement or misappropriation by the
Company or any of its Subsidiaries or such other Person of the Intellectual
Property of any Person other than the Company or its Subsidiaries.
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(h) The operation of the business of the Company and its
Subsidiaries as currently conducted or as presently proposed to be conducted,
including the Company's and its Subsidiaries' design, development, use, import,
manufacture and sale of the products, technology or services (including
products, technology or services currently under development) of the Company or
its Subsidiaries does not (i) infringe or misappropriate the Intellectual
Property of any Person, (ii) violate any term or provision of any License or
Contract concerning such Intellectual Property (including any provision required
by or imposed pursuant to 35 U.S.C. Sections 200-212 in any License or Contract
to which the Company or any of its Subsidiaries is a party requiring that
products be manufactured substantially in the United States ("Made-in-America
Requirements")), (iii) violate the rights of any Person (including rights to
privacy or publicity), or (iv) constitute unfair competition or an unfair trade
practice under any Law, and neither the Company nor any of its Subsidiaries has
received notice from any Person claiming that such operation or any act,
product, technology or service (including products, technology or services
currently under development) of the Company or its Subsidiaries infringes or
misappropriates the Intellectual Property of any Person or constitutes unfair
competition or trade practices under any Law, including notice of third party
patent or other Intellectual Property rights from a potential licensor of such
rights.
(i) Each item of Company Registered Intellectual Property is
valid and subsisting, and all necessary registration, maintenance, renewal fees,
annuity fees and taxes in connection with such Registered Intellectual Property
have been paid and all necessary documents and certificates in connection with
such Company Registered Intellectual Property have been filed with the relevant
patent, copyright, trademark or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property. Section 2.17(i)(1) of the Company Disclosure
Schedule lists all actions that must be taken by the Company within one hundred
eighty (180) days from the date hereof, including the payment of any
registration, maintenance, renewal fees, annuity fees and taxes or the filing of
any documents, applications or certificates for the purposes of maintaining,
perfecting or preserving or renewing any Company Registered Intellectual
Property. Except as set forth in Section 2.17(i)(2) of the Company Disclosure
Schedule, the Company and its Subsidiaries have registered the copyright with
the U.S. Copyright Office and its equivalent in any relevant foreign
jurisdiction for the latest version of each product and technology of the
Company and each of its Subsidiaries that constitutes or includes a
copyrightable work. In each case in which the Company or any of its Subsidiaries
has acquired ownership of any Intellectual Property rights from any Person, the
Company and its Subsidiaries have obtained a valid and enforceable assignment
sufficient to irrevocably transfer all rights in such Intellectual Property
(including the right to seek past and future damages with respect to such
Intellectual Property) to the Company and its Subsidiaries and, to the maximum
extent provided for by and required to protect the Company's and its
Subsidiaries' ownership rights in and to such Intellectual Property in
accordance with applicable Laws, the Company and its Subsidiaries have recorded
each such assignment of Registered Intellectual Property with the relevant
Governmental or Regulatory Authority, including the PTO, the U.S. Copyright
Office, or their respective equivalents in any relevant foreign jurisdiction, as
the case may be.
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(j) There are no Contracts or Licenses between the Company or
any of its Subsidiaries, on the one hand, and any other Person, on the other
hand, with respect to Company Intellectual Property under which there is any
dispute (or, to the knowledge of the Company and its Subsidiaries, facts that
may reasonably lead to a dispute) known to the Company or any of its
Subsidiaries regarding the scope of such Contract or License, or performance
under such Contract or License, including with respect to any payments to be
made or received by the Company or any of its Subsidiaries thereunder.
(k) To the knowledge of the Company and its Subsidiaries, no
Person is infringing or misappropriating any Company Intellectual Property.
(l) The Company and its Subsidiaries have taken all commercially
reasonable steps to protect the Company's and its Subsidiaries' rights in
confidential information and trade secrets of the Company and its Subsidiaries
or provided by any other Person to the Company or any of its Subsidiaries
subject to a duty of confidentiality. Without limiting the generality of the
foregoing, the Company and its Subsidiaries have, and enforce, a policy
requiring each employee, consultant and independent contractor to execute
proprietary information, confidentiality and invention and copyright assignment
agreements substantially in the form set forth in Section 2.17(l) of the Company
Disclosure Schedule, and all current and former employees, consultants and
independent contractors of the Company and each of its Subsidiaries have
executed such an agreement. Copies of all such agreements have been provided to
Broadcom or made available to Broadcom for review.
(m) No Company Intellectual Property or product, technology or
service of the Company is subject to any Order, Action or Proceeding or "march
in" rights that restricts, or that is reasonably expected to restrict in any
manner, the use, transfer or licensing of any Company Intellectual Property by
the Company or any of its Subsidiaries or that may affect the validity, use or
enforceability of such Company Intellectual Property.
(n) No (i) product, technology, service or publication of the
Company or any of its Subsidiaries, (ii) material published or distributed by
the Company or any of its Subsidiaries or (iii) conduct or statement of the
Company or any of its Subsidiaries reasonably constitutes obscene material, a
defamatory statement or material, false advertising or otherwise violates any
Law.
(o) The Company and its Subsidiaries have taken all actions
necessary and appropriate to assure that there shall be no material adverse
change in its business or electronic systems or material interruptions in the
delivery of the Company's and its Subsidiaries' products and services by reason
of the advent of the year 2000, including that all of its products (including
products currently under development) will, without interruption or manual
intervention, continue to consistently, predictably and accurately record,
store, process, calculate and present calendar dates falling on and after (and
if applicable, spans of time including) January 1, 2000, and will consistently,
predictably and accurately calculate any information dependent on or relating to
such dates in the same manner, and with the same functionality, data integrity
and performance, as such products record, store, process, calculate and present
calendar dates on or before December 31, 1999, or calculate any information
dependent on or relating to such dates. Without limiting the
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generality of the foregoing, (i) the Company and its Subsidiaries have taken all
actions necessary and appropriate to ensure that the IT systems and non-IT
systems used by the Company and its Subsidiaries in their respective internal
operations will function properly beyond 1999 (and neither the Company nor any
of its Subsidiaries has any knowledge of any material issues that have arisen in
connection therewith) and (ii) the Company and its Subsidiaries have made
inquiries of the suppliers listed in Section 2.23(b) of the Company Disclosure
Schedule as to the status of their Year 2000 efforts and as a result thereof has
not uncovered any problems that could materially disrupt or harm the day-to-day
functioning of business and operations of the Company and its Subsidiaries.
(p) Neither this Agreement nor any transactions contemplated by
this Agreement will result in Broadcom's granting any rights or licenses with
respect to the Intellectual Property of Broadcom to any Person pursuant to any
Contract to which the Company or any of its Subsidiaries is a party or by which
any of their respective Assets and Properties are bound.
(q) Section 2.17(q) of the Company Disclosure Schedule sets
forth a list of (x) all software which the Company or any of its Subsidiaries
has licensed from any third party which is used by the Company or any of its
Subsidiaries in its products or otherwise in its business (other than standard
off-the-shelf software) and (y) a list of all "freeware" and "shareware"
incorporated into any product now or heretofore shipped by the Company or any of
its Subsidiaries. The Company and its Subsidiaries have all rights necessary to
the use of such software, "freeware" and "shareware".
(r) The products of the Company and its Subsidiaries comply in
all material respects with all applicable IEEE 802.1 and 802.3 and other
appropriate standards and with the feature specifications and performance
standards for the products set forth in Section 2.17(r) of the Company
Disclosure Schedule. There are no outstanding claims (or facts that may
reasonably lead to a claim) for breach of warranties by the Company or any of
its Subsidiaries in connection with the foregoing. All product performance
comparisons heretofore furnished by the Company or any of its Subsidiaries to
customers or Broadcom are accurate in all material respects as of the dates so
furnished (except that, in the case of product performance comparisons made as
of a specified earlier date, such comparisons shall be accurate as of such
specified earlier date, and, in the case of product performance comparisons
superseded by a subsequent product performance comparison furnished to the
customer before the customer's acquisition of a license on the product covered
by the superseded comparison, the superseding comparison shall be accurate in
all material respects and the superseded comparison shall be disregarded).
(s) The Company and its Subsidiaries have taken all commercially
reasonable steps to protect and preserve ownership of Company Intellectual
Property. The Company and its Subsidiaries have secured valid written
assignments from all consultants and employees who contributed to the creation
or development of the Company Intellectual Property. In the event that the
consultant is concurrently employed by the Company or any of its Subsidiaries
and/or a third party, the Company and its Subsidiaries have taken additional
commercially reasonable steps to ensure that any Company Intellectual Property
developed by such a consultant does not belong to the third party or conflict
with the third
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party's employment agreement such steps include ensuring that all research and
development work performed by such a consultant are performed only on facilities
of the Company or its Subsidiaries and only using resources of the Company or
its Subsidiaries, except as set forth in Section 2.17(s) of the Company
Disclosure Schedule.
2.18 Contracts.
(a) Section 2.18(a)(1) of the Company Disclosure Schedule
contains a true and complete list of each of the Contracts or other arrangements
(true and complete copies or, if none, reasonably complete and accurate written
descriptions of which, together with all amendments and supplements thereto and
all waivers of any terms thereof, have been made available to Broadcom prior to
the execution of this Agreement), to which the Company or any of its
Subsidiaries is a party or by which any of their respective Assets and
Properties is bound (other than employee offer letters). Section 2.18(a)(2) of
the Company Disclosure Schedule contains a true and complete list of each
Contract of the Company and its Subsidiaries (i) not terminable by the Company
or any of its Subsidiaries upon thirty (30) days (or less) notice by the Company
or any of its Subsidiaries without penalty or obligation to make payments based
on such termination or (ii) which provides for continuing design or other
services by the Surviving Corporation after the Closing Date.
(b) Each Contract required to be disclosed in Section 2.18(a) of
the Company Disclosure Schedule is in full force and effect and constitutes a
legal, valid and binding agreement, enforceable in accordance with its terms,
and to the knowledge of the Company and its Subsidiaries, each other party
thereto; and except as disclosed in Section 2.18(b) of the Company Disclosure
Schedule, to the knowledge of the Company and its Subsidiaries, no other party
to such Contract is, nor has received notice that it is, in violation or breach
of or default under any such Contract (or with notice or lapse of time or both,
would be in violation or breach of or default under any such Contract).
(c) Except as disclosed in Section 2.18(c) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to or bound by any Contract that has been or could reasonably be expected to be,
individually or in the aggregate with any other similar Contracts, materially
adverse to the Business or Condition of the Company or any of its Subsidiaries
or that has been or could reasonably be expected to result, individually or in
the aggregate with any such other Contracts, in Losses to the Company or be
materially adverse to the Business or Condition of the Company and its
Subsidiaries, in each case taking the Company together with its Subsidiaries as
a whole.
(d) Except as disclosed in Section 2.18(d) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to or bound by any Contract that (i) automatically terminates or allows
termination by the other party thereto upon consummation of the transactions
contemplated by this Agreement or (ii) contains any covenant or other provision
which limits the ability of the Company or any of its Subsidiaries to compete
with any Person in any line of business or in any area or territory.
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2.19 Insurance.
(a) Section 2.19(a) of the Company Disclosure Schedule contains
a true and complete list (including the names and addresses of the insurers, the
expiration dates thereof, the annual premiums and payment terms thereof, the
period of time covered thereby and a brief description of the interests insured
thereby) of all liability, property, workers' compensation, directors' and
officers' liability and other insurance policies currently in effect that insure
any of the business, operations or employees of either the Company or any of its
Subsidiaries or affect or relate to the ownership, use or operation of any of
the Assets and Properties of the Company or any of its Subsidiaries and that (a)
have been issued to the Company or any of its Subsidiaries or (b) to the
knowledge of the Company and its Subsidiaries, have been issued to any Person
(other than the Company) for the benefit of the Company or any of its
Subsidiaries. The insurance coverage provided by the policies set forth in
Section 2.19(a) of the Company Disclosure Schedule will not terminate or lapse
by reason of any of the transactions contemplated by this Agreement or any of
the Ancillary Agreements. Each policy listed in Section 2.19(a) of the Company
Disclosure Schedule is valid and binding and in full force and effect, all
premiums due thereunder have been paid when due and neither the Company nor any
of its Subsidiaries nor any other Person to whom such policy has been issued has
received any notice of cancellation or termination in respect of any such policy
or is in default thereunder, and neither the Company nor any of its Subsidiaries
has any knowledge of any reason or state of facts that could reasonably be
expected to lead to the cancellation of such policies or of any threatened
termination of, or material premium increase with respect to, any of such
policies. The insurance policies listed in Section 2.19(a) of the Company
Disclosure Schedule, (i) in light of the business, operations and Assets and
Properties of the Company and its Subsidiaries are in amounts and have coverages
that are reasonable and customary for Persons engaged in similar businesses and
operations and having similar Assets and Properties and (ii) are in amounts and
have coverages as required by any Contract to which the Company or any of its
Subsidiaries is a party or by which any of their respective Assets and
Properties is bound.
(b) Section 2.19(b) of the Company Disclosure Schedule contains
a list of all claims made under any insurance policies covering the Company or
any of its Subsidiaries in the last two (2) years. Neither the Company nor any
of its Subsidiaries has received notice that any insurer under any policy listed
(or required to be listed) in Section 2.19(b) of the Company Disclosure Schedule
is denying, disputing or questioning liability with respect to a claim
thereunder or defending under a reservation of rights clause. The Company and
its Subsidiaries have, in the reasonable judgment of the Company and its
Subsidiaries, in light of their respective businesses, location, operations and
Assets and Properties, maintained, at all times, without interruption,
appropriate insurance, both in scope and amount of coverages.
2.20 Affiliate Transactions.
(a) Except as disclosed in Section 2.9(f) or Section 2.20(a) of
the Company Disclosure Schedule, (i) there are no Contracts or Liabilities
between the Company or any of its Subsidiaries, on the one hand, and (A) any
current or former officer, director, shareholder, or to the knowledge of the
Company and its Subsidiaries, any Affiliate
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or Associate of the Company or its Subsidiaries or (B) any Person who, to the
knowledge of the Company and its Subsidiaries, is an Associate of any such
officer, director, shareholder or Affiliate, on the other hand, (ii) neither the
Company nor any of its Subsidiaries provides or causes to be provided any
assets, services or facilities to any such current or former officer, director,
shareholder, Affiliate or Associate, (iii) neither the Company nor any of its
Subsidiaries nor any such current or former officer, director, shareholder,
Affiliate or Associate provides or causes to be provided any assets, services or
facilities to the Company or any of its Subsidiaries and (iv) neither the
Company nor any of its Subsidiaries beneficially owns, directly or indirectly,
any Investment Assets of any such current or former officer, director,
shareholder, Affiliate or Associate.
(b) Except as disclosed in Section 2.20(b) of the Company
Disclosure Schedule, each of the Contracts and Liabilities listed in Section
2.20(a) of the Company Disclosure Schedule was entered into or incurred, as the
case may be, on terms no less favorable to the Company and its Subsidiaries (in
the reasonable judgment of the Company and its Subsidiaries) than if such
Contract or Liability was entered into or incurred on an arm's-length basis on
competitive terms. Any Contract to which the Company or any of its Subsidiaries
is a party and in which any director of the Company or any of its Subsidiaries
has a financial interest in such Contract was approved by a majority of the
disinterested members of the Boards of Directors of the Company and its
Subsidiaries and/or shareholders of the Company and its Subsidiaries, as the
case may be, in accordance with applicable law.
2.21 Employees; Labor Relations.
(a) Neither the Company nor any of its Subsidiaries is a party
to any collective bargaining agreement and there is no unfair labor practice or
labor arbitration proceedings pending with respect to the Company or any of its
Subsidiaries, or, to the knowledge of the Company and its Subsidiaries,
threatened, and there are no facts or circumstances known to the Company or any
of its Subsidiaries that could reasonably be expected to give rise to such
complaint or claim. To the knowledge of the Company and its Subsidiaries, there
are no organizational efforts presently underway or threatened involving any
employees of the Company, or any of its Subsidiaries or any of the employees
performing work for the Company or any of its Subsidiaries but provided by an
outside employment agency, if any. There has been no work stoppage, strike or
other concerted action by employees of the Company or any of its Subsidiaries.
(b) Each Person who is an employee of either the Company or any
of its Subsidiaries is employed at will, and no employee of the Company or of
any of its Subsidiaries is represented by a union. Each Person who is an
independent contractor of either the Company or of any of its Subsidiaries is
properly classified as an independent contractor for purposes of all employment
related Laws and all Laws concerning the status of independent contractors.
Section 2.21(b)(i) of the Company Disclosure Schedule sets forth, individually
and by category, the name of each officer, employee, independent contractor and
consultant, together with such person's position or function, annual base salary
or wage and any incentive, severance or bonus arrangements with respect to such
person. Except as described in Section 2.21(b)(ii) of the Company Disclosure
Schedule, the completion of the transactions contemplated by this Agreement will
not result in any
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payment or increased payment becoming due from the Company or any of its
Subsidiaries to any current or former officer, director, or employee of, or
consultant to, the Company or any of its Subsidiaries, and to the knowledge of
the Company and its Subsidiaries, no employee of the Company or of any of its
Subsidiaries has made any threat, or otherwise revealed an intent, to terminate
such employee's relationship with the Company or the Subsidiary by which such
Person is employed, for any reason, including because of the consummation of the
transactions contemplated by this Agreement. Neither the Company nor any of its
Subsidiaries is a party to any agreement for the provision of labor from any
outside agency. To the knowledge of the Company and its Subsidiaries, since
January 1, 1997 there have been no claims by employees of such outside agencies,
if any, with regard to employees assigned to work for the Company or any of its
Subsidiaries, and no claims by any governmental agency with regard to such
employees.
(c) Since January 1, 1997, there have been no federal or state
claims based on sex, sexual or other harassment, age, disability, race or other
discrimination or common law claims, including claims of wrongful termination,
by any employees of the Company, or any of its Subsidiaries or by any of the
employees performing work for the Company or for any of its Subsidiaries but
provided by an outside employment agency, and there are no facts or
circumstances known to the Company or any of its Subsidiaries that could
reasonably be expected to give rise to such complaint or claim. The Company and
its Subsidiaries have complied in all material respects with all laws related to
the employment of employees and, except as set forth in Section 2.21(c) of the
Company Disclosure Schedule, since January 1, 1997, neither the Company nor any
of its Subsidiaries has received any notice of any claim that it has not
complied in any material respect with any Laws relating to the employment of
employees, including any provisions thereof relating to wages, hours, collective
bargaining, the payment of Social Security and similar taxes, equal employment
opportunity, employment discrimination, the WARN Act, employee safety, or that
it is liable for any arrearages of wages or any taxes or penalties for failure
to comply with any of the foregoing.
(d) Neither the Company nor any of its Subsidiaries has written
policies and/or employee handbooks or manuals except as described in Section
2.21(d) of the Company Disclosure Schedule.
(e) To the knowledge of the Company and its Subsidiaries, no
officer, employee or consultant of the Company or of any of its Subsidiaries is
obligated under any Contract or other agreement or subject to any Order or Law
that would interfere with the businesses of the Company and its Subsidiaries as
currently conducted. Neither the execution nor delivery of this Agreement, nor
the carrying on of the businesses of the Company and its Subsidiaries as
presently conducted nor any activity of such officers, employees or consultants
in connection with the carrying on of the businesses of the Company and its
Subsidiaries as presently conducted, will conflict with or result in a breach of
the terms, conditions or provisions of, constitute a default under, or trigger a
condition precedent to any rights under any Contract or other agreement under
which any of such officer's, employees or consultants is now bound.
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2.22 Environmental Matters.
