Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
Copper Mountain Networks, Inc.
a Delaware corporation;
Copper Mountain Acquisition Corp.,
a Delaware corporation;
and
OnPREM Networks Corporation
a California corporation;
____________________________
Dated as of January 25, 2000
____________________________
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EXHIBITS
Exhibit A - Certain definitions
Exhibit B - Form of Amended and Restated Articles of Incorporation of Surviving
Corporation
Exhibit C - Form of Amended and Restated Bylaws of Surviving Corporation
Exhibit D - Directors and Officers of Surviving Corporation
Exhibit E - Escrow Agreement
Exhibit F - Persons to Sign Employment and Noncompetition Agreements
Exhibit G - Form of Employment Agreement
Exhibit H - Form of Noncompetition Agreement
Exhibit I - Company Shareholders
Exhibit J - Employees
Exhibit K - Form of legal opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx PC
Exhibit L - Form of legal opinion of Xxxxxx Godward llp
1. Description of Transaction......................................................... 1
1.1 Merger of Merger Sub into the Company........................................ 1
1.2 Effect of the Merger......................................................... 1
1.3 Closing; Effective Time...................................................... 1
1.4 Certificate of Incorporation and Bylaws; Directors and Officers.............. 2
1.5 Conversion of Shares......................................................... 2
1.6 Employee Stock Options....................................................... 3
1.7 Closing of the Company's Transfer Books...................................... 4
1.8 Exchange of Certificates..................................................... 4
1.9 Dissenting Shares............................................................ 6
1.10 Escrow of Parent Common Stock................................................ 6
1.11 Tax Consequences............................................................. 7
1.12 Further Action............................................................... 7
2. Representations and Warranties of the Company...................................... 7
2.1 Due Organization; No Subsidiaries; Etc....................................... 7
2.2 Articles of Incorporation and Bylaws; Records................................ 8
2.3 Capitalization, Etc.......................................................... 8
2.4 Financial Statements......................................................... 9
2.5 Absence of Changes........................................................... 10
2.6 Title to Assets.............................................................. 11
2.7 Bank Accounts; Receivables................................................... 12
2.8 Equipment; Leasehold......................................................... 12
2.9 Proprietary Assets........................................................... 12
2.10 Contracts.................................................................... 15
2.11 Liabilities.................................................................. 17
2.12 Compliance with Legal Requirements........................................... 17
2.13 Governmental Authorizations.................................................. 17
2.14 Tax Matters.................................................................. 18
2.15 Employee and Labor Matters; Benefit Plans.................................... 19
2.16 Environmental Matters........................................................ 21
2.17 Insurance.................................................................... 22
1.
2.18 Related Party Transactions................................................... 22
2.19 Legal Proceedings; Orders.................................................... 22
2.20 Authority; Binding Nature of Agreement....................................... 23
2.21 Non-Contravention; Consents.................................................. 23
2.22 Customers.................................................................... 24
2.23 Product Development.......................................................... 24
2.24 Financial Advisor............................................................ 25
2.25 Certain Business Practices................................................... 25
2.26 Full Disclosure.............................................................. 25
3. Representations and Warranties of Parent and Merger Sub............................ 25
3.1 Corporate Existence and Power................................................ 25
3.2 Authority; Binding Nature of Agreement....................................... 26
3.3 Capitalization............................................................... 26
3.4 SEC Filings; Financial Statements............................................ 26
3.5 No Conflict.................................................................. 27
3.6 Valid Issuance............................................................... 27
4. Certain Covenants of the Company................................................... 27
4.1 Access and Investigation..................................................... 27
4.2 Operation of the Company's Business.......................................... 27
4.3 Notification; Updates to Disclosure Schedule................................. 29
4.4 No Negotiation............................................................... 30
5. Certain Covenants of Parent and Merger Sub......................................... 31
(a) Notification............................................................. 31
6. Additional Covenants of the Parties................................................ 31
6.1 Filings and Consents......................................................... 31
6.2 Information Statement; Shareholder Approval.................................. 32
6.3 Public Announcements......................................................... 32
6.4 Best Efforts................................................................. 32
6.5 Tax Matters.................................................................. 32
6.6 Employment and Noncompetition Agreements..................................... 33
6.7 Termination of Agreements.................................................... 33
6.9 Termination of Employee Plans................................................ 33
6.10 FIRPTA Matters............................................................... 33
2.
6.11 Indemnification of Directors and Officers............................................ 33
6.12 S-8 Registration Statement........................................................... 34
6.13 Employment Offers.................................................................... 34
7. Conditions Precedent to Obligations of Parent and Merger Sub................................ 34
7.1 Accuracy of Representations.......................................................... 34
7.2 Performance of Covenants............................................................. 34
7.3 Shareholder Approval................................................................. 34
7.4 Consents............................................................................. 35
7.5 Employees............................................................................ 35
7.6 Agreements and Documents............................................................. 35
7.7 No Restraints........................................................................ 36
7.8 Conversion of Outstanding Preferred Stock; Exercise of Outstanding Warrants.......... 36
7.9 Promissory Notes..................................................................... 36
7.10 Dissenting Shares.................................................................... 36
8. Conditions Precedent to Obligations of the Company.......................................... 36
8.1 Accuracy of Representations.......................................................... 36
8.2 Performance of Covenants............................................................. 37
8.3 Documents............................................................................ 37
8.4 Shareholder Approval................................................................. 37
8.5 Listing.............................................................................. 37
8.6 No Restraints........................................................................ 37
9. Termination................................................................................. 37
9.1 Termination Events................................................................... 37
9.2 Termination Procedures............................................................... 38
9.3 Effect of Termination................................................................ 38
10. Registration of Shares...................................................................... 39
10.1 Registration Statement............................................................... 39
10.2 Damages.............................................................................. 40
10.3 Piggyback Registrations.............................................................. 40
10.4 Indemnification...................................................................... 41
10.5 Transferability of Registration Rights............................................... 42
10.6 Delay of Registration................................................................ 42
3.
10.7 Amendment of Section 10...................................................... 43
11. Indemnification, Etc................................................................ 43
11.1 Survival of Representations, Etc............................................. 43
11.2 Indemnification.............................................................. 44
11.3 Threshold.................................................................... 44
11.4 Right of Offset of Indemnification Claims.................................... 45
11.5 No Contribution.............................................................. 45
11.6 Defense of Third Party Claims................................................ 45
11.7 Exercise of Remedies by Indemnitees Other Than Parent........................ 46
11.8 Determination of Damages; Mitigation......................................... 46
12. Miscellaneous Provisions............................................................ 46
12.1 Company Shareholders' Representative......................................... 46
12.2 Further Assurances........................................................... 47
12.3 Fees and Expenses............................................................ 47
12.4 Attorneys' Fees.............................................................. 47
12.5 Notices...................................................................... 48
12.6 Time of the Essence.......................................................... 48
12.7 Headings..................................................................... 48
12.8 Counterparts................................................................. 48
12.9 Governing Law................................................................ 49
12.10 Successors and Assigns....................................................... 49
12.11 Remedies Cumulative; Specific Performance.................................... 49
12.12 Waiver....................................................................... 49
12.13 Amendments................................................................... 49
12.14 Severability................................................................. 49
12.15 Parties in Interest.......................................................... 49
12.16 Entire Agreement............................................................. 50
12.17 Construction................................................................. 50
4.
AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization ("Agreement") is made
and entered into as of January 25, 2000, by and among: Copper Mountain Networks,
Inc. a Delaware corporation ("Parent"); Copper Mountain Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"); and
OnPREM Networks Corporation, a California corporation (the "Company"). Certain
other capitalized terms used in this Agreement are defined in Exhibit A.
Recitals
A. Parent, Merger Sub and the Company intend to effect a merger of Merger
Sub into the Company (the "Merger") in accordance with this Agreement, the
California General Corporation Law (the "CGCL") and the Delaware General
Corporation Law (the "DGCL"). Upon consummation of the Merger, Merger Sub will
cease to exist, and the Company will become a wholly owned subsidiary of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
C. This Agreement has been approved by the respective boards of directors
of Parent, Merger Sub and the Company and has been adopted by Parent, as the
sole shareholder of Merger Sub.