(a) The Company and its Subsidiaries possess any and all
Environmental Permits necessary to or required for the operation of its
business. The Company and its Subsidiaries will obtain, prior to the Closing,
any Environmental Permits that must be obtained as of or immediately after the
Closing in order for the Surviving Corporation, the Company and/or its
Subsidiaries to conduct the businesses of the Company and its Subsidiaries as
conducted prior to the Closing.
(b) The Company and its Subsidiaries are in compliance with (i)
all terms, conditions and provisions of its Environmental Permits; and (ii) all
Environmental Laws.
(c) Neither the Company, nor any of its Subsidiaries nor any of
their respective predecessors nor any entity previously owned by the Company or
any of its Subsidiaries has received any notice of alleged, actual or potential
responsibility for, or any inquiry regarding, (i) any Release or threatened or
suspected Release of any Hazardous Material, or (ii) any violation of
Environmental Law.
(d) Neither the Company nor any of its Subsidiaries nor any of
their respective predecessors nor any entity previously owned by the Company or
any of its Subsidiaries has any obligation or liability with respect to any
Hazardous Material, including any Release or threatened or suspected Release of
any Hazardous Material, and there have been no events, facts or circumstances
which could form the basis of any such obligation or liability.
(e) No Releases of Hazardous Material(s) have occurred at, from,
in, to, on, or under any Site and no Hazardous Material is present in, on, about
or migrating to or from any Site.
(f) Neither the Company nor any of its Subsidiaries, nor any of
their respective predecessors, nor any entity previously owned by the Company or
any of its Subsidiaries, has transported or arranged for the treatment, storage,
handling, disposal or transportation of any Hazardous Material at or to any
location.
(g) No Site is a current or proposed Environmental Clean-up
Site.
(h) There are no Liens under or pursuant to any Environmental
Law on any Site.
(i) There is no (i) underground storage tank, active or
abandoned, (ii) polychlorinated biphenyl containing equipment, (iii)
asbestos-containing material, (iv) radon, (v) lead-based paint or (vi) urea
formaldehyde at any Site. Any underground storage tank meets all 1998 upgrade
requirements.
(j) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted with respect to any Site
which have not been delivered to Broadcom prior to execution of this Agreement.
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(k) Neither the Company nor any of its Subsidiaries is a party,
whether as a direct signatory or as successor, assign, third party beneficiary,
guarantor or otherwise, to, and is not otherwise bound by, any lease or other
contract under which the Company or any of its Subsidiaries is obligated or may
be obligated by any representation, warranty, covenant, restriction,
indemnification or other undertaking respecting Hazardous Materials or under
which any other person is or has been released respecting Hazardous Materials.
(l) The Company, its Subsidiaries, all of their respective
predecessors and all entities previously owned by the Company or any of its
Subsidiaries have provided all notifications and warnings, made all reports, and
kept and maintained all records required pursuant to Environmental Laws.
2.23 Substantial Customers and Suppliers. Section 2.23(a) of the Company
Disclosure Schedule lists the fifteen (15) largest customers of the Company and
its Subsidiaries, collectively on the basis of revenues collected or accrued for
the most recent complete fiscal year. Section 2.23(b) of the Company Disclosure
Schedule lists the fifteen (15) largest suppliers of the Company and its
Subsidiaries, collectively on the basis of cost of goods or services purchased
for the most recent fiscal year. Except as disclosed in Section 2.23(c) of the
Company Disclosure Schedule, no such customer or supplier has ceased or
materially reduced its purchases from or sales or provision of services to the
Company or any of its Subsidiaries since December 31, 1999 or, to the knowledge
of the Company and its Subsidiaries, has threatened to cease or materially
reduce such purchases or sales or provision of services after the date hereof.
Except as disclosed in Section 2.23(d) of the Company Disclosure Schedule, to
the knowledge of the Company and its Subsidiaries, no such customer or supplier
is threatened with bankruptcy or insolvency.
2.24 Accounts Receivable. Except as set forth in Section 2.24 of the
Company Disclosure Schedule, the accounts and notes receivable of the Company
reflected on the Company Financials, and all accounts and notes receivable
arising subsequent to the Unaudited Financial Statement Date, (a) arose from
bona fide sales transactions in the ordinary course of business, consistent with
past practice, and are payable on ordinary trade terms, (b) are legal, valid and
binding obligations of the respective debtors enforceable in accordance with
their respective terms, (c) are not subject to any valid set-off or counterclaim
and (d) do not represent obligations for goods sold on consignment, on approval
or on a sale-or-return basis or subject to any other repurchase or return
arrangement.
2.25 Inventory. All inventory of the Company reflected on the balance
sheet included in the Company Financials consisted, and all such inventory
acquired since the Audited Financial Statement Date consists, of a quality and
quantity usable and salable in the ordinary course of business. Except as
disclosed in the notes to the Company Financials or in Section 2.25 of the
Company Disclosure Schedule, all items included in the inventory of the Company
are the property of the Company free and clear of any Lien, have not been
pledged as collateral, are not held by the Company on consignment from others
and conform in all material respects to all standards applicable to such
inventory or its use or sale imposed by Governmental or Regulatory Authorities.
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2.26 Other Negotiations; Brokers; Third Party Expenses. Neither the
Company nor any of its Subsidiaries, nor any of their respective officers,
directors, employees, agents, or, to the knowledge of the Company and its
Subsidiaries, any of their respective shareholders or Affiliates (nor any
investment banker, financial advisor, attorney, accountant or other Person
retained by or acting for or on behalf of the Company or any of its Subsidiaries
or any such Affiliate) (a) has entered into any Contract that conflicts with any
of the transactions contemplated by this Agreement or (b) has entered into any
Contract or had any discussions with any Person regarding any transaction
involving the Company or any of its Subsidiaries which could result in Broadcom,
the Company, any of its Subsidiaries or any general partner, limited partner,
manager, officer, director, employee, agent or Affiliate of any of them being
subject to any claim for liability to said Person as a result of entering into
this Agreement or consummating the transactions contemplated hereby. No broker,
investment banker, financial advisor or other Person is entitled to any
broker's, finder's, financial advisor's or similar fee or commission in
connection with this Agreement and the transactions contemplated hereby based on
arrangements made by or on behalf of the Company or any of its Subsidiaries.
Section 2.26 of the Company Disclosure Schedule sets forth the principal terms
and conditions of any Contract with respect to, and a reasonable estimate of,
all Third Party Expenses expected to be incurred either by the Company or by any
of its Subsidiaries in connection with the negotiation and effectuation of the
terms and conditions of this Agreement and the transactions contemplated hereby
("Estimated Third Party Expenses").
2.27 Banks and Brokerage Accounts. Section 2.27 of the Company
Disclosure Schedule sets forth (a) a true and complete list of the names and
locations of all banks, trust companies, securities brokers and other financial
institutions at which the Company or any of its Subsidiaries has an account or
safe deposit box or maintains a banking, custodial, trading or other similar
relationship, (b) a true and complete list and description of each such account,
box and relationship, indicating in each case the account number and the names
of the respective officers, employees, agents or other similar representatives
of the Company and its Subsidiaries having signatory power with respect thereto
and (c) a list of each Investment Asset, the name of the record and beneficial
owner thereof, the location of the certificates, if any, therefor, the maturity
date, if any, and any stock or bond powers or other authority for transfer
granted with respect thereto.
2.28 Warranty Obligations.
(a) Section 2.28(a) of the Company Disclosure Schedule sets
forth (i) a list of all forms of written warranties, guarantees and written
warranty policies of the Company and its Subsidiaries in respect of any of their
respective products and services, which are currently in effect (the "Warranty
Obligations"), and the duration of each such Warranty Obligation, (ii) each of
the Warranty Obligations which is subject to any dispute or, to the knowledge of
the Company and its Subsidiaries, threatened dispute and (iii) the experience of
the Company and its Subsidiaries with respect to warranties, guarantees and
warranty policies of or relating to the Company's and its Subsidiaries' products
and services. True and correct copies of the Warranty Obligations have been
delivered to Broadcom prior to the execution of this Agreement.
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(b) Except as disclosed in Section 2.28(b) of the Company
Disclosure Schedule, (i) there have not been any material deviations from the
Warranty Obligations, and no salesperson, employee or agent of the Company or
any of its Subsidiaries is authorized to undertake obligations to any customer
or other Person in excess of such Warranty Obligations and (ii) the balance
sheet included in the Interim Financial Statements reflects adequate reserves
for Warranty Obligations. All products manufactured, designed, licensed, leased,
rented or sold by the Company or any of its Subsidiaries (A) are and were free
from material defects in construction and design and (B) satisfy any and all
Contract or other specifications related thereto to the extent stated in writing
in such Contracts or specifications, in each case, in all material respects.
2.29 Foreign Corrupt Practices Act. Neither the Company nor any of its
Subsidiaries, nor to the knowledge of the Company and its Subsidiaries, any
agent, employee or other Person associated with or acting on behalf of the
Company or its Subsidiaries has, directly or indirectly, used any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds, violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff,
influence payment, kickback or other similar unlawful payment.
2.30 Tax-Free Reorganization. To the knowledge of the Company and its
Subsidiaries after Good Faith Consultation with the Company's and its
Subsidiaries' independent accountants, neither the Company nor any of its
Subsidiaries nor any of their respective directors, officers or shareholders has
taken any action which could reasonably be expected to jeopardize the status of
the Merger as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code.
2.31 Financial Projections/Operating Plan.
(a) The Company and its Subsidiaries have made available to
Broadcom certain financial projections with respect to the Company's and its
Subsidiaries' business which projections were prepared for internal use only.
Neither the Company nor any of its Subsidiaries makes any representation or
warranty regarding the accuracy of such projections or as to whether such
projections will be achieved, except that the Company and its Subsidiaries
represent and warrant that such projections were prepared in good faith and are
based on assumptions believed by the Company and its Subsidiaries to be
reasonable as of the date of this Agreement.
(b) The Company has made available to Broadcom and Broadcom has
reviewed and approved the written budget or other written operation plan for the
balance of 2000 and 2001 (the "2000-01 Operating Plan"). The Company makes no
representation or warranty regarding its ability to successfully execute the
2000-01 Operating Plan, except that the Company represents and warrants that the
2000-01 Operating Plan was prepared in good faith and is based on assumptions
believed by it to be reasonable as of the date of this Agreement.
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2.32 Approvals.
(a) Section 2.32(a) of the Company Disclosure Schedule contains
a list of all material Approvals of Governmental or Regulatory Authorities
relating to the businesses conducted by the Company and its Subsidiaries which
are required to be given to or obtained by the Company and its Subsidiaries from
any and all Governmental or Regulatory Authorities in connection with the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements (other than the filing of the Agreement of Merger, together
with the required officers' certificates, and such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
state or federal securities laws).
(b) Section 2.32(b) of the Company Disclosure Schedule contains
a list of all material Approvals which are required to be given to or obtained
by the Company and its Subsidiaries from any and all third parties other than
Governmental or Regulatory Authorities in connection with the consummation of
the transactions contemplated by this Agreement and the Ancillary Agreements.
(c) Except as set forth in Section 2.32(c)(1) of the Company
Disclosure Schedule, the Company and its Subsidiaries have obtained all material
Approvals from Governmental or Regulatory Authorities necessary to conduct the
businesses conducted by the Company and its Subsidiaries in the manner as
currently being conducted and there has been no written notice received by the
Company or any of its Subsidiaries of any material violation or material
non-compliance with any such Approvals. All material Approvals from Governmental
or Regulatory Authorities necessary to conduct the businesses conducted by the
Company and its Subsidiaries as currently being conducted are set forth in
Section 2.32(c)(2) of the Company Disclosure Schedule.
(d) The affirmative vote or consent of the holders of (i) a
majority of the shares of Company Common Stock outstanding as of the applicable
record date voting separately as a class, and (ii) a majority of the shares of
the shares of Preferred Stock outstanding as of the applicable record date
(voting together) are the only votes of the holders of any of the Company
Capital Stock necessary to approve this Agreement and the Merger and the
transactions contemplated hereby.
(e) Each of the Major Shareholders of the Company has executed
and delivered to Broadcom a Support Agreement.
2.33 Compliance. Except as set forth in Section 2.33 of the Company
Disclosure Schedule, the Company and its Subsidiaries and their respective
Affiliates, officers, directors, agents and employees have been and are in
compliance with all applicable Laws and Orders of any Governmental or Regulatory
Authorities applicable to the businesses conducted by the Company and its
Subsidiaries, and neither the Company nor any of its Subsidiaries nor any of
their respective Affiliates, is aware of any claim of violation, or of any
actual violation, of any such Laws and Orders by the Company or its
Subsidiaries.
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2.34 Takeover Statutes. No Takeover Statute applicable to the Company is
applicable to the Merger or the transactions contemplated hereby.
2.35 Permit Application; Information Statement. The information supplied
by the Company for inclusion in the application for issuance of a California
Permit pursuant to which the shares of Broadcom Common Stock to be issued in the
Merger and (if deemed necessary by Broadcom in its good faith judgment) the
Company Options to be assumed in the Merger will be qualified under the
California Code (the "Permit Application") shall not at the time the Fairness
Hearing is held pursuant to Section 25142 of the California Code and the time
the qualification of such securities is effective under Section 25122 of the
California Code contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The information supplied by the Company for inclusion in
the information statement to be sent to the shareholders of the Company in
connection with the Company shareholders' consideration of the Merger (the
"Company Shareholder Action") (such information statement as amended or
supplemented is referred to herein as the "Information Statement") shall not, on
the date the Information Statement is first mailed to the Company's
shareholders, at the time of the Company Shareholder Action and at the Effective
Time, contain any statement which, at such time, is false or misleading with
respect to any material fact, or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they are made, not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies or written consents for the Company Shareholder
Action which has become false or misleading. Notwithstanding the foregoing, the
Company makes no representation, warranty or covenant with respect to any
information supplied by Broadcom which is contained in the Permit Application or
the Information Statement.
2.36 No Solicitation. Since August 10, 2000, neither the Company nor any
of its Subsidiaries has taken, and neither the Company nor any of its
Subsidiaries has permitted any officer, director, employee, shareholder,
attorney, investment advisor, agent, representative, Affiliate or Associate of
the Company or any of its Subsidiaries to (directly or indirectly), take any of
the actions prohibited from being taken on or after the date of this Agreement
by Section 4.2 with any Person other than Broadcom and its designees.
2.37 Disclosure. No representation or warranty contained in this
Agreement, and no statement contained in the Company Disclosure Schedule or in
any certificate, list or other writing furnished to Broadcom pursuant to any
provision of this Agreement (including the Company Financials and the notes
thereto) contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein, in
the light of the circumstances under which they were made, not misleading. The
Company and its Subsidiaries have provided Broadcom with all of the Contracts
and Licenses heretofore requested on behalf of Broadcom in writing, and all
other material information concerning the Company and its Subsidiaries, in the
possession, custody or control of the Company or any of its Subsidiaries.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BROADCOM
Broadcom hereby represents and warrants to the Company, subject to such
exceptions as are specifically disclosed with respect to specific numbered and
lettered sections and subsections of this Article 3 in the disclosure schedule
and schedule of exceptions (the "Broadcom Disclosure Schedule") delivered
herewith and dated as of the date hereof, and numbered with corresponding
numbered and lettered sections and subsections, as follows:
3.1 Organization and Qualification. Broadcom is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
California. Broadcom has full corporate power and authority to conduct its
business as now conducted and as currently proposed to be conducted and to own,
use and lease its Assets and Properties. Broadcom is duly qualified, licensed or
admitted to do business and is in good standing in each jurisdiction in which
the ownership, use, licensing or leasing of its Assets and Properties, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for such failures to be so duly qualified, licensed
or admitted and in good standing that could not reasonably be expected to have a
material adverse effect on the Business or Condition of Broadcom.
3.2 Authority Relative to this Agreement. Broadcom has full corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements to which it is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by Broadcom of this Agreement and the Ancillary
Agreements to which it is a party and the consummation by Broadcom of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary action by the Board of Directors of Broadcom, and no
other action on the part of the Board of Directors of Broadcom is required to
authorize the execution, delivery and performance of this Agreement and the
Ancillary Agreements to which it is a party and the consummation by Broadcom of
the transactions contemplated hereby and thereby. This Agreement and the
Ancillary Agreements to which Broadcom is a party have been or will be, as
applicable, duly and validly executed and delivered by Broadcom and, assuming
the due authorization, execution and delivery hereof by the Company and/or the
other parties thereto, constitutes or will constitute, as applicable, a legal,
valid and binding obligation of Broadcom enforceable against Broadcom in
accordance with their respective terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar Laws relating to the enforcement of creditors'
rights generally and by general principles of equity.
3.3 Issuance of Broadcom Common Stock. The shares of Broadcom Common
Stock to be issued pursuant to the Merger, when issued, will be duly authorized,
validly issued, fully paid, non-assessable and issued in compliance with
applicable federal and state securities laws subject to the truth and accuracy
of the representations made by the Company in Section 2.3.
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3.4 SEC Documents; Broadcom Financial Statements. Broadcom has furnished
or made available to the Company true and complete copies of all SEC Documents
filed by it with the SEC since December 3, 1999, all in the form so filed. As of
their respective filing dates, such SEC Documents filed by Broadcom and all SEC
Documents filed after the date hereof but before the Closing complied or, if
filed after the date hereof, will comply in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the SEC thereunder, as the case may be, and none of the SEC
Documents contained or will contain any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which they
were made, not misleading, except to the extent such SEC Documents have been
corrected, updated or superseded by a document subsequently filed with the SEC.
The financial statements of Broadcom, including the notes thereto, included in
the SEC Documents (the "Broadcom Financial Statements") comply as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP consistently applied
(except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q under the Exchange Act) and present fairly
the consolidated financial position of Broadcom at the dates thereof and the
consolidated results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited financial statements, to normal year-end
adjustments), it being understood that such financial statements may be required
to be restated from time to time as may be required under applicable accounting
rules in connection with past, present or future acquisitions. There has been no
change in Broadcom's accounting policies except as described in the notes to the
Broadcom Financial Statements. Except as reflected or reserved against in the
Broadcom Financial Statements, Broadcom has no material Liabilities, except for
Liabilities and obligations (i) incurred in the ordinary course of business or
(ii) that would not be required to be reflected or reserved against in the
balance sheet of Broadcom prepared in accordance with GAAP.
3.5 No Conflicts. The execution and delivery by Broadcom of this
Agreement and the Ancillary Agreements to which it is a party does not, and the
performance by Broadcom of its obligations under this Agreement and the
Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby do not and will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the Articles of Incorporation or Bylaws
of Broadcom;
(b) conflict with or result in a violation or breach of any Law
or Order applicable to Broadcom or its Assets or Properties; or
(c) except as would not have a material adverse effect on the
Business or Condition of Broadcom, (i) conflict with or result in a violation or
breach of, (ii) constitute a default (or an event that, with or without notice
or lapse of time or both, would constitute a default) under, (iii) require
Broadcom to obtain any consent, approval or action of, make any filing with or
give any notice to any Person as a result of the terms of (except for (A) the
filing of the Agreement of Merger, together with the required officer's
certificate(s); (B) such consents, approvals, orders, authorizations,
registrations, declarations and filings as
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may be required under applicable state or federal securities laws; and (C) such
filings as may be required under the HSR Act), (iv) result in or give to any
Person any right of termination, cancellation, acceleration or modification in
or with respect to, (v) result in or give to any person any additional rights or
entitlement to increased, additional, accelerated or guaranteed payments or
performance under, (vi) result in the creation or imposition of (or the
obligation to create or impose) any Lien upon Broadcom or any of its Assets or
Properties, or (vii) result in the loss of a material benefit under, any of the
terms, conditions or provisions of any Contract or License to which Broadcom is
a party or by which any of its Assets and Properties are bound.
3.6 Information to be Supplied by Broadcom. The information supplied by
Broadcom for inclusion in the Permit Application shall not either at the time
the Fairness Hearing is held pursuant to Section 25142 of the California Code or
the time the qualification of such securities is effective under Section 25122
of the California Code, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The information supplied by Broadcom for inclusion in
the Information Statement shall not, on the date the Information Statement is
first mailed to the Company's shareholders, at the time of the Company
Shareholder Action and at the Effective Time, contain any statement which, at
such time, is false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which it is made, not false or misleading; or
omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies or written
consents for the Company Shareholder Action which has become false or
misleading. Notwithstanding the foregoing, Broadcom makes no representation,
warranty or covenant with respect to any information supplied by the Company
which is contained in any of the foregoing documents.
3.7 Investment Advisors. No broker, investment banker, financial advisor
or other Person is entitled to any broker's, finder's, financial advisor's or
similar fee or commission in connection with this Agreement and the transactions
contemplated hereby based on arrangements made by or on behalf of Broadcom.
3.8 Tax-Free Reorganization. To the knowledge of Broadcom after Good
Faith Consultation with Broadcom's independent accountants, neither Broadcom nor
any of its directors, officers or shareholders has taken any action which could
reasonably be expected to jeopardize the status of the Merger as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code.
ARTICLE 4
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business of the Company. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement and the Effective Time, the Company agrees (unless it is required to
take such action pursuant to this Agreement or Broadcom shall give its prior
consent in writing, which consent shall not
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be unreasonably withheld) to carry on its business (and to cause its
Subsidiaries to carry on their businesses) in the usual, regular and ordinary
course consistent with past practice and in any event consistent with the
2000-01 Operating Plan provided prior to the date of this Agreement to Broadcom
(any material deviations therefrom or material modifications to the 2000-01
Operating Plan shall be required to be approved in advance by Broadcom), to pay
its Liabilities and Taxes consistent with the Company's and its Subsidiaries'
past practices (and in any event when due), to pay or perform other obligations
when due consistent with the Company's and its Subsidiaries' past practices
(other than Liabilities, Taxes and other obligations, if any, contested in good
faith through appropriate proceedings), and, to the extent consistent with such
business, to use all commercially reasonable efforts and institute all policies
required to preserve intact its present business organization, keep available
the services of its present officers and key employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees,
independent contractors and other Persons having business dealings with it, all
with the express purpose and intent of preserving unimpaired its goodwill and
ongoing businesses at the Effective Time. Except as expressly contemplated by
this Agreement, the Company shall not take or agree in writing or otherwise to
take, and the Company shall not permit any of its Subsidiaries to take or agree
in writing or otherwise to take, without the prior written consent of Broadcom,
any action that would result in the occurrence of any of the changes described
in Section 2.9 or any other action that would make any of its representations or
warranties contained in this Agreement untrue or incorrect in any material
respect or prevent the Company from performing or cause the Company not to
perform its agreements and covenants hereunder or knowingly cause any condition
to Broadcom's closing obligations in Section 6.1 or Section 6.3 not to be
satisfied. Without limiting the generality of the foregoing, during the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, except as set forth in the
Company Disclosure Schedule or as required or expressly permitted by this
Agreement, the Company shall not do, cause or permit (and the Company shall not
permit any of its Subsidiaries to do, cause or permit) any of the following,
without the prior written consent of Broadcom:
(a) Charter Documents: cause or permit any amendments to its
Articles of Incorporation or Bylaws;
(b) Dividends; Changes in Capital Stock: declare or pay any
dividend on or make any other distribution (whether in cash, stock or property)
in respect of any of its capital stock, or split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or
repurchase or otherwise acquire, directly or indirectly, any shares of its
capital stock except from former employees, directors and consultants in
accordance with agreements providing for the repurchase of shares in connection
with any termination of service to it;
(c) Stock Option Plans: accelerate, amend or change the period
of exercisability or vesting of options or other rights granted under its stock
plans or authorize cash payments in exchange for any options or other rights
granted under any of such plans; grant any Option with an exercise price of less
than the fair market value of the Company Common Stock on the date the Option
was granted (as determined in good faith by the
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Company's Board of Directors following consultation with, and consistent with
the advice provided by, each of the Company's and Broadcom's independent public
accountants); or grant any additional Company Options (other than Permitted
Grants);
(d) Contracts: enter into any Contract or commitment, or
violate, amend or otherwise modify or waive any of the terms of any of its
Contracts, other than Contracts in the ordinary course of business consistent
with past practice which involve total obligations of less than fifty thousand
dollars ($50,000) and which are not otherwise material to the business of the
Company and its Subsidiaries, taking the Company and its Subsidiaries together
as a whole;
(e) Issuance of Securities: issue, deliver or sell or authorize
or propose the issuance, delivery or sale of, any shares of Company Capital
Stock or securities convertible into, or subscriptions, rights, warrants or
options to acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities, other
than the issuance of shares of its Common Stock pursuant to the conversion of
outstanding shares of Company Preferred Stock and the exercise of Company
Options or Company Warrants (if any) outstanding as of August 7, 2000 and grants
to employees hired after the date of this Agreement;
(f) Intellectual Property: dispose of, license or transfer to
any person or entity any rights to any Intellectual Property, other than
non-exclusive licenses in connection with the sale of products of the Company
and its Subsidiaries in the ordinary course of business consistent with past
practice, without the written consent of Broadcom;
(g) Exclusive Rights: enter into or amend any agreement pursuant
to which any other party is granted exclusive marketing or other exclusive
rights of any type or scope with respect to any of Company's or its
Subsidiaries' products or technology;
(h) Dispositions: sell, lease, license or otherwise dispose of
or encumber any of Company's or its Subsidiaries' properties or assets, except
for sales of products (and related nonexclusive licenses) in the ordinary course
consistent with past practice;
(i) Indebtedness: incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(j) Leases: enter into any operating lease;
(k) Payment of Obligations: pay, discharge or satisfy any claim,
liability or obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise) arising other than in the ordinary course of business, other than
the payment, discharge or satisfaction of liabilities reflected or reserved
against in the Company Financials and reasonable expenses incurred in connection
with the transactions contemplated by this Agreement;
(l) Capital Expenditures: make any capital expenditures, capital
additions or capital improvements except in accordance with the 2000-01
Operating Plan;
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(m) Insurance: reduce the amount of any insurance coverage
provided by existing insurance policies;
(n) Termination or Waiver: terminate or waive any right of
substantial value;
(o) Employee Benefit Plans; New Hires; Pay Increases: adopt or
amend any employee benefit or stock purchase or option plan, or hire any new
director level or officer level employee or consultant, pay any special bonus or
special remuneration to any employee, consultant, director or officer or
increase the salaries, wage rates or compensation of any employee or consultant,
except that the Company may hire, without the prior written consent of Broadcom,
up to five (5) new employees and may pay special bonuses or other special
remuneration to such new employees, provided that such payment is made in the
ordinary course of business of the Company and its Subsidiaries and is
consistent in nature, amount and other terms with the Company's past practice;
(p) Severance Arrangements: grant any severance or termination
pay (i) to any director, officer or consultant or (ii) to any other employee or
consultant except payments made pursuant to standard written agreements
outstanding on the date hereof;
(q) Lawsuits: commence a lawsuit other than (i) for the routine
collection of bills, (ii) in such cases where it in good faith determines that
failure to commence suit would result in the material impairment of a valuable
aspect of its business, provided that it consults with Broadcom prior to the
filing of such a suit, or (iii) for a breach of this Agreement;
(r) Acquisitions: acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof;
(s) Taxes: make or change any election in respect of Taxes,
adopt or change any accounting method in respect of Taxes, file any Tax Return
or any amendment to a Tax Return other than Company's corporate Tax Return for
the year ended December 31, 1999, enter into any closing agreement, settle any
claim or assessment in respect of Taxes, or consent to any extension or waiver
of the limitation period applicable to any claim or assessment in respect of
Taxes;
(t) Revaluation: revalue any of its assets, including writing
down the value of inventory or writing off notes or accounts receivable; or
(u) Other: take or agree in writing or otherwise to take, any of
the actions described in Section 4.1(a) through Section 4.1(t), or any other
action that would prevent the Company from performing, or cause the Company not
to perform, its covenants and agreements hereunder.
4.2 No Solicitation. Until the earlier of the Effective Time and the
date of termination of this Agreement pursuant to the provisions of Section 8.1,
neither the
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Company will take (and since August 10, 2000 inclusive has not taken), nor will
the Company (and since August 10, 2000 inclusive has not permitted) permit any
of the officers, directors, employees, shareholders, attorneys, investment
advisors, agents, representatives, Affiliates or Associates (collectively,
"Representatives") of the Company or any of its Subsidiaries to (directly or
indirectly), take any of the following actions with any Person other than
Broadcom and its designees: (a) solicit, encourage, initiate, entertain, accept
receipt of, review or encourage any proposals or offers from, or participate in
or conduct discussions with or engage in negotiations with, any Person relating
to any offer or proposal, oral, written or otherwise, formal or informal (a
"Competing Proposed Transaction"), with respect to any possible Business
Combination with the Company or any of its Subsidiaries (whether such
Subsidiaries are in existence on the date hereof or are hereafter organized),
(b) provide information with respect to the Company or any of its Subsidiaries
(whether such Subsidiaries is in existence on the date hereof or is hereafter
organized) to any Person, other than Broadcom, relating to (or which the Company
believes would be used for the purpose of formulating an offer or proposal with
respect to), or otherwise assist, cooperate with, facilitate or encourage any
effort or attempt by any such Person with regard to, any possible Business
Combination with the Company or any Subsidiary of the Company (whether such
Subsidiary is in existence on the date hereof or is hereafter organized), (c)
agree to, enter into a Contract with any Person, other than Broadcom, providing
for, or approve a Business Combination with the Company or any Subsidiary of the
Company (whether such Subsidiary is in existence on the date hereof or is
hereafter organized), (d) make or authorize any statement, recommendation,
solicitation or endorsement in support of any possible Business Combination with
the Company or any Subsidiary of the Company (whether such Subsidiary is in
existence on the date hereof or is hereafter organized) other than by Broadcom,
or (e) authorize or permit any of the Company or any of its Representatives to
take any such action. The Company shall immediately cease and cause to be
terminated (and shall cause its Subsidiaries to immediately cease and cause to
be terminated) any such contacts or negotiations with any Person relating to any
such transaction or Business Combination. In addition to the foregoing, if the
Company or any of its Subsidiaries receives prior to the Effective Time or the
termination of this Agreement any offer or proposal (formal or informal, oral,
written or otherwise) relating to, or any inquiry or contact from any Person
with respect to, a Competing Proposed Transaction, the Company shall immediately
notify Broadcom thereof and provide Broadcom with the details thereof, including
the identity of the Person or Persons making such offer or proposal, and will
keep Broadcom fully informed on a current basis of the status and details of any
such offer or proposal and of any modifications to the terms thereof; provided,
however, that this provision shall not in any way be deemed to limit the
obligations of the Company and its Representatives set forth in the previous
sentence. Each of the Company and Broadcom acknowledge that this Section 4.2 was
a significant inducement for Broadcom to enter into this Agreement and the
absence of such provision would have resulted in either (i) a material reduction
in the consideration to be paid to the shareholders of the Company in the Merger
or (ii) a failure to induce Broadcom to enter into this Agreement.
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ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Information Statement; Permit Application.
(a) As soon as practicable after the execution of this
Agreement, the Company shall prepare, with the cooperation of Broadcom, the
Information Statement for the shareholders of the Company to approve this
Agreement, the Agreement of Merger and the transactions contemplated hereby.
Broadcom and the Company shall each use reasonable commercial efforts to cause
the Information Statement to comply with applicable federal and state securities
laws requirements. Each of Broadcom and the Company agrees to provide promptly
to the other such information concerning its business and financial statements
and affairs as, in the reasonable judgment of the providing party or its
counsel, may be required or appropriate for inclusion in the Information
Statement, or in any amendments or supplements thereto, and to cause its counsel
and auditors to cooperate with the other's counsel and auditors in the
preparation of the Information Statement. The Company will promptly advise
Broadcom, and Broadcom will promptly advise the Company, in writing if at any
time prior to the Effective Time either the Company or Broadcom, as applicable,
shall obtain knowledge of any facts that might make it necessary or appropriate
to amend or supplement the Information Statement in order to make the statements
contained or incorporated by reference therein not misleading or to comply with
applicable law. The Information Statement shall contain the unanimous
recommendation of the Board of Directors of the Company that the Company's
shareholders approve the Merger and this Agreement and the conclusion of the
Board of Directors that the terms and conditions of the Merger are advisable and
fair and reasonable to, and in the best interests of, the shareholders of the
Company. Anything to the contrary contained herein notwithstanding, the Company
shall not include in the Information Statement any information with respect to
Broadcom or its affiliates or associates, the form and content of which
information shall not have been approved by Broadcom prior to such inclusion.
(b) As soon as practicable after the execution of this
Agreement, Broadcom shall prepare, with the cooperation of the Company, and file
the Permit Application. Broadcom and the Company shall each use commercially
reasonable efforts to cause the Permit Application to comply with the
requirements of applicable federal and state laws. Each of Broadcom and the
Company agrees to provide promptly to the other such information concerning its
business and financial statements and affairs as, in the reasonable judgment of
the providing party or its counsel, may be required or appropriate for inclusion
in the Permit Application, or in any amendments or supplements thereto, and to
cause its counsel and auditors to cooperate with the other's counsel and
auditors in the preparation of the Permit Application. The Company will promptly
advise Broadcom, and Broadcom will promptly advise the Company, in writing if at
any time prior to the Effective Time either the Company or Broadcom, as
applicable, shall obtain knowledge of any facts that might make it necessary or
appropriate to amend or supplement the Permit Application in order to make the
statements contained or incorporated by reference therein not misleading or to
comply with applicable law. Anything to the contrary contained herein
notwithstanding, Broadcom shall not include in the Permit Application any
information with respect to the Company or
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its affiliates or associates, the form and content of which information shall
not have been approved by the Company prior to such inclusion.
(c) In the event that it is determined by Broadcom and the
Company that the California Permit cannot be obtained, or cannot reasonably be
expected to be obtained, in time to permit the Closing to occur on or before
December 15, 2000, Broadcom and the Company shall use commercially reasonable
efforts to effect the issuance of the shares of Broadcom Common Stock to be
issued pursuant to Section 1.6 in a private placement pursuant to Section 4(2)
of the Securities Act. The parties hereto acknowledge and agree that in such
event: (i) as a condition to effecting such issuance as a private placement
pursuant to Section 4(2) of the Securities Act, Broadcom shall be entitled to
obtain from each shareholder of the Company a Shareholder Certificate in the
form attached hereto as Exhibit E (or such other form as shall be reasonably
satisfactory to Broadcom) ("Shareholder Certificate") and that Broadcom will be
relying upon the representations made by each shareholder of the Company in the
applicable Shareholder Certificate in connection with the issuance of Broadcom
Common Stock to such shareholder, (ii) at the Closing, Broadcom shall execute
and deliver a backup registration rights agreement that will provide, among
other things, that Broadcom shall file within thirty (30) calendar days after
the Closing Date, after the determination referred to in the first sentence of
this Section 5.1(c), a registration statement on Form S-3 covering the resale of
the shares of the Broadcom Common Stock issued pursuant to Section 1.6 (the
"Registration Statement"), and maintain the effectiveness of the Registration
Statement for not less than sixty (60) days, subject to the usual and customary
terms and condition reasonably acceptable to the parties (the "Backup
Registration Rights Agreement"), provided, however, that the Backup Registration
Rights Agreement will provide with respect to blackouts and postponement rights
that if Broadcom shall furnish to the former shareholders of the Company a
certificate signed by Broadcom's President or Chief Executive Officer stating
that, in the good faith judgment of Broadcom, it would be seriously detrimental
to Broadcom (or would deprive Broadcom of the opportunity to pursue a
significant favorable transaction) for such Registration Statement to be filed
at such time or for sales of Broadcom Common Stock to occur pursuant to such
Registration Statement at such time, as applicable, then (A) Broadcom shall have
the right to defer the filing of the Registration Statement and (B) Broadcom
shall have the right to suspend the effectiveness of such Registration Statement
and to prohibit each former shareholder of the Company from effecting sales of
Broadcom Common Stock pursuant to the Registration Statement, for one or more
periods, which shall not exceed sixty (60) days in any single instance or one
hundred eighty (180) days in the aggregate during any one (1) year period; (iii)
the shares of Broadcom Common Stock so issued pursuant to Section 1.6 will not
be registered under the Securities Act and will constitute "restricted
securities" within the meaning of the Securities Act; and (iv) the certificates
representing the shares of Broadcom Common Stock shall bear appropriate legends
to identify such privately placed shares as being restricted under the
Securities Act, to comply with applicable state securities laws and, if
applicable, to notice the restrictions on transfer of such shares. Subject to
the foregoing provisions, Broadcom will use its commercially reasonable efforts
to cause the Registration Statement to be filed with and declared effective by
the SEC no later than thirty (30) calendar days after the Closing Date.
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5.2 Shareholder Approval. As soon as practicable following the execution
and delivery of this Agreement, the Company shall give written notice of this
Agreement and the proposed Merger to all Company shareholders and shall use
commercially reasonable efforts to take all other action necessary in accordance
with the California Code and its Articles of Incorporation and Bylaws to convene
a meeting of the shareholders of the Company or to secure the written consent of
its shareholders ("Company Shareholder Action") before December 31, 2000. The
Company shall submit this Agreement to its shareholders for adoption whether or
not the Company's Board of Directors determines at any time subsequent to
declaring its advisability that this Agreement is no longer advisable and
recommends that its shareholders reject it. The Company shall consult with
Broadcom regarding the date of the Company Shareholder Action and shall not
postpone or adjourn (other than for the absence of a quorum) any meeting of the
shareholders of the Company without the consent of Broadcom, which consent shall
not be unreasonably withheld. The Company shall use all commercially reasonable
efforts required to solicit and obtain from shareholders of the Company proxies
or written consents in favor of the Merger and this Agreement and shall take all
other action necessary or advisable to secure the vote or written consent of
shareholders required to effect the Merger. The Company shall establish a record
date for determining the shareholders of the Company entitled to vote or consent
in connection with the Company Shareholder Action that is as early as possible
after the date of this Agreement. The materials submitted to the shareholders of
the Company in respect of the Merger shall have been subject to prior review and
comment by Broadcom and shall include (a) information regarding the Company, the
terms of the Merger and this Agreement, (b) the unanimous recommendation of the
Board of Directors of the Company that the Company's shareholders approve the
Merger and this Agreement and the transactions contemplated hereby and approve
and execute such other documents as may be required to satisfy the applicable
requirements of the Securities Act in connection with the issuance and sale of
Broadcom Common Stock in the Merger, (c) the conclusion of the Board of
Directors of the Company that the terms and conditions of the Merger are
advisable, fair and reasonable to, and in the best interests of, the Company's
shareholders and (d) such other documents as may be required to satisfy the
applicable requirements of the Securities Act in connection with the issuance
and sale of Broadcom Common Stock in the Merger.