D. In connection with the execution and delivery of this Agreement,
certain shareholders of the Company are executing and delivering to Parent a
Voting Agreement of even date herewith.
Agreement
The parties to this Agreement agree as follows:
1. Description of Transaction
1.1 Merger of Merger Sub into the Company. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the CGCL and the DGCL.
1.3 Closing; Effective Time. Unless this Agreement is earlier terminated
pursuant to Section 9, the consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxx Godward llp,
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxx
Xxxxx, Xxxxxxxxxx 00000 at 8:00 a.m. on a date as soon as practicable (but not
more than 20 days after the date on which the conditions set forth in Sections 7
and 8 are satisfied). The time and date as of which the Closing is required to
take place pursuant to this Section 1.3, is referred to in this Agreement as the
"Scheduled Closing Time," and the date on which the Closing actually takes place
is referred to in this Agreement as the "Closing Date.") Contemporaneously with
or as promptly as practicable after the Closing, a properly executed certificate
of merger conforming to the requirements of the DGCL shall be filed with the
Secretary of State of the State of Delaware and a properly executed agreement of
merger conforming to the requirements of the CGCL shall be filed with the
Secretary of State of the State of California. The Merger shall become effective
upon the later of (a) at the time such certificate of merger is filed with the
Secretary of State of the State of Delaware, and (b) at the time such agreement
of merger is approved by the Secretary of State of the State of California (the
"Effective Time").
1.4 Certificate of Incorporation and Bylaws; Directors and Officers.
Unless otherwise determined by Parent prior to the Effective Time:
(a) the Articles of Incorporation of the Surviving Corporation shall
be amended and restated as of the Effective Time to conform to Exhibit B;
(b) the Bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to Exhibit C; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals identified on
Exhibit D.
1.5 Conversion of Shares.
(a) Subject to Sections 1.8(a), 1.9 and 1.10, at the Effective Time,
by virtue of the Merger and without any further action on the part of Parent,
Merger Sub, the Company or any shareholder of the Company:
(i) each share of Company Common Stock outstanding immediately
prior to the Effective Time shall be converted into the right to receive that
fraction of a share of the common stock of Parent ("Parent Common Stock") equal
to the "Applicable Fraction" (as defined in Section 1.5(b)(i)), it being
understood that certain of the shares of Parent Common Stock issuable pursuant
to this Section 1.5(a)(i) shall be held in escrow in accordance with Section
1.10; and
(ii) each share of the common stock of Merger Sub outstanding
immediately prior to the Effective Time shall be converted into one share of
common stock of the Surviving Corporation.
(b) For purposes of this Agreement:
(i) The "Applicable Fraction" shall be the fraction: (A) having
a numerator equal to $67,500,000 and (B) having a denominator equal to the
amount determined
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by multiplying (i) the Fully Diluted Company Share Amount (as defined in Section
1.5(b)(ii)) by (2) the Designated Parent Stock Price (as defined in Section
1.5(b)(iv)).
(ii) The "Fully Diluted Company Share Amount" shall be the sum
of (A) the aggregate number of shares of Company Common Stock outstanding
immediately prior to the Effective Time (including any such shares that are
subject to a repurchase option or risk of forfeiture under any restricted stock
purchase agreement or other agreement), (B) the aggregate number of shares of
Company Common Stock issuable pursuant to all Company Options outstanding (based
on the treasury stock method under generally accepted accounting principles)
immediately prior to the Effective Time, (C) the aggregate number of shares of
Company Common Stock into which the shares of Series A Preferred Stock of the
Company outstanding immediately prior to the Effective Time are convertible, (D)
the aggregate number of shares of Company Common Stock into which the shares of
Series B Preferred Stock of the Company outstanding immediately prior to the
Effective Time are convertible, and (E) the aggregate number of shares of
Company Common Stock issuable pursuant to warrants, convertible securities
(other than Company Preferred Stock) and any other rights to acquire shares of
Company Common Stock or Company Preferred Stock outstanding immediately prior to
the Effective Time.