5.3 Access to Information. Between the date of this Agreement and the
earlier of the Effective Time or the termination of this Agreement, upon
reasonable notice the Company shall (a) give Broadcom and its officers,
employees, accountants, counsel, financing sources and other agents and
representatives full access to all buildings, offices, and other facilities and
to all Books and Records of the Company and its Subsidiaries, whether located on
the premises of the Company or at another location; (b) permit Broadcom to make
such inspections as they may require; (c) cause its officers to furnish Broadcom
such financial, operating, technical and product data and other information with
respect to the business and Assets and Properties of the Company and its
Subsidiaries as Broadcom from time to time may request, including financial
statements and schedules; (d) allow Broadcom the opportunity to interview such
employees and other personnel and Affiliates of the Company and its Subsidiaries
with the Company's prior written consent, which consent shall not be
unreasonably withheld or delayed; and (e) assist and cooperate with Broadcom in
the development of integration plans for implementation by Broadcom
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and the Surviving Corporation following the Effective Time; provided, however,
that no investigation pursuant to this Section 5.3 shall affect or be deemed to
modify any representation or warranty made by the Company herein. Materials
furnished to Broadcom pursuant to this Section 5.3 may be used by Broadcom for
strategic and integration planning purposes relating to accomplishing the
transactions contemplated hereby.
5.4 Confidentiality. The parties acknowledge that Broadcom and the
Company have previously executed a non-disclosure agreement dated August 10,
2000 (the "Confidentiality Agreement"), which Confidentiality Agreement shall
continue in full force and effect in accordance with its terms. Without limiting
the foregoing, all information furnished to Broadcom and its officers,
employees, accountants and counsel by the Company, and all information furnished
to the Company by Broadcom and its officers, employees, accountants and counsel,
shall be covered by the Confidentiality Agreement, and Broadcom and the Company
shall be fully liable and responsible under the Confidentiality Agreement for
any breach of the terms and conditions thereof by their respective Subsidiaries,
officers, employees, accountants, counsel and other Representatives.
5.5 Expenses. Whether or not the Merger is consummated, all fees and
expenses incurred in connection with the Merger including all legal, accounting,
financial advisory, consulting and all other fees and expenses of third parties
("Third Party Expenses") incurred by a party in connection with the negotiation
and effectuation of the terms and conditions of this Agreement and the
transactions contemplated hereby, shall be the obligation of the respective
party incurring such fees and expenses. Broadcom shall have the right to approve
Third Party Expenses to be incurred by the Company or any of its Subsidiaries
between the date hereof and the Closing, including necessary fees and expenses
of legal counsel, accountants, financial advisors, auditors and tax advisors,
which such approvals will not be unreasonably withheld. Broadcom has approved
the payment when due by the Company of the Third Party Expenses set out in
Schedule 5.5.
5.6 Public Disclosure. Unless otherwise required by Law (including
federal and state securities laws) or, as to Broadcom, by the rules and
regulations of the NASD, prior to the Effective Time, no public disclosure
(whether or not in response to any inquiry) of the existence of any subject
matter of, or the terms and conditions of, this Agreement shall be made by any
party hereto unless approved by Broadcom and the Company prior to release;
provided, however, that such approval shall not be unreasonably withheld or
delayed. Broadcom and the Company agree to consult with each other as to the
contents of the public disclosure prior to its release.
5.7 Approvals. The Company and Broadcom shall each use commercially
reasonable efforts to obtain all Approvals required to be obtained by such party
from Governmental or Regulatory Authorities as may be required in connection
with the Merger (which Approvals are identified in Section 2.6(c) and Section
3.5(c) and the corresponding sections of the Company Disclosure Schedule and the
Broadcom Disclosure Schedule), and the Company shall use commercially reasonable
efforts to obtain all Approvals under any of the Contracts or other agreements,
as may be required in connection with the Merger (all of which Approvals are set
forth in the Company Disclosure Schedule, including Section 2.6(c), Section
2.32(a), Section 2.32(b) and Section 2.32(c) thereof) so as to preserve all
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rights of and benefits to the Company thereunder, and Broadcom and the Company
shall provide each other with such assistance and information as is reasonably
required to obtain such Approvals.
5.8 FIRPTA Compliance. On or prior to the Closing Date, the Company
shall deliver to Broadcom a properly executed statement in a form reasonably
acceptable to Broadcom for purposes of satisfying Broadcom's obligations under
Treasury Regulation Section 1.1445-2(c)(3).
5.9 Notification of Certain Matters. The Company shall give prompt
notice to Broadcom, and Broadcom shall give prompt notice to the Company, of (a)
the occurrence or non-occurrence of any event, the occurrence or non-occurrence
of which is likely to cause any representation or warranty of the Company or
Broadcom, respectively, contained in this Agreement to be untrue or inaccurate
at or prior to the Closing Date and (b) any failure of the Company or Broadcom,
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 5.9 shall not limit or
otherwise affect any remedies available to the party receiving such notice.
5.10 Company Affiliate Agreements. Schedule 5.10 sets forth those
persons who, in the Company's reasonable judgment following consultation with
legal counsel and accounting advisors, are or may be "affiliates" of the Company
within the meaning of Rule 145 under the Securities Act (the "Company
Affiliates"). The Company shall provide Broadcom such information and documents
as Broadcom shall reasonably request for purposes of reviewing such list. The
Company shall use its commercially reasonable efforts to deliver or cause to be
delivered to Broadcom, at or prior to the Closing, from each of the Company
Affiliates, an executed Company Affiliate Agreement, to the extent such Company
Affiliates have not executed and delivered Company Affiliate Agreements
contemporaneously with the execution and delivery of this Agreement. The Company
agrees that if any Person would have been a Company Affiliate had such Person
been a shareholder of the Company as of the date of this Agreement, the Company
shall cause such person to execute and deliver to the Company and Broadcom a
Company Affiliate Agreement promptly upon such Person attaining such status.
5.11 Additional Documents and Further Assurances; Cooperation. Each
party hereto, at the request of the other party hereto, shall execute and
deliver such other instruments and do and perform such other acts and things
(including all action reasonably necessary to seek and obtain any and all
consents, waivers and approvals of any Governmental or Regulatory Authority or
Person required in connection with the Merger; provided, however, that Broadcom
shall not be obligated to consent to any divestitures or operational limitations
or activities in connection therewith and no party shall be obligated to make a
payment of money as a condition to obtaining any such consent, waiver or
approval) as may be necessary or desirable for effecting completely the
consummation of this Agreement and the transactions contemplated hereby. Each
party agrees to use commercially reasonable efforts to cause the conditions set
forth in Article 6 to be satisfied, where the satisfaction of such conditions
depends on action or forbearance from action by such party.
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5.12 Indemnification. Broadcom, the Company and the Surviving
Corporation agree that all rights to indemnification or exculpation now existing
in favor of the employees, agents, directors or officers of the Company (the
"Company Indemnified Parties") as provided in its Articles of Incorporation or
Bylaws or indemnification agreements as in effect on the date of this Agreement
shall continue in full force and effect for a period of three (3) years from and
after the Closing Date, assuming the consummation of the Merger; provided,
however, that, in the event any claim or claims are asserted or made within such
three (3) year period, all rights to indemnification in respect of any such
claim or claims shall continue to disposition of any and all such claims. Any
determination required to be made with respect to whether a Company Indemnified
Party's conduct complies with the standards set forth in the articles of
incorporation or bylaws or indemnification agreements of the Surviving
Corporation or otherwise shall be made by independent counsel jointly selected
by Broadcom and the Company Indemnified Party. The fees and expenses of such
counsel shall be paid by the Surviving Corporation, and the determination of
such counsel shall be final and binding on Broadcom, the Surviving Corporation
and the Company Indemnified Party. The Company hereby represents and warrants to
Broadcom that no claim for indemnification has been made by any director or
officer of the Company and, to the knowledge of the Company, no basis exists for
any such claim for indemnification.
5.13 Form S-8. Broadcom shall file a registration statement on Form S-8
for the shares of Broadcom Common Stock issuable with respect to assumed Company
Options promptly after the Effective Time to the extent the shares of Broadcom
Common Stock issuable upon exercise of such Company Options qualify for
registration on Form S-8.
5.14 NNM Listing of Additional Shares Application. Broadcom shall, to
the extent required by the rules of the NNM, notify the NNM of the shares of
Class A Common Stock of Broadcom into which the shares of Broadcom Common Stock
to be issued, and the shares of Broadcom Common Stock required to be reserved
for issuance, in connection with the Merger, will be converted upon disposition.
5.15 Company's Auditors. The Company will use commercially reasonable
efforts to cause its management and its independent auditors to facilitate on a
timely basis (a) the preparation of financial statements (including pro forma
financial statements if required) as required by Broadcom to comply with
applicable SEC regulations, (b) the review of any Company audit or review work
papers, including the examination of selected interim financial statements and
data, (c) the delivery of such representations from the Company's independent
accountants as may be reasonably requested by Broadcom or its accountants, and
(d) the securing of a binding fee commitment (on terms similar to those in place
on the date of this Agreement) with respect to consents and comfort letters
requested by Broadcom after the Closing.
5.16 Termination of 401(k) Plans. Unless Broadcom requests otherwise in
writing, the Board of Directors of the Company shall adopt resolutions
terminating, effective as of the day prior to the Closing Date, any Plan which
is intended to meet the requirements of Section 401(k) of the Internal Revenue
Code, and which is sponsored, or contributed to, by the Company or any
Subsidiary of the Company. At the Closing, the Company shall
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provide Broadcom (a) executed resolutions of the Board of Directors of Broadcom
authorizing such termination and (b) an executed amendment to the 401(k) Plan
sufficient to assure compliance with all applicable requirements of the Internal
Revenue Code and regulations thereunder so that the tax-qualified status of the
401(k) Plan will be maintained at the time of termination. The Company shall
take all actions necessary to terminate the Representative Stock Bonus Plan and
the Representative Stock Bonus Plan Agreements listed on Section 2.18(a)(1) of
the Company Disclosure Schedule.
5.17 Takeover Statutes. If any Takeover Statute is or may become
applicable to the transactions contemplated hereby, the Board of Directors of
the Company will grant such approvals and take such actions as are necessary so
that the transactions contemplated by this Agreement and the Ancillary
Agreements may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate the effects of any Takeover
Statute on any of the transactions contemplated hereby.
5.18 Treatment as Reorganization. Neither Broadcom nor the Company shall
take any action prior to or following the Closing that would cause the Merger to
fail to qualify as a "reorganization" within the meaning of Section 368(a) of
the Internal Revenue Code.
5.19 Company Repurchases. The Company will exercise any rights that
mature between the date hereof and the Effective Time to repurchase any
outstanding shares of Company Capital Stock at the price at which such shares
were issued.
5.20 Information Technology Access. In furtherance of the Company's
agreement in Section 5.3 and to facilitate prompt integration following the
Closing of the Company's information technology ("IT") inventory (e.g., voice
and data network services and software and hardware, licenses,
financial/accounting software, IT budgets, etc.) with Broadcom's, the Company
will provide Broadcom and its Representatives with access to the IT inventory of
the Company and its Subsidiaries, as well as the personnel of the Company and
its Subsidiaries responsible for such IT inventory. Because of the substantial
lead time that may be required to order and install new software and hardware to
integrate the IT systems of the Company and its Subsidiaries with Broadcom's,
and the importance of a smooth integration of such IT systems promptly after the
Closing, the Company agrees that Broadcom may order, either in Broadcom's name
or, if required by the vendor, the Company's name, any new IT services, hardware
and software that Broadcom believes will be needed at the facilities of the
Company and its Subsidiaries in order to integrate the respective operations of
Broadcom, on the one hand, and the Company and its Subsidiaries, on the other
hand, following the Closing. The Company will cooperate with Broadcom in the
installation of such IT systems, hardware and software prior to and in
anticipation of the Closing, including providing Broadcom with reasonable access
to and use of the appropriate personnel of the Company and its Subsidiaries. If
required by the vendor, at Broadcom's request, the Company will place IT
systems, hardware and software orders in the Company's name. For clarity, it is
the parties' intent not to connect any of the ordered services or systems prior
to the Closing. Broadcom and the Company agree to cooperate with each other to
minimize any potential disruption to the Company's business from the IT
integration efforts; provided, however, that Broadcom will not have any
liability to the Company for any such disruption or as may otherwise result from
the IT integration efforts,
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except as may be directly caused by Broadcom's gross negligence or willful
misconduct; and provided further that in no event will Broadcom have any
liability to the Company for any indirect, incidental, consequential, special or
speculative damages, including damages for loss of profits or use, business
interruption or loss of goodwill, irrespective of whether such damages arise
under contract, tort, statute or otherwise and whether or not the Company has
given Broadcom advance notice of the possibility of such damages. If the Closing
does not occur, other than because of the Company's breach of this Agreement,
Broadcom will reimburse the Company for its reasonable and documented
out-of-pocket costs incurred by it in connection with the ordering and
installation of IT services, hardware and software. If Broadcom is so required
to reimburse the Company, Broadcom will own any such hardware and software and
will pay for its removal from Company premises. Broadcom and the Company will
cooperate in the removal of any such hardware or software so as to minimize any
disruption to the Company's business. In addition, if the Closing does not
occur, the Company will cooperate with Broadcom in canceling any orders for IT
services, hardware or software and will otherwise act to minimize the costs
which might be incurred in connection with the IT integration efforts.
5.21 Change of Merger Form. The Company agrees that in the event
Broadcom requests that the transactions contemplated hereby be effected through
a different form of merger (including a reverse triangular or forward triangular
merger) than the form presently contemplated herein, and provided that the
alternative form of merger is in any event intended to qualify as a tax-free
reorganization, the Company shall cooperate with Broadcom in effecting the
alternative form of merger and will take all reasonably necessary action towards
such end, including the execution of any amendments to this Agreement (provided
that such amendments relate only to the alternative form of merger and any
related matters and do not include any other substantive changes not otherwise
agreed between the parties).
5.22 Intellectual Property. The Company shall give Broadcom prompt
notice of that any Person shall have (a) commenced, or shall have notified the
Company or any of its Subsidiaries that it intends to commence, an Action or
Proceeding or (b) provided the Company or any of its Subsidiaries with notice,
in either case which allege(s) that any of the Intellectual Property, including
the Company Intellectual Property, presently embodied, or proposed in the
Company's 2000-01 Operating Plan to be embodied, in any product of the Company
or any of its Subsidiaries or utilized in any development tools (including
standard cells) or design environments designed or modified by the Company or
any of its Subsidiaries infringes or otherwise violates the intellectual
property rights of such Person, is available for licensing from a potential
licensor providing the notice or otherwise alleges that the Company or any of
its Subsidiaries does not otherwise own or have the right to exploit such
Intellectual Property, including the Company Intellectual Property. The Company
shall cooperate with Broadcom in making arrangements, prior to the Closing Date,
reasonably satisfactory to Broadcom to effect the assignment to the Company of
all Intellectual Property created by the founders, employees and consultants of
the Company and any of its Subsidiaries (if any), including certain Intellectual
Property created by the founders of the Company and any of its Subsidiaries
prior to the incorporation of the Company and any of its Subsidiaries, and to
obtain the cooperation of such Persons to complete all appropriate patent
filings related thereto. The Company shall take
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commercially reasonable actions to maintain, perfect, preserve or renew the
Company Registered Intellectual Property, including the payment of any
registration, maintenance, renewal fees, annuity fees and taxes or the filing of
any documents, applications or certificates related thereto, and to promptly
respond and prepare to respond to all requests, related to the Company
Registered Intellectual Property, received from Governmental or Regulatory
Authorities. At the Closing, the Company will notify Broadcom of all material
actions which must be taken within the one hundred eighty (180) days following
the Closing Date and which are necessary to maintain, perfect, preserve or renew
the Company Registered Intellectual Property, including the payment of any
registration, maintenance, renewal fees, annuity fees and taxes or the filing of
any documents, applications or certificates related thereto.
5.23 Delivery of Stock Ledger and Minute Book of the Company. The
Company shall deliver its and its Subsidiaries' stock ledgers and minute books
to Broadcom at the Closing.
5.24 Certain Actions Relating to the Holders of Warrants (if any) and
Preferred Stock. The Company shall take all requisite commercially reasonable
efforts (a) to cause all Company Warrants (if any) that were outstanding as of
September 25, 2000 and that would otherwise be outstanding at or immediately
prior to the Effective Time to be exercised in full, by means of a cash exercise
(and not by means of net exercise), for shares of Company Capital Stock prior to
the Effective Time (and thereafter converted, as applicable, into shares of
Company Common Stock), and to cause the cash exercise price therefor to be paid
to the Company; and (b) to cause the holders of all such outstanding Company
Warrants (if any) to execute and deliver to the Company waivers of notice with
respect to the notice that would otherwise be applicable to the Merger.
5.25 Third Party Consents. The Company will use its best efforts to
obtain all consents, approvals and/or waivers required for the assignment or
transfer to Broadcom of each of the Contracts listed in Schedule 5.25. If any
such consent, approval or waiver is not obtained on or prior to the Closing
Date, Broadcom shall be entitled to recover from the Escrow Fund, without regard
to the dollar threshold set forth in the proviso in the first sentence of
Section 7.2(b), all costs of obtaining such consent, approval or waiver and/or
procuring replacement or substitute technology for the technology that Broadcom
is unable to utilize due to the absence of such consent, approval or waiver;
provided, however, that the amount that Broadcom may recover from the Escrow
Fund with respect to the failure of the Company to obtain any such consent,
approval or waiver shall not exceed the amount set forth immediately after such
Contract in Schedule 5.25.
5.26 Faraday Agreement. The Company shall use its best efforts to
either, on or before the Closing Date, (i) enter into a written manufacturing
agreement with UMC Foundry, as that term is defined in that certain Mass Set
Release Agreement dated April 5, 2000 (the "Faraday Agreement") between the
Company and Faraday Technology Corporation ("Faraday"), or (ii) obtain written
confirmation or assurance from Faraday in form and substance acceptable to
Broadcom in its sole and absolute discretion that Faraday shall not revoke any
right granted to the Company under the Faraday Agreement based on the absence of
a written agreement between the Company and UMC Foundry.
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5.27 Capitalization Table. The Company shall deliver to Broadcom prior
to the Closing Date a capitalization table for the Company in the standard
Broadcom form.
ARTICLE 6
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) Governmental and Regulatory Approvals. Approvals from any
Governmental or Regulatory Authority (if any) necessary for consummation of the
transactions contemplated hereby shall have been timely obtained; and any
waiting period applicable to the consummation of the Merger under the HSR Act
(other than with respect to the receipt of Broadcom Common Stock by a
shareholder of the Company) shall have expired or been terminated.
(b) No Injunctions or Regulatory Restraints; Illegality. No
temporary restraining order, preliminary or permanent injunction or other Order
issued by any court of competent jurisdiction or Governmental or Regulatory
Authority or other legal or regulatory restraint or prohibition preventing the
consummation of the Merger shall be in effect; nor shall there be any action
taken, or any Law or Order enacted, entered, enforced or deemed applicable to
the Merger or the other transactions contemplated by the terms of this Agreement
that would prohibit the consummation of the Merger or which would permit
consummation of the Merger only if certain divestitures were made or if Broadcom
were to agree to limitations on its business activities or operations.
(c) Tax Opinions. Broadcom and the Company shall each have
received written opinions from their outside legal counsel, in form and
substance reasonably satisfactory to each of them, to the effect that the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code. The parties to this Agreement agree to make such
reasonable written representations as requested by such counsel for the purpose
of rendering such opinions.
(d) Shareholder Approval. The Merger shall have been approved by
the requisite votes of the Company's shareholders in accordance with the
California Code.