(iii) The "Merger Consideration" receivable by a holder of
capital stock of the Company shall consist of (i) the shares of Parent Common
Stock (other than Escrow Shares) issuable to such holder in accordance with
Section 1.5(a) upon the surrender of the certificate or certificates
representing capital stock of the Company held by such holder, (ii) the rights
of such holder with respect to the Escrow Shares held by the Escrow Agent on
behalf of such holder, and (iii) the right of such holder to receive cash in
lieu of fractional shares of Parent Common Stock in accordance with Section
1.8(a).
(iv) The "Designated Parent Stock Price" shall be the average of
the closing sale prices of Parent Common Stock as reported on the Nasdaq for
each of the ten consecutive trading days in the period ending on the date that
is two trading days immediately preceding the date of this Agreement (as
adjusted for any stock split, stock dividend, stock combination or other
recapitalization).
(c) If any shares of Company Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option
in favor of the Company, risk of forfeiture or other condition under any
applicable restricted stock purchase agreement or other agreement with the
Company, then the shares of Parent Common Stock issued in exchange for such
shares of Company Common Stock will also be unvested and subject to the same
repurchase option, risk of forfeiture or other condition, and the certificates
representing such shares of Parent Common Stock may accordingly be marked with
appropriate legends.
1.6 Employee Stock Options. At the Effective Time, each then outstanding
Company Option (as defined in Section 2.3(b)) and each other outstanding option
to purchase Common Stock of the Company issued in accordance with the terms of
this Agreement, whether vested or unvested, shall be assumed by Parent in
accordance with the terms (as in effect as of the date of this Agreement) of
such Company Stock Option Plan under which such Company Option was issued and
the stock option agreement by which such Company Option is evidenced.
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All rights with respect to Company Common Stock under outstanding Company
Options shall thereupon be converted into rights with respect to Parent Common
Stock. Accordingly, from and after the Effective Time, (a) each Company Option
assumed by Parent may be exercised solely for shares of Parent Common Stock, (b)
the number of shares of Parent Common Stock subject to each such assumed Company
Option shall be equal to the number of shares of Company Common Stock that were
subject to such Company Option immediately prior to the Effective Time
multiplied by the Applicable Fraction, rounded down to the nearest whole number
of shares of Parent Common Stock, (c) the per share exercise price for the
Parent Common Stock issuable upon exercise of each such assumed Company Option
shall be determined by dividing the exercise price per share of Company Common
Stock subject to such Company Option, as in effect immediately prior to the
Effective Time, by the Applicable Fraction, and rounding the resulting exercise
price up to the nearest whole cent, and (d) all restrictions on the exercise of
each such assumed Company Option shall continue in full force and effect, and
the term, exercisability, vesting schedule and other provisions of such Company
Option shall otherwise remain unchanged; provided however, that each such
assumed Company Option shall, in accordance with its terms, be subject to
further adjustment as appropriate to reflect any stock split, reverse stock
split, stock dividend, recapitalization or other similar transaction effected by
Parent after the Effective Time. The Company and Parent shall take all action
that may be necessary (under all Company Stock Option Plans and otherwise) to
effectuate the provisions of this Section 1.6. It is the intention of the
parties that the Company Options assumed by Parent qualify following the
Effective Time as incentive stock options as defined in Section 422 of the Code
to the extent the Company Options qualified as incentive stock options
immediately prior to the Effective Time.
1.7 Closing of the Company's Transfer Books. At the Effective Time,
holders of certificates representing shares of capital stock of the Company that
were outstanding immediately prior to the Effective Time shall cease to have any
rights as shareholders of the Company, and the stock transfer books of the
Company shall be closed with respect to all shares of such capital stock of the
Company outstanding immediately prior to the Effective Time. No further transfer
of any such shares of capital stock of the Company shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any shares of capital stock of the Company
(a "Company Stock Certificate") is presented to the Surviving Corporation or
Parent, such Company Stock Certificate shall be canceled and shall be exchanged
as provided in Section 1.8.