6.2 Additional Conditions to Obligations of the Company. The obligations
of the Company to consummate the Merger and the other transactions contemplated
by this Agreement shall be subject to the satisfaction at or prior to the
Closing of each of the following conditions, any of which may be waived, in
writing, exclusively by the Company:
(a) Representations and Warranties. The representations and
warranties of Broadcom contained in this Agreement shall be accurate in all
respects as of the date of this Agreement and shall be accurate in all respects
as of the Closing Date as if made on and as of the Closing Date (other than
representations and warranties which by their express terms are made solely as
of a specified earlier date, which shall be accurate as of such specified
earlier date), except that any inaccuracies in such representations and
warranties
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will be disregarded if the circumstances giving rise to all such inaccuracies
(considered collectively) do not constitute, and would not reasonably be
expected to have, a material adverse change on the Business or Condition of
Broadcom; provided, however, that, for purposes of determining the accuracy of
such representations and warranties, all qualifications and exceptions referring
to a "material adverse change in the Business or Condition of Broadcom" or a
"material adverse effect on the Business or Condition of Broadcom" and other
materiality qualifications and materiality exceptions contained in such
representations and warranties shall be disregarded.
(b) Performance. Broadcom shall have performed and complied with
in all material respects each agreement, covenant and obligation required by
this Agreement to be so performed or complied with by Broadcom at or before the
Closing.
(c) Officers' Certificates. Broadcom shall have delivered to the
Company a certificate, dated the Closing Date and executed by its President and
Chief Executive Officer, substantially in the form set forth in Exhibit H-1
hereto, and a certificate, dated the Closing Date and executed by the Secretary
of Broadcom, substantially in the form set forth in Exhibit H-2 hereto.
(d) Legal Opinion. The Company shall have received a legal
opinion from Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel to Broadcom, as to the
matters set forth in Exhibit I.
(e) Fairness Hearing and California Permit; Private Placement
Alternative. Either (i) the fairness hearing shall have been held by the
Commissioner of Corporations of the State of California and the California
Permit shall have been issued by the State of California, or (ii) if the
issuance of the shares of Broadcom Common Stock pursuant to Section 1.6 is
effected in a private placement pursuant to Section 4(2) of the Securities Act,
Broadcom and the Company shall have executed and delivered the Backup
Registration Rights Agreement in conformity with Section 5.1(c) and otherwise in
form and substance reasonably satisfactory to the Company (and such Backup
Registration Rights Agreement shall be in full force and effect), and the
parties shall be reasonably satisfied that the shares of Broadcom Common Stock
to be issued in connection with the Merger pursuant to Section 1.6(a) are
issuable without registration pursuant to Section 4(2) of the Securities Act and
SEC rules and regulations promulgated thereunder.
6.3 Additional Conditions to the Obligations of Broadcom. The
obligations of Broadcom to consummate the Merger and the other transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, exclusively by Broadcom:
(a) Representations and Warranties. The representations and
warranties made by the Company in this Agreement shall be true and correct in
all material respects (if not qualified by materiality) and in all respects (if
qualified by materiality) when made and on and as of the Closing Date as though
such representation or warranty was made on and as of the Closing Date;
provided, however, that any representation or warranty made as of a specified
date earlier than the Closing Date shall also have been true and correct in all
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material respects (if not qualified by materiality) and in all respects (if
qualified by materiality) on and as of such earlier date.
(b) Performance. The Company shall have performed and complied
with in all material respects each agreement, covenant and obligation required
by this Agreement to be so performed or complied with by the Company on or
before the Closing Date.
(c) Officers' Certificates. The Company shall have delivered to
Broadcom a certificate, dated the Closing Date and executed by the President and
Chief Executive Officer of the Company, substantially in the form set forth in
Exhibit J-1 hereto, and a certificate, dated the Closing Date and executed by
the Secretary of the Company, substantially in the form set forth in Exhibit J-2
hereto.
(d) Third Party Consents. Broadcom shall have been furnished
with evidence satisfactory to it that the Company has obtained the consents,
approvals and waivers listed (or required to be listed) in Schedule 6.3(d)
(except for such consents, approvals and waivers, the absence of which, in the
aggregate, could not reasonably be expected to have a material adverse effect on
the Company), and that all such consents, approvals and waivers are in full
force and effect.
(e) Legal Proceedings. No Governmental or Regulatory Authority
shall have notified either party to this Agreement that such Governmental or
Regulatory Authority intends to commence proceedings to restrain or prohibit the
transactions contemplated hereby or force rescission, unless such Governmental
or Regulatory Authority shall have withdrawn such notice and abandoned any such
proceedings prior to the time which otherwise would have been the Closing Date.
(f) Fairness Hearing and California Permit; Private Placement
Alternative. The fairness hearing shall have been held by the Commissioner of
Corporations of the State of California and the California Permit shall have
been issued by the State of California. In the alternative, each of the
shareholders of the Company who is an "accredited investor" shall have delivered
an executed copy of the Shareholder Certificate, and Broadcom shall be
reasonably satisfied that the shares of Broadcom Common Stock to be issued in
connection with the Merger pursuant to Section 1.6(a) are issuable without
registration pursuant to Section 4(2) of the Securities Act and SEC rules and
regulations promulgated thereunder.
(g) Legal Opinion. Broadcom shall have received a legal opinion
from Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, PC, legal counsel to the Company, as to
the matters set forth in Exhibit K.
(h) Tax Representation Letter. The Company shall have executed
and delivered to Xxxxxxx, Phleger & Xxxxxxxx LLP and Wilson, Sonsini, Xxxxxxxx &
Xxxxxx, PC Tax Representation Letters in form reasonably acceptable to Broadcom.
(i) Non-Competition Agreements. Each of the persons listed on
Schedule 6.3(i) shall have executed and delivered to Broadcom a Non-Competition
Agreement and all of the Non-Competition Agreements shall be in full force and
effect.
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(j) Delivery of Agreements.
(i) Each Company Affiliate shall have executed and
delivered to Broadcom a Company Affiliate Agreement, and no breach of any
Company Affiliate Agreement shall have occurred or be continuing.
(ii) The Major Shareholders shall have executed and
delivered to Broadcom a Support Agreement, and no breach of any Support
Agreement shall have occurred or be continuing.
(k) Employees. The employees of the Company and its Subsidiaries
set forth on Schedule 6.3(i) shall continue to be employed by the Company and
its Subsidiaries at the Closing and shall not have given any notice or other
indication that they are not willing or do not intend to be employed by Broadcom
or the Surviving Corporation or a Subsidiary of Broadcom or the Surviving
Corporation (as Broadcom or the Surviving Corporation shall designate) following
the Merger or that they are not willing or do not intend to execute and deliver
to Broadcom or the Surviving Corporation Broadcom's standard forms of
Confidentiality and Invention Assignment Agreement and associated schedules and
statements without amendment or modification thereto in any substantive respect.
The salary specified for each employee listed in the letter of Broadcom to the
Company dated of even date herewith shall have been communicated to each such
employee, and no such employee shall have given any notice or other indication
that such employee is not willing or does not intend to be employed by Broadcom
or a Subsidiary of Broadcom (as Broadcom shall designate) at such salary
following the Merger. At least twenty-three (23) of the engineering and research
and development employees (excluding the employees identified on Schedule
6.3(i)) of the Company employed as of the date of this Agreement shall continue
to be employed by the Company at the Closing and shall not have given any notice
or other indication that they are not willing or do not intend to be employed by
Broadcom or the Surviving Corporation or a Subsidiary of Broadcom or the
Surviving Corporation (as Broadcom shall designate) following the Merger or to
execute and deliver to Broadcom or the Surviving Corporation Broadcom's standard
forms of Confidentiality and Invention Assignment Agreement and associated
schedules and statements without amendment or modification thereto in any
substantive respect.
(l) Limitation on Dissent. Holders of no more than five percent
(5%) of the outstanding shares of Company Capital Stock shall have exercised,
nor shall they have any continued right to exercise, appraisal, dissenters' or
similar rights under applicable law with respect to their shares by virtue of
the Merger.
(m) No Material Adverse Change. There shall have occurred no
material adverse change in the Business or Condition of the Company and its
Subsidiaries, taking the Company together with its Subsidiaries as a whole,
since the date hereof.
(n) Company Intellectual Property. No Person shall have (i)
commenced, or shall have notified either party to this Agreement that it intends
to commence, an Action or Proceeding or (ii) provided the Company or any of its
Subsidiaries with notice, in either case which allege(s) that any of the
Intellectual Property, including the Company Intellectual
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Property, presently embodied, or proposed in the Company's 2000-01 Operating
Plan to be embodied, in any product of the Company or any of its Subsidiaries or
utilized in development tools (including standard cells) or design environments
designed or modified by the Company or any of its Subsidiaries, infringes or
otherwise violates the intellectual property rights of such Person, is available
for licensing from a potential licensor providing the notice or otherwise
alleges that the Company or any of its Subsidiaries does not otherwise own or
have the right to exploit such Intellectual Property, including the Company
Intellectual Property, unless such Person shall have withdrawn such notice and
abandoned any such Action or Proceeding prior to the time which otherwise would
have been the Closing Date.
(o) Assignment of Intellectual Property. Arrangements reasonably
satisfactory to Broadcom shall have been made to effect the assignment to the
Company of all Intellectual Property created by the founders, employees and
consultants of the Company or any of its Subsidiaries, including certain
Intellectual Property created by the Company's founders prior to the
incorporation of the Company or any of its Subsidiaries (if any) and the Company
Intellectual Property, presently embodied, or proposed in the Company's 2000-01
Operating Plan to be embodied, in any product of the Company or any of its
Subsidiaries or utilized in development tools (including standard cells) or
design environments designed or modified by the Company or any of its
Subsidiaries, and to obtain the full cooperation of such Persons to complete and
prosecute all appropriate U.S. and foreign patent filings related thereto.
(p) Shareholder Approval of Certain Payments. Any agreements or
arrangements that may result in the payment of any amount that would not be
deductible by reason of Section 280G of the Internal Revenue Code shall have
been approved by such number of shareholders of the Company as is required by
the terms of Section 280G(b)(5)(B) and shall be obtained in a manner that
satisfies all applicable requirements of such Section 280G(b)(5)(B) and the
proposed Treasury regulations thereunder, including Q-7 of Section 1.280G-1 of
such proposed regulations.
(q) Certain Waivers and Actions. (i) All outstanding Company
Warrants (if any) that were outstanding as of August 7, 2000 shall have been
exercised in full, by means of a cash exercise (and not by net exercise), for
shares of Company Capital Stock (and thereafter converted, as applicable, into
shares of Company Common Stock) and the cash exercise price therefor shall have
been received by the Company; (ii) the holders of all outstanding Company
Warrants (if any) shall have executed and delivered to the Company all waivers
of notice (if any) with respect to the notice that would otherwise be applicable
to the Merger; (iii) the Amended and Restated Investor Rights Agreement dated as
of August 2, 2000 shall have been terminated and shall no longer be of any force
or effect; (iv) the Amended and Restated Shareholders Agreement dated as of
August 2, 2000 shall have been terminated and shall no longer be of any force or
effect; and (v) the Amended and Restated Co-Sale and Right of First Refusal
Agreement dated as of August 2, 2000 shall have been terminated and shall no
longer be of any force or effect.
(r) Termination of 401(k) Plan. The Company shall have provided
to Broadcom (i) executed resolutions of the Board of Directors of the Company
authorizing the
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termination and (ii) an executed amendment to any 401(k) Plan sufficient to
assure compliance with all applicable requirements of the Internal Revenue Code
and regulations thereunder so that the tax-qualified status of any 401(k) Plan
will be maintained at the time of termination if such Plan has been adopted or
is in existence. The Representative Stock Bonus Plan Agreements listed on
Section 2.18(a)(1) of the Company Disclosure Schedule and the Representative
Stock Bonus Plan shall have been terminated and are no longer in force or
effect.
(s) Conversion of Company Indebtedness. All outstanding
Indebtedness (if any) of the Company that is convertible or exchangeable into
shares of Company Capital Stock shall have been converted or exchanged into
shares of Company Capital Stock immediately prior to the Effective Time.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS;
ESCROW PROVISIONS
7.1 Survival of Representations, Warranties, Covenants and Agreements.
Notwithstanding any right of Broadcom or the Company (whether or not exercised)
to investigate the affairs of Broadcom or the Company (whether pursuant to
Section 5.3 or otherwise) or a waiver by Broadcom or the Company of any
condition to Closing set forth in Article 6, each party shall have the right to
rely fully upon the representations, warranties, covenants and agreements of the
other party contained in this Agreement or in any instrument delivered pursuant
to this Agreement. Except for (i) the covenant contained in Section 5.12 (which
shall survive for the period set forth therein) and (ii) Article 7 (which shall
survive until termination of the escrow created thereby and the satisfaction of
any other obligations described therein), all of the representations,
warranties, covenants and agreements of the Company and Broadcom contained in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Merger and continue until the first anniversary of the Closing Date
(the "Expiration Date").
7.2 Escrow Provisions.
(a) Establishment of the Escrow Fund. As soon as practicable
after the Effective Time, the date of the First Earn-Out and the date of the
Second Earn-Out, the Escrow Amount (or, in the case of the First Earn-Out and
the Second Earn-Out, the applicable portion thereof), without any act of any
shareholder, will be deposited with the Depositary Agent (plus a proportionate
share of any additional shares of Broadcom Common Stock as may be issued upon
any stock splits, stock dividends or recapitalizations effected by Broadcom
following the Effective Time), such deposit to constitute the "Escrow Fund" to
be governed by the terms set forth herein. The portion of the Escrow Amount
contributed on behalf of each shareholder of the Company shall be in proportion
to the aggregate number of shares of Broadcom Common Stock which such holder
would otherwise be entitled under Section 1.6. Notwithstanding the references in
this Agreement to the "escrow" and the Escrow Fund, the parties acknowledge and
agree that the Depositary Agent is acting as a depositary and not as an escrow
agent pursuant to this Article 7.
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(b) Recourse to the Escrow Fund. The Escrow Fund shall be
available to compensate Broadcom and its officers, directors, employees, agents,
Affiliates and Associates (collectively, the "Broadcom Indemnitees"), (i) for
any and all Losses (whether or not involving a Third Party Claim), incurred or
sustained by Broadcom or any other Broadcom Indemnitee as a result of any
inaccuracy or breach of any representation, warranty, covenant or agreement of
the Company contained herein or in the Ancillary Agreements or in any instrument
delivered pursuant to this Agreement, (ii) as contemplated by Section 5.25 and
(iii) any Losses incurred or sustained by Broadcom or any other Broadcom
Indemnitee as a result of any infringement, misappropriation or other claim by
Allied Telesyn Inc. related to any Intellectual Property; provided, however,
that, except in the case of claims pursuant to Section 5.25 and for Losses
resulting from a breach, violation or inaccuracy in or omission from any of the
representations and warranties of the Company set forth in Section 2.3 or the
related sections of the Company Disclosure Schedule, Broadcom may not make any
claims against the Escrow Fund unless the aggregate Losses incurred or sustained
exceed $200,000 (at which such time claims may be made for all Losses incurred
or sustained). The dollar threshold set forth in the immediately preceding
proviso shall not apply to Losses resulting from any breach, violation or
inaccuracy in or omission from any of the representations and warranties of the
Company set forth in Section 2.3 or the related sections of the Company
Disclosure Schedule, which shall be recoverable without respect to any threshold
amount. Broadcom and the Company each acknowledge that such Losses, if any,
would relate to unresolved contingencies existing at the Effective Time, which
if resolved at the Effective Time would have led to a reduction in the aggregate
Merger consideration to be paid to the shareholders of the Company. The
shareholders of the Company shall not have any liability under this Agreement of
any sort whatsoever in excess of the Escrow Fund, except in the event of fraud
or willful misconduct (i.e., an intentional breach of a representation,
warranty, covenant or agreement, but excluding a negligent or reckless breach)
by the Company of any of its representations, warranties, agreements or
covenants contained in this Agreement, the Ancillary Agreements or in any other
instrument or document required to be delivered pursuant to this Agreement in
connection herewith. In the event of such a fraudulent or willful breach,
Broadcom shall have all remedies available at law or in equity (including for
tort) with respect to such breach; provided, however, that, notwithstanding
anything to the contrary contained in this Agreement, in no event shall any
shareholder of the Company have any liability in excess of the Merger
consideration received by such shareholder in connection with the Merger or the
proceeds, if any, received by such shareholder in connection with the
disposition of such Merger consideration.
(c) Escrow Period; Distribution of Escrow Fund upon Termination
of Escrow Period. Subject to the following requirements, the Escrow Fund shall
be in existence immediately following the Effective Time and shall terminate at
5:00 p.m., Pacific Time, on the Expiration Date (the period of time from the
Effective Time through and including the Expiration Date is referred to herein
as the "Escrow Period"); and all shares of Broadcom Common Stock remaining in
the Escrow Fund shall be distributed as set forth in the last sentence of this
Section 7.2(c); provided, however, that the Escrow Period shall not terminate
with respect to such amount (or some portion thereof) that is necessary in the
reasonable judgment of Broadcom, subject to the objection of the Shareholder
Agent and the subsequent arbitration of the matter in the manner as provided in
Section 7.2(g), to satisfy
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any unsatisfied claims under this Section 7.2 concerning facts and circumstances
existing prior to the termination of such Escrow Period which claims are
specified in any Officer's Certificate delivered to the Depositary Agent prior
to termination of such Escrow Period. As soon as all such claims, if any, have
been resolved, the Depositary Agent shall deliver to the shareholders of the
Company the remaining portion of the Escrow Fund not required to satisfy such
claims. Deliveries of shares of Broadcom Common Stock remaining in the Escrow
Fund to the shareholders of the Company pursuant to this Section 7.2(c) shall be
made ratably in proportion to their respective contributions to the Escrow Fund.
Each shareholder of the Company who would otherwise be entitled to a fraction of
a share of Broadcom Common Stock (after aggregating all fractional shares of
Broadcom Common Stock to be received by such holder) shall be entitled to
receive from Broadcom an amount of cash (rounded to the nearest whole cent)
equal to the product of (a) such fraction, multiplied by (b) the Closing Price.
Broadcom shall use its commercially reasonable efforts to have such shares and
cash delivered within five (5) Business Days after such resolution.
(d) Protection of Escrow Fund.
(i) The Depositary Agent shall hold and safeguard the
Escrow Fund during the Escrow Period, shall treat such fund as a trust fund in
accordance with the terms of this Agreement and not as the property of Broadcom
and shall hold and dispose of the Escrow Fund only in accordance with the terms
hereof.
(ii) Any shares of Broadcom Common Stock or other Equity
Equivalents securities issued or distributed by Broadcom ("New Shares") in
respect of Broadcom Common Stock in the Escrow Fund which have not been released
from the Escrow Fund shall be added to the Escrow Fund. New Shares issued in
respect of shares of Broadcom Common Stock which have been released from the
Escrow Fund shall not be added to the Escrow Fund but shall be distributed to
the record holders thereof. Cash dividends on Broadcom Common Stock shall not be
added to the Escrow Fund but shall be distributed to the record holders of the
Broadcom Common Stock on the record date set for any such dividend.
(iii) Each shareholder shall have voting rights with
respect to the shares of Broadcom Common Stock contributed to the Escrow Fund by
such shareholder (and on any voting securities added to the Escrow Fund in
respect of such shares of Broadcom Common Stock).
(e) Claims Upon Escrow Fund.
(i) Upon receipt by the Depositary Agent at any time on
or before the last day of the Escrow Period of a certificate signed by any
officer of Broadcom (an "Officer's Certificate"): (A) stating that Broadcom or
another Broadcom Indemnitee has paid or properly accrued or reasonably
anticipates that it will have to pay or accrue Losses, directly or indirectly,
as a result of any inaccuracy or breach (or any claim by any third party
alleging, constituting or involving an inaccuracy or breach) of any
representation, warranty, covenant or agreement of the Company contained in this
Agreement or in any of the Ancillary Agreements or in any instrument or
agreement delivered pursuant to this
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Agreement, and (B) specifying in reasonable detail the individual items of
Losses included in the amount so stated, the date each such item was paid or
properly accrued, or the basis for such anticipated liability, and the nature of
the misrepresentation, breach of warranty, agreement or covenant to which such
item is related, the Depositary Agent shall, subject to the provisions of
Section 7.2(f), deliver to Broadcom out of the Escrow Fund, as promptly as
practicable, shares of Broadcom Common Stock held in the Escrow Fund in an
amount equal to such Losses. Where the basis for a claim upon the Escrow Fund by
Broadcom is that Broadcom reasonably anticipates that it will pay or accrue a
Loss, no payment will be made from the Escrow Fund for such Loss unless and
until such Loss is actually paid or accrued.
(ii) For the purposes of determining the number of
shares of Broadcom Common Stock to be delivered to Broadcom out of the Escrow
Fund pursuant to Section 7.2(e)(i), the shares of Broadcom Common Stock shall be
valued at the Closing Price.
(f) Objections to Claims. At the time of delivery of any
Officer's Certificate to the Depositary Agent, a duplicate copy of such
certificate shall be delivered to the Shareholder Agent and for a period of
thirty (30) days after such delivery, the Depositary Agent shall make no
delivery to Broadcom of any Escrow Amount pursuant to Section 7.2(e) unless the
Depositary Agent shall have received written authorization from the Shareholder
Agent to make such delivery. After the expiration of such thirty (30) day
period, the Depositary Agent shall make delivery of shares of Broadcom Common
Stock from the Escrow Fund in accordance with Section 7.2(e), provided that no
such payment or delivery may be made if the Shareholder Agent shall object in a
written statement to the claim made in the Officer's Certificate, and such
statement shall have been delivered to the Depositary Agent prior to the
expiration of such thirty (30) day period.
(g) Resolution of Conflicts; Arbitration.
(i) In case the Shareholder Agent shall object in
writing to any claim or claims made in any Officer's Certificate, the
Shareholder Agent and Broadcom shall attempt in good faith to agree upon the
rights of the respective parties with respect to each of such claims. If the
Shareholder Agent and Broadcom should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties and shall be furnished to
the Depositary Agent. The Depositary Agent shall be entitled to rely on any such
memorandum and distribute shares of Broadcom Common Stock from the Escrow Fund
in accordance with the terms thereof.
(ii) If no such agreement can be reached after good
faith negotiation, either Broadcom or the Shareholder Agent may demand
arbitration of the dispute unless the amount of the damage or loss is at issue
in a pending Action or Proceeding involving a Third Party Claim, in which event
arbitration shall not be commenced until such amount is ascertained or both
parties agree to arbitration; and in either event the matter shall be settled by
arbitration conducted by three arbitrators, one selected by Broadcom and one
selected by the Shareholder Agent, and the two arbitrators selected by Broadcom
and the Shareholder Agent shall select a third arbitrator. The
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arbitrators shall set a limited time period and establish procedures designed to
reduce the cost and time for discovery of information relating to any dispute
while allowing the parties an opportunity, adequate as determined in the sole
judgment of the arbitrators, to discover relevant information from the opposing
parties about the subject matter of the dispute. The arbitrators shall rule upon
motions to compel, limit or allow discovery as they shall deem appropriate given
the nature and extent of the disputed claim. The arbitrators shall also have the
authority to impose sanctions, including attorneys' fees and other costs
incurred by the parties, to the same extent as a court of law or equity, should
the arbitrators determine that discovery was sought without substantial
justification or that discovery was refused or objected to by a party without
substantial justification. The decision of a majority of the three arbitrators
as to the validity and amount of any claim in such Officer's Certificate shall
be binding and conclusive upon the parties to this Agreement, and
notwithstanding anything in Section 7.2(f), the Depositary Agent shall be
entitled to act in accordance with such decision and make or withhold payments
out of the Escrow Fund in accordance therewith. Such decision shall be written
and shall be supported by written findings of fact and conclusions regarding the
dispute which shall set forth the award, judgment, decree or order awarded by
the arbitrators.
(iii) Judgment upon any award rendered by the
arbitrators may be entered in any court having competent jurisdiction. Any such
arbitration shall be held in the County of Santa Xxxxx in the State of
California under the commercial rules of arbitration then in effect of the
American Arbitration Association. For purposes of this Section 7.2(g), in any
arbitration hereunder in which any claim or the amount thereof stated in the
Officer's Certificate is at issue, Broadcom shall be deemed to be the
Non-Prevailing Party in the event that the arbitrators award Broadcom less than
the sum of one-half of the disputed amount of any Losses, plus any amounts not
in dispute; otherwise, the shareholders of the Company as represented by the
Shareholder Agent shall be deemed to be the Non-Prevailing Party. The
Non-Prevailing Party to an arbitration shall pay its own expenses, the fees of
each arbitrator, the administrative costs of the arbitration and the expenses,
including reasonable attorneys' fees and costs, incurred by the other party to
the arbitration.
(h) Shareholder Agent of the Shareholders; Power of Attorney.
(i) In the event that the Merger is approved by the
shareholders of the Company, effective upon such vote, and without further act
of any shareholder, Xxxxx-xxxxx Shih shall be appointed as agent and
attorney-in-fact (the "Shareholder Agent") for each shareholder of the Company
(except such shareholders, if any, as shall have perfected their appraisal or
dissenters' rights under the California Code), for and on behalf of shareholders
of the Company, to give and receive notices and communications, to authorize
delivery to Broadcom of shares of Broadcom Common Stock from the Escrow Fund in
satisfaction of claims by Broadcom, to object to such deliveries, to agree to,
negotiate, enter into settlements and compromises of, and demand 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
Shareholder Agent for the accomplishment of the foregoing. Such agency may be
changed by the shareholders of the Company from time to time upon not less than
thirty (30) days prior written notice to Broadcom; provided, however, that the
Shareholder Agent may not be removed unless holders of a two-thirds
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interest in the Escrow Fund agree to such removal and to the identity of the
substituted shareholder agent. Any vacancy in the position of Shareholder Agent
may be filled by approval of the holders of a majority in interest of the Escrow
Fund. No bond shall be required of the Shareholder Agent, and the Shareholder
Agent shall not receive compensation for his services. Notices or communications
to or from the Shareholder Agent shall constitute notice to or from each of the
shareholders of the Company.
(ii) The Shareholder Agent shall not incur any liability
with respect to any action taken or suffered by him or omitted hereunder as
Shareholder Agent while acting in good faith and in the exercise of reasonable
judgment. The Shareholder Agent may, in all questions arising hereunder, rely on
the advice of counsel and for anything done, omitted or suffered in good faith
by the Shareholder Agent based on such advice, the Shareholder Agent shall not
be liable to anyone. The Shareholder Agent undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement and no implied
covenants or obligations shall be read into this Agreement against the
Shareholder Agent.
(iii) The Shareholder Agent shall have reasonable access
to information about the Company and the reasonable assistance of the Company's
officers and employees for purposes of performing its duties and exercising its
rights hereunder, provided that the Shareholder Agent shall treat confidentially
and not disclose any nonpublic information from or about the Company to anyone
(except on a need to know basis to individuals who agree in writing to treat
such information confidentially).
(i) Actions of the Shareholder Agent. A decision, act, consent
or instruction of the Shareholder Agent shall constitute a decision of all the
shareholders for whom a portion of the Escrow Amount otherwise issuable to them
is deposited in the Escrow Fund and shall be final, binding and conclusive upon
each of such shareholders, and the Depositary Agent and Broadcom may rely upon
any such decision, act, consent or instruction of the Shareholder Agent as being
the decision, act, consent or instruction of every such shareholder of the
Company. The Depositary Agent and Broadcom are hereby relieved from any
liability to any person for any acts done by them in accordance with such
decision, act, consent or instruction of the Shareholder Agent.
(j) Third-Party Claims. In the event Broadcom becomes aware of a
third-party claim (a "Third Party Claim") which Broadcom reasonably expects may
result in a demand against the Escrow Fund, Broadcom shall notify the
Shareholder Agent of such claim, and the Shareholder Agent, as representative
for the shareholders of the Company, shall be entitled, at their expense, to
participate in any defense of such claim. Broadcom shall have the right in its
sole discretion to settle any Third Party Claim; provided, however, that if
Broadcom settles any Third Party Claim without the Shareholder Agent's consent
(which consent shall not be unreasonably withheld or delayed), Broadcom may not
make a claim against the Escrow Fund with respect to the amount of Losses
incurred by Broadcom in such settlement. In the event that the Shareholder Agent
has consented to any such settlement, the Shareholder Agent shall have no power
or authority to object under any provision of this Article 7 to the amount of
any claim by Broadcom against the Escrow Fund with respect to the amount of
Losses incurred by Broadcom in such settlement.
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(k) Indemnification for Shareholder Agent. The shareholders of
the Company shall, severally and not jointly, on a pro rata basis based on their
proportionate ownership interests in the Company, indemnify, defend and hold the
Shareholder Agent harmless from and against any loss, damage, tax, liability and
expense that may be incurred or paid by the Shareholder Agent arising out of or
in connection with the acceptance or administration of the Shareholder Agent's
duties, except as caused by the Shareholder Agent's gross negligence or willful
misconduct, including legal costs and expenses of defending the Shareholder
Agent against any claim or liability in connection with the performance of the
Shareholder Agent's duties. The Shareholder Agent shall be entitled to such
indemnification from the Escrow Fund prior to any distribution thereof to the
shareholders of the Company, but except for actual, reasonable and documented
out-of-pocket losses, damages, taxes, liabilities and expenses up to the sum of
fifty thousand dollars ($50,000) in the aggregate, no such indemnification shall
be paid to the Shareholder Agent from the Escrow Fund until after the Expiration
Date and after the final termination of the Escrow Period (as the same may be
extended) in accordance with Section 7.2(c), after any distributions from the
Escrow Fund have been made to Broadcom and no amount shall be paid to the
Shareholder Agent from the Escrow Fund at any time in the absence of reasonable
documentation thereof.
(l) Depositary Agent's Duties.
(i) Limitation on Duties of Depositary Agent. The
Depositary Agent shall be obligated only for the performance of such duties as
are specifically set forth herein, and as set forth in any additional written
escrow instructions which the Depositary Agent may receive after the date of
this Agreement which are signed by an officer of Broadcom and the Shareholder
Agent, and may rely and shall be protected in relying or refraining from acting
on any instrument reasonably believed to be genuine and to have been signed or
presented by the proper party or parties. The Depositary Agent shall not be
liable for any act done or omitted hereunder as Depositary Agent while acting in
good faith and in the exercise of reasonable judgment, and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence of such
good faith.
(ii) Compliance with Orders. The Depositary Agent is
hereby expressly authorized to comply with and obey Orders of any court of law
or Governmental or Regulatory Authority, notwithstanding any notices, warnings
or other communications from any party or any other person to the contrary. In
case the Depositary Agent obeys or complies with any such Order, the Depositary
Agent shall not be liable to any of the parties hereto or to any other person by
reason of such compliance, notwithstanding any such Order being subsequently
reversed, modified, annulled, set aside, vacated or found to have been entered
without jurisdiction or proper authority.
(iii) Limitations on Liability of Depositary Agent. The
Depositary Agent shall not be liable in any respect on account of (A) the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver this Agreement or any documents or papers
deposited or called for hereunder; or (B) the expiration of any rights under any
statute of limitations with respect to this Agreement or any documents deposited
with the Depositary Agent.
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(iv) Good Faith of Depositary Agent. In performing any
duties under the Agreement, the Depositary Agent shall not be liable to any
party for damages, losses, or expenses, except for gross negligence or willful
misconduct on the part of the Depositary Agent. The Depositary Agent shall not
incur any such liability for (A) any act or failure to act made or omitted in
good faith, or (B) any action taken or omitted in reliance upon any instrument,
including any written statement or affidavit provided for in this Agreement that
the Depositary Agent shall in good faith believe to be genuine, nor will the
Depositary Agent be liable or responsible for forgeries, fraud, impersonations
or determining the scope of any representative authority. In addition, the
Depositary Agent may consult with legal counsel in connection with the
Depositary Agent's duties under this Agreement and shall be fully protected in
any act taken, suffered, or permitted by him/her in good faith in accordance
with the advice of counsel. The Depositary Agent is not responsible for
determining and verifying the authority of any person acting or purporting to
act on behalf of any party to this Agreement.
(v) Non-responsibility of Depositary Agent. If any
controversy arises between the parties to this Agreement, or with any other
party, concerning the subject matter of this Agreement, its terms or conditions,
the Depositary Agent will not be required to determine the controversy or to
take any action regarding it. The Depositary Agent may hold all documents and
shares of Broadcom Common Stock and may wait for settlement of any such
controversy by final appropriate legal proceedings or other means as, in the
Depositary Agent's discretion, the Depositary Agent may be required, despite
what may be set forth elsewhere in this Agreement. In such event, the Depositary
Agent will not be liable for any damages. Furthermore, the Depositary Agent may
at its option, file an action of interpleader requiring the parties to answer
and litigate any claims and rights among themselves. The Depositary Agent is
authorized to deposit with the clerk of the court all documents and shares of
Broadcom Common Stock held in escrow, except all costs, expenses, charges and
reasonable attorney fees incurred by the Depositary Agent due to the
interpleader action and which the parties jointly and severally agree to pay.
Upon initiating such action, the Depositary Agent shall be fully released and
discharged of and from all obligations and liability imposed by the terms of
this Agreement.
(vi) Indemnification of Depositary Agent. Broadcom and
its successors and assigns agrees to indemnify and hold the Depositary Agent
harmless against any and all Losses incurred by the Depositary Agent in
connection with the performance of the Depositary Agent's duties under this
Agreement, including any litigation arising from this Agreement or involving its
subject matter.
(vii) Resignation of Depositary Agent. The Depositary
Agent may resign at any time upon giving at least thirty (30) days written
notice to the parties; provided, however, that no such resignation shall become
effective until the appointment of a successor depositary agent which shall be
accomplished as follows: the parties shall use their reasonable best efforts to
mutually agree on a successor depositary agent within thirty (30) days after
receiving such notice. If the parties fail to agree upon a successor depositary
agent within such time, the Depositary Agent shall have the right to appoint a
successor depositary agent authorized to do business in the State of California.
The successor depositary agent shall execute and deliver an instrument accepting
such appointment and it
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shall, without further acts, be vested with all the estates, properties, rights,
powers, and duties of the predecessor depositary agent as if originally named as
Depositary Agent. The Depositary Agent shall be discharged from any further
duties and liability under this Agreement.
(m) Fees. All fees of the Depositary Agent for performance of
its duties hereunder shall be paid by Broadcom. In the event that the conditions
of this Agreement are not promptly fulfilled, or if the Depositary Agent renders
any service not provided for in this Agreement, or if the parties request a
substantial modification of its terms, or if any controversy arises, or if the
Depositary Agent is made a party to, or intervenes in, any Action or Proceeding
pertaining to this escrow or its subject matter, the Depositary Agent shall be
reasonably compensated for such extraordinary services and reimbursed for all
costs, attorney's fees, and expenses occasioned by such default, delay,
controversy or Action or Proceeding. Broadcom agrees to pay these sums upon
demand.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. Except as provided in Section 8.2, this Agreement may
be terminated and the Merger abandoned at any time prior to the Effective Time:
(a) by mutual agreement of the Company and Broadcom;
(b) by Broadcom or the Company if: (i) the Effective Time has
not occurred before 5:00 p.m. (Pacific Time) on January 1, 2001 (provided,
however, that the right to terminate this Agreement under this Section 8.1(b)(i)
shall not be available to any party whose willful failure to fulfill any
obligation hereunder has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date); (ii) there shall be a final
nonappealable order of a federal or state court in effect preventing
consummation of the Merger; or (iii) there shall be any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
Merger by any Governmental or Regulatory Authority that would make consummation
of the Merger illegal;
(c) by Broadcom if there shall be any action taken, or any Law
or Order enacted, promulgated or issued or deemed applicable to the Merger, by
any Governmental or Regulatory Authority, which would: (i) prohibit Broadcom's
ownership or operation of all or any portion of the business of the Company or
(ii) compel Broadcom to dispose of or hold separate all or any portion of the
Assets and Properties of the Company as a result of the Merger;
(d) by Broadcom if it is not in material breach of its
representations, warranties, covenants and agreements under this Agreement and
there has been a breach of any representation, warranty, covenant or agreement
contained in this Agreement on the part of the Company and (i) the Company is
not using its reasonable efforts to cure such breach, or has not cured such
breach within thirty (30) days, after notice of such breach to the Company
(provided, however, that, no cure period shall be required for a breach which by
its nature cannot be cured) and (ii) as a result of such breach any of the
conditions set forth
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in Section 6.1 or Section 6.3, as the case may be, would not be satisfied prior
to the Closing Date;
(e) by the Company if it is not in material breach of its
representations, warranties, covenants and agreements under this Agreement and
there has been a breach of any representation, warranty, covenant or agreement
contained in this Agreement on the part of Broadcom and (i) Broadcom is not
using its reasonable efforts to cure such breach, or has not cured such breach
within thirty (30) days, after notice of such breach to Broadcom (provided,
however, that no cure period shall be required for a breach which by its nature
cannot be cured), and (ii) as a result of such breach any of the conditions set
forth in Section 6.1 or Section 6.2, as the case may be, would not be satisfied
as of the Closing Date;
(f) by Broadcom, if at any time after twenty (20) days following
the meeting at which the Company's shareholders take the Company Shareholder
Action, holders of more than five percent (5%) the outstanding shares of Company
Capital Stock shall have exercised, or have any continued right to exercise,
appraisal, dissenters' or similar rights under applicable law with respect to
their shares by virtue of the Merger;
(g) by Broadcom, if the Merger shall not have been approved by
the requisite votes or consents of the Company's shareholders in accordance with
the California Code at any meeting (or any adjournment thereof) convened for the
purpose of taking a vote with respect to the Merger or, in any solicitation of
shareholder written consents with respect to the Merger, within twenty (20) days
after the record date established for determining the shareholders of the
Company entitled to consent;
(h) by Broadcom, if any of the individuals listed on Schedule
6.3(i) cease to be employed by the Company, provided, however, that Broadcom may
exercise this termination right with respect to a particular individual named in
Schedule 6.3(i) only if Broadcom gives the Company written notice of termination
of the Agreement within twenty (20) days after receipt of written notice from
the Company that such individual has ceased to be employed by the Company; or
(i) by Broadcom, if, at any time, less than twenty-three (23) of
the Company's engineering and research and development employees (excluding the
employees identified on Schedule 6.3(i)) of the Company employed as of the date
of this Agreement shall cease to be employed by the Company at the Closing or
such employees shall have given notice or other indication that they are not
willing to be employed by Broadcom or a Subsidiary of Broadcom (as Broadcom
shall designate) following the Merger.
8.2 Effect of Termination. In the event of a valid termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Broadcom or the
Company, or their respective officers, directors or shareholders or Affiliates
or Associates; provided, however, that each party shall remain liable for any
breaches of this Agreement prior to its termination; and provided further that,
the provisions of Sections 5.4, 5.5, and 8.2, Article 9 (exclusive of Section
9.3) and the applicable definitions set forth in Article 10 shall remain in full
force and effect and survive any termination of this Agreement.
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8.3 Amendment. Except as is otherwise required by applicable law after
the shareholders of the Company approve the Merger and this Agreement, this
Agreement may be amended by the parties hereto at any time by execution of an
instrument in writing signed on behalf of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time, Broadcom
and the Company may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations of the other party hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto, and (c) waive compliance
with any of the agreements, covenants or conditions for the benefit of such
party contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission against
facsimile confirmation or mailed by internationally recognized overnight courier
prepaid, to the parties at the following addresses or facsimile numbers:
If to Broadcom to:
Broadcom Corporation
00000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attn: President and Chief Executive Officer
and
Broadcom Corporation
00000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attn: General Counsel
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Two Embarcadero Place, 0000 Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxx X. Xxxxxx, Esq.
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If to the Company to:
Allayer Communications
000 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: President and Chief Executive Officer
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, PC
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
If to the Depositary Agent:
U.S. Stock Transfer Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Vice President
All such notices, requests and other communications will (a) if delivered
personally to the address as provided in this Section 9.1, be deemed given upon
delivery, (b) if delivered by facsimile transmission to the facsimile number as
provided for in this Section 9.1, be deemed given upon facsimile confirmation,
and (c) if delivered by overnight courier to the address as provided in this
Section 9.1, be deemed given on the earlier of the first Business Day following
the date sent by such overnight courier or upon receipt (in each case regardless
of whether such notice, request or other communication is received by any other
Person to whom a copy of such notice is to be delivered pursuant to this Section
9.1). Any party from time to time may change its address, facsimile number or
other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
9.2 Entire Agreement. This Agreement and the Exhibits and Schedules
hereto, including the Company Disclosure Schedule and the Broadcom Disclosure
Schedule, constitute the entire Agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, including the original Merger Agreement and Plan of Reorganization by
and among the parties hereto dated as of the date hereof, except for the
Confidentiality Agreement, which shall continue in full force and effect and
shall survive any termination of this Agreement or the Closing in accordance
with its terms.
9.3 Further Assurances; Post-Closing Cooperation. At any time or from
time to time after the Closing, the parties shall execute and deliver to the
other party such other documents and instruments, provide such materials and
information and take such other
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actions as the other party may reasonably request to consummate the transactions
contemplated by this Agreement and otherwise to cause the other party to fulfill
its obligations under this Agreement and the transactions contemplated hereby.
Each party agrees to use commercially reasonable efforts to cause the conditions
to its obligations to consummate the Merger to be satisfied.
9.4 Waiver. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion. All remedies, either under this
Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
9.5 Third Party Beneficiaries. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights, and this Agreement does not
confer any such rights, upon any other Person other than any Person entitled to
indemnity under Section 5.12 or Article 7.
9.6 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned (by operation of law or
otherwise) by any party without the prior written consent of the other party and
any attempt to do so will be void. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the
parties hereto and their respective successors and assigns.
9.7 Headings. The headings and table of contents used in this Agreement
have been inserted for convenience of reference only and do not define or limit
the provisions hereof.
9.8 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
9.9 Governing Law. This Agreement, the Ancillary Agreements and any
other closing documents shall be governed by and construed in accordance with
the domestic laws of the State of California, without giving effect to any
choice of law or conflict of law
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provision or rule (whether of the State of California or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of California.
9.10 WAIVER OF TRIAL BY JURY. IN ANY ACTION OR PROCEEDING ARISING
HEREFROM, THE PARTIES HERETO CONSENT TO TRIAL WITHOUT A JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER OR
THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION OR PROCEEDING.
9.11 Construction. The parties hereto agree that this Agreement is the
product of negotiation between sophisticated parties and individuals, all of
whom were represented by counsel, and each of whom had an opportunity to
participate in and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto but rather shall be given a
fair and reasonable construction without regard to the rule of contra
proferentem.
9.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. The Depositary Agent may
execute this Agreement following the date hereof and prior to the Closing, and
such later execution, if so executed after the date hereof, shall not affect the
binding nature of this Agreement as of the date hereof between the other
signatories hereto.
9.13 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Except where this Agreement specifically provides for arbitration, it
is agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
ARTICLE 10
DEFINITIONS
10.1 Definitions. As used in this Agreement, the following defined terms
shall have the meanings indicated below:
"2000-01 Operating Plan" has the meaning ascribed to it in
Section 2.31(b).
"Actions or Proceedings" means any action, suit, complaint,
petition, investigation, proceeding, arbitration, litigation or Governmental or
Regulatory Authority investigation, audit or other proceeding, whether civil or
criminal, in law or in equity, or before any arbitrator or Governmental
Regulatory Authority.
"Affiliate" means, as applied to any Person, (a) any other
Person directly or indirectly controlling, controlled by or under common control
with, that Person, (b) any
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other Person that owns or controls (i) ten percent (10%) or more of any class of
equity securities of that Person or any of its Affiliates or (ii) ten percent
(10%) or more of any class of equity securities (including any equity securities
issuable upon the exercise of any option or convertible security) of that Person
or any of its Affiliates, or (c) as to a corporation, each director and officer
thereof, and as to a partnership, each general partner thereof, and as to a
limited liability company, each managing member or similarly authorized person
thereof (including officers), and as to any other entity, each Person exercising
similar authority to those of a director or officer of a corporation. For the
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling", "controlled by", and "under common control with") as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person, whether through ownership of voting securities or by contract or
otherwise.
"Aggregate Common Amount" means the Aggregate Share Number
(before giving effect to either the First Earn-Out or the Second Earn-Out) minus
the Aggregate Preferred Amount; provided, that for purposes of determining the
number of additional shares of Broadcom Common Stock and options (if any)
allocable pursuant to Section 1.16 to the persons who immediately prior to the
Effective Time were holders of Company Common Stock and Company Options, the
Aggregate Common Amount shall be reduced to exclude of shares of Broadcom Common
Stock issuable upon exercise of Company Warrants and shall be increased to
include the shares of Broadcom Common Stock (if any) issued or reserved for
issuance pursuant to the First Earn-Out and the Second Earn-Out.
"Aggregate Common Number" means the aggregate number of shares
of Company Common Stock outstanding immediately prior to the Effective Time
(including all shares of Company Common Stock issued or issuable upon exercise,
conversion or exchange in full of all unvested and vested Company Options,
Company Warrants (if any) and Company Stock Purchase Rights (if any) which are
not exercised, converted, exchanged or expired as of the Effective Time);
provided, that for purposes of determining the number of additional shares of
Broadcom Common Stock and options (if any) allocable pursuant to Section 1.16 to
the persons who immediately prior to the Effective Time were holders of Company
Common Stock and Company Options, the Aggregate Common Number shall be reduced
to exclude the shares of Company Common Stock issuable upon exercise of Company
Warrants.
"Aggregate Preferred Amount" means the aggregate number of
shares of Broadcom Common Stock issuable in the event of a liquidation pursuant
to the Company's Restated Articles of Incorporation in respect of the shares of
Company Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock which are outstanding immediately prior to
the Effective Time and which have not been converted into Company Common Stock.
"Aggregate Share Number" means two million twenty-three thousand
four hundred fifty (2,023,450) shares of Broadcom Common Stock, subject to
adjustment pursuant to Section 1.8 and subject to increase by the amount (if
any) of the First Earn-Out and the Second Earn-Out.
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"Agreement" means this Amended and Restated Merger Agreement and
Plan of Reorganization, including (unless the context otherwise requires) the
Exhibits and the Disclosure Schedules and the certificates and instruments
delivered in connection herewith, or incorporated by reference, as the same may
be amended or supplemented from time to time in accordance with the terms
hereof.
"Agreement of Merger" has the meaning ascribed to it in Section
1.2.
"Ancillary Agreements" has the meaning ascribed to it in Section
2.2.
"Approval" means any approval, authorization, consent, permit,
qualification or registration, or any waiver of any of the foregoing, required
to be obtained from or made with, or any notice, statement or other
communication required to be filed with or delivered to, any Governmental or
Regulatory Authority or any other Person.
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, operated, owned, licensed or leased by such Person, including
cash, cash equivalents, Investment Assets, accounts and notes receivable,
chattel paper, documents, instruments, general intangibles, real estate,
equipment, inventory, goods and Intellectual Property.
"Associate" means, with respect to any Person, any corporation
or other business organization of which such Person is an officer or partner or
is the beneficial owner, directly or indirectly, of ten percent (10%) or more of
any class of equity securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.
"Audited Financial Statement Date" means December 31, 1999.
"Audited Financial Statements" means the audited consolidated
balance sheets of the Company as of each of the fiscal years ended December 31,
1997 through December 31, 1999, respectively, and the related audited
consolidated statements of operations, shareholders' equity and cash flows for
each of the fiscal years then ended, in each case, including the notes thereto
together with the notes thereto and the unqualified report of the Company's
independent accountants with respect thereto.
"Backup Registration Rights Agreement" has the meaning ascribed
to it in Section 5.1(c).
"Books and Records" means all files, documents, instruments,
papers, books and records relating to the Business or Condition of the Company
and its Subsidiaries, including financial statements, internal reports, Tax
Returns and related work papers and letters from accountants, budgets, pricing
guidelines, ledgers, journals, deeds, title policies, minute books, stock
certificates and books, stock transfer ledgers, Contracts, Licenses,
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customer lists, computer files and programs (including data processing files and
records), retrieval programs, operating data and plans and environmental studies
and plans.
"Broadcom" has the meaning ascribed to it in the forepart of
this Agreement.
"Broadcom Common Stock" has the meaning ascribed to it in
Recital B to this Agreement.
"Broadcom Disclosure Schedule" has the meaning ascribed to it in
the forepart of Article 3.
"Broadcom Financial Statements" has the meaning ascribed to it
in Section 3.4.
"Broadcom Indemnitees" has the meaning ascribed to it in Section
7.2(b).
"Business Combination" means, with respect to any Person, (a)
any merger, consolidation, share exchange, reorganization or other business
combination transaction to which such Person is a party, (b) any sale, dividend,
split or other disposition of any capital stock or other equity interests of
such Person (except for issuances of common stock upon conversion of preferred
stock outstanding on the date hereof or the exercise of options or warrants (if
any) outstanding on the date hereof or issued in accordance with the covenants
of this Agreement), (c) any tender offer (including a self tender), exchange
offer, recapitalization, restructuring, liquidation, dissolution or similar or
extraordinary transaction, (d) any sale, dividend or other disposition of all or
a material or significant portion of the Assets and Properties of such Person
(including by way of exclusive license or joint venture formation) or (e) the
entering into of any agreement or understanding, the granting of any rights or
options, or the acquiescence of such Person, with respect to any of the
foregoing.
"Business Day" means a day other than Saturday, Sunday or any
day on which banks located in the State of California are authorized or
obligated to close.
"Business or Condition of Broadcom" means the business,
condition (financial or otherwise), results of operations, prospects or Assets
and Properties of Broadcom and its Subsidiaries, in the aggregate, taking
Broadcom and its Subsidiaries together as a whole.
"Business or Condition of the Company" means the business,
condition (financial or otherwise), results of operations, prospects or Assets
and Properties of the Company and its Subsidiaries, in the aggregate, taking the
Company and its Subsidiaries together as a whole.
"California Code" means the California Corporations Code and all
amendments and additions thereto.
"California Permit" has the meaning ascribed to it in Section
1.14.
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"Certificates" has the meaning ascribed to it in Section
1.11(b).
"Certificate of Merger" has the meaning ascribed to it in
Section 1.2.
"Closing" means the closing of the transactions contemplated by
Section 1.2.
"Closing Date" has the meaning ascribed to it in Section 1.2.
"Closing Price" means the average closing sales price of
Broadcom Common Stock as traded on the NNM and reported by the Wall Street
Journal, for the thirty (30) consecutive market trading days commencing on the
thirty second (32nd) market trading day prior to the Closing Date and ending on
(inclusive) the third (3rd) market trading day prior to the Closing Date.
"COBRA" has the meaning ascribed to it in Section 2.14(f).
"Common Stock Exchange Ratio" means the quotient obtained by
dividing (a) the Aggregate Common Amount by (b) the Aggregate Common Number.
"Company" has the meaning ascribed to it in the forepart of this
Agreement.
"Company Affiliates" has the meaning ascribed to it in Section
5.10.
"Company Affiliate Agreement" has the meaning ascribed to it in
Recital C to this Agreement.
"Company Capital Stock" means the Company Common Stock and the
Company Preferred Stock.
"Company Common Stock" has the meaning ascribed to it in Section
2.3(a).
"Company Disclosure Schedule" means the schedules delivered to
Broadcom by or on behalf of the Company, containing all lists, descriptions,
exceptions and other information and materials as are required to be included
therein in connection with the representations and warranties made by the
Company in Article 2 or otherwise.
"Company Financials" means the Audited Financial Statements and
the Interim Financial Statements.
"Company Indemnified Party" has the meaning ascribed to it in
Section 5.12.
"Company Intellectual Property" shall mean any Intellectual
Property that (a) is owned by the Company or any of its Subsidiaries; (b) is
licensed to the Company or any of its Subsidiaries; (c) was developed or created
by or for the Company or any of its Subsidiaries or (d) is used in or necessary
for the conduct of the business of the Company or any of its Subsidiaries as
presently or heretofore conducted or as proposed to be conducted in the 2000-01
Operating Plan, including any Intellectual Property created by any of the
founders, employees or consultants of the Company or any of its Subsidiaries and
including
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any Intellectual Property created by any of the founders of the Company or any
of its Subsidiaries prior to the creation of the Company and its Subsidiaries.
"Company Options" means any Option to purchase Company Capital
Stock, excluding the Company Preferred Stock and the Company Warrants (if any).
"Company Preferred Stock" has the meaning ascribed to it in
Section 2.3(a).
"Company Registered Intellectual Property" means all Registered
Intellectual Property owned by, filed in the name of, assigned to or applied for
by, the Company.
"Company Restricted Stock" means shares of Company Capital Stock
purchased pursuant to an exercise of a Company Stock Purchase Right which are
subject to a repurchase option by the Company.
"Company Series A Preferred Stock" has the meaning ascribed to
it in Section 2.3.
"Company Series B Preferred Stock" has the meaning ascribed to
it in Section 2.3.
"Company Series C Preferred Stock" has the meaning ascribed to
it in Section 2.3.
"Company Series D Preferred Stock" has the meaning ascribed to
it in Section 2.3.
"Company Stock Plan" has the meaning ascribed to it in Section
1.6(d)(ii).
"Company Stock Purchase Right" means any right to (i) purchase
Company Restricted Stock granted pursuant to Section 3 of the Company Stock Plan
or otherwise, or (ii) receive Company Capital Stock accrued pursuant to the
Representative Stock Bonus Plan.
"Company Shareholder Action" has the meaning ascribed to it in
Section 2.35.
"Company Warrants" means any and all warrants (if any) to
purchase Company Capital Stock including the warrants listed in Section 2.3 of
the Company Disclosure Schedule.
"Competing Proposed Transaction" has the meaning ascribed to it
in Section 4.2.
"Confidentiality Agreement" has the meaning ascribed to it in
Section 5.4.
"Contract" means any contract, agreement or other business
arrangement (whether oral or written) including:
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(i) any distributor, sales, advertising, agency
or manufacturer's representative contract;
(ii) any continuing contract for the purchase of
materials, supplies, equipment or services involving in the case
of any such contract more than one hundred thousand dollars
($100,000) over the life of the contract;
(iii) any contract that expires or may be
renewed at the option of any person other than the Company so as
to expire more than one (1) year after the date of this
Agreement;
(iv) any trust indenture, mortgage, promissory
note, loan agreement or other contract for the borrowing of
money, any currency exchange, commodities or other hedging
arrangement or any leasing transaction of the type required to
be capitalized in accordance with generally accepted accounting
principles;
(v) any contract for capital expenditures in
excess of one hundred thousand dollars ($100,000) in the
aggregate;
(vi) any contract limiting the freedom of the
Company to engage in any line of business or to compete with any
other Person or any confidentiality, secrecy or non-disclosure
contract;
(vii) any contract pursuant to which the Company
is a lessor of any machinery, equipment, motor vehicles, office
furniture, fixtures or other personal property;
(viii) any contract that is not terminable by
the Company upon thirty (30) days (or less) notice by the
Company without penalty or obligation to make payments based on
such termination; or
(ix) any agreement of guarantee, support,
indemnification, assumption or endorsement of, or any similar
commitment with respect to, the obligations, liabilities
(whether accrued, absolute, contingent or otherwise) or
indebtedness of any other Person.
"Depositary Agent" means U.S. Stock Transfer Corporation (or
other institution acceptable to Broadcom and the Shareholder Agent).
"Disclosure Schedules" means the Company Disclosure Schedule and
the Broadcom Disclosure Schedule.
"Dissenting Shares" has the meaning ascribed to it in Section
1.10.
"Earn-Out Determination" has the meaning ascribed to it in
Section 1.16(d).
"Earn-Out Dispute" has the meaning ascribed to it in Section
1.16(d).
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"Effective Time" has the meaning ascribed to it in Section 1.2.
"Environment" means air, surface water, ground water, or land,
including land surface or subsurface, and any receptors such as persons,
wildlife, fish, biota or other natural resources.
"Environmental Clean-up Site" means any location which is listed
or proposed for listing on the National Priorities List, the Comprehensive
Environmental Response, Compensation and Liability Information System, or on any
similar state list of sites relating to investigation or cleanup, or which is
the subject of any pending or threatened action, suit, proceeding, or
investigation related to or arising from any location at which there has been a
Release or threatened or suspected Release of a Hazardous Material.
"Environmental Law" means any federal, state, local or foreign
environmental, health and safety or other Law relating to Hazardous Materials,
including the Comprehensive, Environmental Response Compensation and Liability
Act, the Clean Air Act, the Federal Water Pollution Control Act, the Solid Waste
Disposal Act, the Federal Insecticide, Fungicide and Rodenticide Act, and the
California Safe Drinking Water and Toxic Enforcement Act.
"Environmental Permit" means any permit, license, approval,
consent or authorization required under or in connection with any Environmental
Law and includes any and all orders, consent orders or binding agreements issued
by or entered into with a Governmental or Regulatory Authority.
"Equity Equivalents" means securities (including Options to
purchase any shares of Company Capital Stock) which, by their terms, are or may
be exercisable, convertible or exchangeable for or into common stock, preferred
stock or other securities at the election of the holder thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" has the meaning ascribed to it in the
definition of "Plan" in this Section 10.1.
"Escrow Amount" means the number of shares of Broadcom Common
Stock obtained by multiplying (a) the aggregate number of shares of Broadcom
Common Stock issuable by Broadcom at the Effective Time to holders of Company
Capital Stock in accordance with the Section 1.6(a), plus the aggregate number
of shares of Broadcom Common Stock issued by Broadcom pursuant to Section 1.16
prior to the Expiration Date by (b) 0.10. The shares deposited with the
Depositary Agent shall, to the extent possible, be shares that are not subject
to any repurchase rights.
"Escrow Fund" has the meaning ascribed to it in Section 7.2(a).
"Escrow Period" has the meaning ascribed to it in Section
7.2(c).
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"Estimated Third Party Expenses" has the meaning ascribed to it
in Section 2.26.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
"Exchange Agent" means U.S. Stock Transfer Corporation.
"Exchange Ratio" and "Exchange Ratios" mean the Series A
Exchange Ratio, the Series B Exchange Ratio, the Series C Exchange Ratio, the
Series D Exchange Ratio and/or the Common Stock Exchange Ratio, as the case may
be and as the context shall require.
"Expiration Date" has the meaning ascribed to it in Section 7.1.
"Fairness Hearing" has the meaning ascribed to it in Section
1.14.
"Faraday" has the meaning ascribed to it in Section 5.26.
"Faraday Agreement" has the meaning ascribed to it in Section
5.26.
"Final Earn-Out Amount" has the meaning ascribed to it in
Section 1.16(d).
"Financial Statement Date" means December 31, 1999.
"First Earn-Out" has the meaning ascribed to it in Section
1.16(a).
"GAAP" means generally accepted accounting principles in the
United States, as in effect from time to time.
"Good Faith Consultation" means consultation with a Person's
independent accountants following disclosure in good faith to such accountants
of all facts requested by such accountants or which the specified Person
otherwise had reason to believe would be relevant to such accountants'
assessment.
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, bureau, board, commission, department,
official or other instrumentality of the United States, any foreign country or
any domestic or foreign state, county, city or other political subdivision, and
shall include any stock exchange, quotation service and the National Association
of Securities Dealers.
"Hazardous Material" means (a) any chemical, material, substance
or waste including, containing or constituting petroleum or petroleum products,
solvents (including chlorinated solvents), nuclear or radioactive materials,
asbestos in any form that is or could become friable, radon, lead-based paint,
urea formaldehyde foam insulation or polychlorinated biphenyls, (b) any
chemicals, materials, substances or wastes which are now defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic
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substances," "toxic pollutants" or words of similar import under any
Environmental Law; or (c) any other chemical, material, substance or waste which
is regulated by any Governmental or Regulatory Authority or which could
constitute a nuisance.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Income Tax" means (a) any income, alternative or add-on minimum
tax, gross income, gross receipts, franchise, profits, including estimated taxes
relating to any of the foregoing, or other similar tax or other like assessment
or charge of similar kind whatsoever, excluding any Other Tax, together with any
interest and any penalty, addition to tax or additional amount imposed by any
Taxing Authority responsible for the imposition of any such Tax (domestic or
foreign); or (b) any liability of a Person for the payment of any taxes,
interest, penalty, addition to tax or like additional amount resulting from the
application of Treas. Reg. Section 1.1502-6 or comparable provisions of any
Taxing Authority in respect of a Tax Return of a Relevant Group or any Contract.
"Indebtedness" of any Person means all obligations of such
Person (a) for borrowed money, (b) evidenced by notes, bonds, debentures or
similar instruments, (c) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (d) under capital leases and (e) in the nature of guarantees of the
obligations described in clauses (a) through (d) above of any other Person.
"Information Statement" has the meaning ascribed to it in
Section 2.35.
"Intellectual Property" means all trademarks and trademark
rights, trade names and trade name rights, service marks and service xxxx
rights, service names and service name rights, patents and patent rights,
utility models and utility model rights, copyrights, mask work rights, brand
names, trade dress, product designs, product packaging, business and product
names, logos, slogans, rights of publicity, trade secrets, inventions (whether
patentable or not), invention disclosures, improvements, processes, formulae,
industrial models, processes, designs, specifications, technology,
methodologies, computer software (including all source code and object code),
firmware, development tools, flow charts, annotations, all Web addresses, sites
and domain names, all data bases and data collections and all rights therein,
any other confidential and proprietary right or information, whether or not
subject to statutory registration, and all related technical information,
manufacturing, engineering and technical drawings, know-how and all pending
applications for and registrations of patents, utility models, trademarks,
service marks and copyrights, and the right to xxx for past infringement, if
any, in connection with any of the foregoing, and all documents, disks, records,
files and other media on which any of the foregoing is stored.
"Interim Financial Statements" means the unaudited balance sheet
of the Company as of July 31, 2000, and the related unaudited statement of
operations and statement of cash flows for the seven-month period ended on such
date.
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"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"Investment Assets" means all debentures, notes and other
evidences of Indebtedness, stocks, securities (including rights to purchase and
securities convertible into or exchangeable for other securities), interests in
joint ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by the Company.
"IRS" means the United States Internal Revenue Service or any
successor entity.
"IT" has the meaning ascribed to it in Section 5.20.
"Law" or "Laws" means any law, statute, order, decree, consent
decree, judgment, rule, regulation, ordinance or other pronouncement having the
effect of law, whether in the United States, any foreign country, or any
domestic or foreign state, county, city or other political subdivision, of any
Governmental or Regulatory Authority.
"Lease Documents" has the meaning ascribed to it in Section
2.15(d).
"Leased Real Property" has the meaning ascribed to it in Section
2.15(a).
"Liabilities" means all Indebtedness, obligations and other
liabilities of a Person, whether absolute, accrued, contingent (or based upon
any contingency), known or unknown, fixed or otherwise, or whether due or to
become due.
"License" means any Contract that grants a Person the right to
use or otherwise enjoy the benefits of any Intellectual Property (including any
covenants not to xxx with respect to any Intellectual Property).
"Liens" means any mortgage, pledge, assessment, security
interest, lease, lien, easement, license, covenant, condition, restriction,
adverse claim, levy, charge, option, equity, adverse claim or restriction or
other encumbrance of any kind, or any conditional sale Contract, title retention
Contract or other Contract to give any of the foregoing, except for any
restrictions on transfer generally arising under any applicable federal or state
securities law.
"Loss(es)" means any and all damages, fines, fees, Taxes,
penalties, deficiencies, losses (including lost profits or diminution in value)
and expenses, including interest, reasonable expenses of investigation, court
costs, reasonable fees and expenses of attorneys, accountants and other experts
or other expenses of litigation or other proceedings or of any claim, default or
assessment (such fees and expenses to include all fees and expenses, including
fees and expenses of attorneys, incurred in connection with (a) the
investigation or defense of any Third Party Claims or (b) asserting or disputing
any rights under this Agreement against any party hereto or otherwise), net of
any insurance proceeds actually received (without any adverse effect on the
premiums paid for such insurance) or proceeds received by virtue of third party
indemnification.
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"Made-in-America Requirements" has the meaning ascribed to it in
Section 2.17(h).
"Major Shareholders" means the Company shareholders and option
holders listed on Schedule 10.1.
"Merger" has the meaning ascribed to it in Recital A to this
Agreement.
"NASD" means the National Association of Securities Dealers,
Inc.
"New Shares" has the meaning ascribed to it in Section
7.2(d)(ii).
"NNM" means the distinct tier of The Nasdaq Stock Market
referred to as The Nasdaq National Market.
"Non-Competition Agreement" has the meaning ascribed to it in
Recital D to this Agreement.
"Officer's Certificate" has the meaning ascribed to it in
Section 7.2(e)(i).
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract (other
than the Company Preferred Stock) that gives the right to (a) purchase or
otherwise receive or be issued any shares of capital stock or other equity
interests of such Person or any security of any kind convertible into or
exchangeable or exercisable for any shares of capital stock or other equity
interests of such Person or (b) receive any benefits or rights similar to any
rights enjoyed by or accruing to the holder of shares of capital stock or other
equity interests of such Person, including any rights to participate in the
equity, income or election of directors or officers of such Person.
"Order" means any writ, judgment, decree, injunction or similar
order of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Other Tax" means any sales, use, ad valorem, business license,
withholding, payroll, employment, excise, stamp, transfer, recording,
occupation, premium, property, value added, custom duty, severance, windfall
profit or license tax, governmental fee or other similar assessment or charge,
together with any interest and any penalty, addition to tax or additional amount
imposed by any Taxing Authority responsible for the imposition of any such tax
(domestic or foreign).
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA.
"Permit" means any license, permit, franchise or authorization.
"Permit Application" has the meaning ascribed to it in Section
2.35.
"Permitted Grants" means (a) grants of Company Options in the
ordinary course of business, consistent in amount and terms with the Company's
past practice, to (i)
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existing Company employees and (ii) Company employees hired by the Company after
the date of this Agreement, and (b) grants of Company Options to not more than
five (5) new employees, in an amount such that the total Permitted Grants
pursuant to clause (b) above equal to nineteen and sixty-six hundredth percent
(19.66%) of the Company's outstanding Common Stock, calculated on a fully
converted basis, as of the date of this Agreement. For purposes of this
definition, (x) a Company employee will be deemed to be an "existing Company
employee" if such employee was actually employed by the Company on August 7,
2000; (y) a Company employee will be deemed to be a "new employee" if such
person was hired by the Company after such date; and (z) the calculation of
shares on a "fully converted basis" includes all shares of Company Common Stock
outstanding on the specified date and all shares of Company Common Stock
issuable upon the conversion of all then-outstanding shares of Company Preferred
Stock into Company Common Stock, and all shares of Company Common Stock issuable
upon the exercise in full, by means of cash exercise and not by means of net
exercise, of all Company Options (including Company Options issued or to be
issued pursuant to Permitted Grants) and all Company Warrants (if any).
"Person" means any natural person, corporation, general
partnership, limited partnership, limited liability company or partnership,
proprietorship, other business organization, trust, union, association or
Governmental or Regulatory Authority.
"Plan" mean (a) each of the "employee benefit plans" (as such
term is defined in Section 3(3) of ERISA, of which any of the Company, any
Subsidiary of the Company, or any member of the same controlled group of
businesses as the Company or any Subsidiary of the Company within the meaning of
Section 4001(a)(14) of ERISA (an "ERISA Affiliate") is or ever was a sponsor or
participating employer or as to which the Company or any Subsidiary of the
Company or any of their ERISA Affiliates makes contributions or is required to
make contributions, and (b) any similar employment, severance or other
arrangement or policy of any of the Company, any Subsidiary of the Company or
any of their ERISA Affiliates (whether written or oral) providing for health,
life, vision or dental insurance coverage (including self-insured arrangements),
workers' compensation, disability benefits, supplemental unemployment benefits,
vacation benefits or retirement benefits, fringe benefits, or for profit
sharing, deferred compensation, bonuses, stock options, stock appreciation or
other forms of incentive compensation or post-retirement insurance, compensation
or benefits.
"PTO" means the United States Patent and Trademark Office.
"Registered Intellectual Property" shall mean all United States,
international and foreign: (a) patents and patent applications (including
provisional applications); (b) registered trademarks and servicemarks,
applications to register trademarks and servicemarks, intent-to-use
applications, other registrations or applications to trademarks or servicemarks,
or trademarks or servicemarks in which common law rights are owned or otherwise
controlled; (c) registered copyrights and applications for copyright
registration; (d) any mask work registrations and applications to register mask
works; and (e) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or
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other document issued by, filed with, or recorded by, any state, government or
other public legal authority.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing of a Hazardous Material into the Environment.
"Relevant Group" has the meaning ascribed to it in Section
2.11(a).
"Representative Stock Bonus Plan" means the Representative Stock
Bonus Plan of the Company.
"Representatives" has the meaning ascribed to it in Section 4.2.
"Restricted Stock Purchase Agreement" means a Restricted Stock
Purchase Agreement in one of the forms attached to the Company Stock Plan
pursuant to which the Company has sold Company Restricted Stock or issued
Company Stock Purchase Rights (if any) or as may otherwise been entered into by
the Company prior to the date of this Agreement.
"SEC" means the Securities and Exchange Commission or any
successor entity.
"SEC Documents" means, with respect to any Person, each report,
schedule, form, statement or other document filed or required to be filed with
the SEC by such Person pursuant to Section 13(a) of the Exchange Act.
"Second Earn-Out" has the meaning ascribed to it in Section
1.16(b).
"Securities Act" has the meaning ascribed to it in Section 1.14.
"Series A Exchange Ratio" means the greater of (a) the number of
shares and/or fraction of a share of Broadcom Common Stock issuable per share of
Company Series A Preferred Stock pursuant to Section 3 of Article III.D of the
Company's Restated Articles of Incorporation in the event of a "liquidation" (as
defined therein), assuming a dollar value for each share of Broadcom Common
Stock equal to the Closing Price, or (b) the Common Stock Exchange Ratio,
calculated without giving effect to the First Earn-Out or the Second Earn-Out
and without giving effect to the proviso in the definitions of "Aggregate Common
Amount" and "Aggregate Common Number".
"Series B Exchange Ratio" means the greater of (a) the number of
shares and/or fraction of a share of Broadcom Common Stock issuable per share of
Company Series B Preferred Stock pursuant to Section 3 of Article III.D of the
Company's Restated Articles of Incorporation in the event of a "liquidation" (as
defined therein), assuming a dollar value for each share of Broadcom Common
Stock equal to the Closing Price, or (b) the Common Stock Exchange Ratio,
calculated without giving effect to the First Earn-Out or the Second Earn-Out
and without giving effect to the proviso in the definitions of "Aggregate Common
Amount" and "Aggregate Common Number".
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"Series C Exchange Ratio" means the greater of (a) the number of
shares and/or fraction of a share of Broadcom Common Stock issuable per share of
Company Series C Preferred Stock pursuant to Section 3 of Article III.D of the
Company's Restated Articles of Incorporation in the event of a "liquidation" (as
defined therein), assuming a dollar value for each share of Broadcom Common
Stock equal to the Closing Price, or (b) the Common Stock Exchange Ratio,
calculated without giving effect to the First Earn-Out or the Second Earn-Out
and without giving effect to the proviso in the definitions of "Aggregate Common
Amount" and "Aggregate Common Number".
"Series D Exchange Ratio" means the greater of (a) the number of
shares and/or fraction of a share of Broadcom Common Stock issuable per share of
Company Series D Preferred Stock pursuant to Section 3 of Article III.D of the
Company's Restated Articles of Incorporation in the event of a "liquidation" (as
defined therein), assuming a dollar value for each share of Broadcom Common
Stock equal to the Closing Price, or (b) the Common Stock Exchange Ratio,
calculated without giving effect to the First Earn-Out or the Second Earn-Out
and without giving effect to the proviso in the definitions of "Aggregate Common
Amount" and "Aggregate Common Number".
"Shareholder Agent" has the meaning ascribed to it in Section
7.2(h)(i).
"Shareholder Certificate" has the meaning ascribed to it in
Section 5.1(c).
"Site" means any of the real properties currently or previously
owned, leased, occupied, used or operated by the Company or any of its
Subsidiaries, any predecessors of the Company or any of its Subsidiaries, or any
entities previously owned by the Company or any of its Subsidiaries, including
all soil, subsoil, surface waters and groundwater.
"Subsidiary" means any Person in which the Company or Broadcom,
as the context requires, directly or indirectly through Subsidiaries or
otherwise, beneficially owns at least fifty percent (50%) of either the equity
interest in, or the voting control of, such Person, whether or not existing on
the date hereof.
"Support Agreement" has the meaning ascribed to it in Recital C
to this Agreement.
"Surviving Corporation" has the meaning ascribed to it in
Section 1.1.
"Takeover Statute" means a "fair price," "moratorium," "control
share acquisition" or other similar antitakeover statute or regulation enacted
under state or federal laws in the United States.
"Tax" or "Taxes" means Income Taxes and/or Other Taxes, as the
context requires.
"Tax Laws" means the Internal Revenue Code, federal, state,
county, local or foreign laws relating to Taxes and any regulations or official
administrative pronouncements released thereunder.
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"Tax Returns" means any return, report, information return,
schedule, certificate, statement or other document (including any related or
supporting information) filed or required to be filed with, or, where none is
required to be filed with a Taxing Authority, the statement or other document
issued by, a Taxing Authority in connection with any Tax.
"Taxing Authority" means any governmental agency, board, bureau,
body, department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Tax.
"Third Party Claim" has the meaning ascribed to it in Section
7.2(j).
"Third Party Expenses" has the meaning ascribed to it in Section
5.5.
"Warranty Obligations" has the meaning ascribed to it in Section
2.28.
10.2 Construction.
(a) Unless the context of this Agreement otherwise requires, (i)
words of any gender include each other gender and the neuter, (ii) words using
the singular or plural number also include the plural or singular number,
respectively, (iii) the terms "hereof," "herein," "hereby" and derivative or
similar words refer to this entire Agreement as a whole and not to any
particular Article, Section or other subdivision, (iv) the terms "Article" or
"Section" or other subdivision refer to the specified Article, Section or other
subdivision of the body of this Agreement, (v) the phrases "ordinary course of
business" and "ordinary course of business consistent with past practice" refer
to the business and practice of the Company and its Subsidiaries, (vi) the words
"include," "includes" and "including" shall be deemed to be followed by the
phrase "without limitation," and (vii) when a reference is made in this
Agreement to Exhibits, such reference shall be to an Exhibit to this Agreement
unless otherwise indicated. All accounting terms used herein and not expressly
defined herein shall have the meanings given to them under GAAP. When used
herein the terms "party" and "parties" refer to Broadcom and its Subsidiaries,
on the one hand, and the Company and its Subsidiaries, on the other hand, and
the term "third parties" refers to Persons other than Broadcom and the Company
and their respective Subsidiaries.
(b) When used herein, the phrase "to the knowledge of" any
Person, "to the best knowledge of" any Person, "known to" any Person or any
similar phrase, means (i) with respect to any Person who is an individual, the
actual knowledge of such Person, (ii) with respect to any other Person, the
actual knowledge of the directors and officers of such Person and other
individuals that have a similar position or have similar powers and duties as
the officers and directors of such Person, and (iii) in the case of each of (i)
and (ii), the knowledge of facts that such individuals should have after due
inquiry. For this purpose, "due inquiry" with respect to any matter means
inquiry of and consultations with (A) the directors and officers of such Person
and other individuals that have a similar position or have similar powers and
duties as such officers and directors, and (B) other employees of and the
advisors to such Person, including legal counsel and outside auditors, who have
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principal responsibility for the matter in question or are otherwise likely to
have information relevant to the matter.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Broadcom and the Company, and with respect to
Article 7 and Article 9 only, the Shareholder Agent and the Depositary Agent,
have caused this Amended and Restated Merger Agreement and Plan of
Reorganization to be signed by their duly authorized representatives, all as of
the date first written above.
ALLAYER COMMUNICATIONS BROADCOM CORPORATION
By:/s/ Xxxxx-xxxxx Shih By: /s/ Xxxxx X. Xxxx
------------------------------- --------------------------------
Xxxxx-xxxxx Xxxx Xxxxx X. Xxxx
President and Chief Executive Officer Vice President and General
Counsel
U.S. STOCK TRANSFER CORPORATION,
AS DEPOSITARY AGENT SHAREHOLDER AGENT
By: /s/ Xxxxxxx Xxxxxx By: /s/ Xxxxx-xxxxx Shih
------------------------------- --------------------------------
Xxxxxxx Xxxxxx Xxxxx-xxxxx Shih
Senior Vice President
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LIST OF SCHEDULES AND EXHIBITS TO
AMENDED AND RESTATED MERGER AGREEMENT AND
PLAN OF REORGANIZATION
by and among
BROADCOM CORPORATION,
ALLAYER COMMUNICATIONS
and
THE OTHER PARTIES SIGNATORY HERETO
Dated as of September 29, 2000
Exhibit A Form of Support Agreement
Exhibit B Form of Company Affiliate Agreement
Exhibit C Form of Non-Competition Agreement
Exhibit D Form of Agreement of Merger
Exhibit E Form of Shareholder Certificate
Exhibit F [Intentionally Omitted]
Exhibit G [Intentionally Omitted]
Exhibit H-1 Form of Broadcom Officer's Certificate
Exhibit H-2 Form of Broadcom Secretary's Certificate
Exhibit I Form of Broadcom Counsel Legal Opinion
Exhibit J-1 Form of Company Officer's Certificate
Exhibit J-2 Form of Company Secretary's Certificate
Exhibit K Form of Company Counsel Legal Opinion
Schedule 1.6(d)(ii) Restricted Stock Purchase Agreements
Schedule 1.16(a) First Earn-Out Milestones
Schedule 1.16(b) Second Earn-Out Milestones
Schedule 1.16(c) Earn-Out Examples
Schedule 5.5 Third Party Expenses
Schedule 5.10 Affiliates
Schedule 5.25 Company Third-Party Consents
Schedule 6.3(d) Broadcom Third-Party Consents
Schedule 6.3(i) Certain Employees
Broadcom Corporation agrees to furnish supplementally a copy of any of the
foregoing exhibits to the SEC upon request.
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