1.8 Exchange of Certificates.
(a) Within five (5) business days after the Effective Time, Parent
will send to each of the registered holders of Company Stock Certificates a
letter of transmittal in customary form and containing such provisions as Parent
may reasonably specify and instructions for use in effecting the surrender of
Company Stock Certificates in exchange for the Merger Consideration. Upon
surrender of a Company Stock Certificate to Parent for exchange, together with a
duly executed letter of transmittal and such other documents as may be
reasonably required by Parent, Parent shall (i) deliver to the holder of such
Company Stock Certificate a certificate representing the sum of (x) the number
of shares of Parent Common Stock that such holder has the right to receive
pursuant to Section 1.5, minus (y) the product of (1) a fraction (a) having a
numerator equal to $6,750,000, and (b) having a denominator equal to the
Designated Parent Stock Price,
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and (2) a fraction (a) having a numerator equal to the number of shares of the
Company Common Stock held by such holder, and (b) having a denominator equal to
the sum of the Fully Diluted Company Share Amount minus the aggregate number of
shares of Company Common Stock issuable pursuant to all Company Options
outstanding immediately prior to the Effective Time, and (ii) deliver to the
Escrow Agent under the Escrow Agreement (as defined below) on behalf of such
holder a certificate in the name of the Escrow Agent representing the difference
between the number of shares of Parent Common Stock that such holder has the
right to receive pursuant to Section 1.5 and the number of shares of Parent
Common Stock such holder shall receive pursuant to Section 1.8(a)(i) above,
provided that the certificates representing Parent Common Stock to be delivered
to the holder of a Company Stock Certificate under clause (i) above and to the
Escrow Agent under clause (ii) above shall, in each case, represent only whole
shares of Parent Common Stock and in lieu of any fractional shares to which such
holder would otherwise be entitled, the holder of such Company Stock Certificate
shall be paid in cash an amount equal to the sum of (1) the dollar amount
(rounded to the nearest whole cent) determined by multiplying the Designated
Parent Stock Price (as defined above) by the fraction of a share of Parent
Common Stock that would otherwise be deliverable to such holder under clause (i)
above and (2) the dollar amount (rounded to the nearest whole cent) determined
by multiplying the Designated Parent Stock Price by the fraction of a share of
Parent Common Stock that would otherwise be deliverable to the Escrow Agent
under clause (ii) above. All Company Stock Certificates so surrendered shall be
canceled. Until surrendered as contemplated by this Section 1.8, each Company
Stock Certificate shall be deemed, from and after the Effective Time, to
represent only the right to receive the Merger Consideration in accordance with
this Agreement. If any Company Stock Certificate shall have been lost, stolen or
destroyed, Parent may, in its discretion and as a condition precedent to the
issuance of any certificate representing Parent Common Stock or the payment of
cash in lieu of fractional shares, require the owner of such lost, stolen or
destroyed Company Stock Certificate to provide an appropriate affidavit and to
deliver a bond (in such sum as Parent may reasonably direct) as indemnity
against any claim that may be made against Parent or the Surviving Corporation
with respect to such Company Stock Certificate.
(b) No dividends or other distributions declared or made with respect
to Parent Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Company Stock Certificate with respect to the
shares of Parent Common Stock represented thereby, and no cash payment in lieu
of any fractional share shall be paid to any such holder, until such holder
surrenders such Company Stock Certificate in accordance with this Section 1.8
(at which time such holder shall be entitled to receive all such dividends and
distributions and such cash payment).
(c) Parent and the Surviving Corporation shall be entitled to deduct
and withhold from any consideration payable or otherwise deliverable to any
holder or former holder of capital stock of the Company pursuant to this
Agreement such amounts as Parent or the Surviving Corporation may be required to
deduct or withhold therefrom under the Code or under any provision of state,
local or foreign tax law. To the extent such amounts are so deducted or
withheld, such amounts shall be treated for all purposes under this Agreement as
having been paid to the Person to whom such amounts would otherwise have been
paid.
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(d) Neither Parent nor the Surviving Corporation shall be liable to
any holder or former holder of capital stock of the Company for any shares of
Parent Common Stock (or dividends or distributions with respect thereto), or for
any cash amounts, delivered to any public official pursuant to any applicable
abandoned property, escheat or similar law.
1.9 Dissenting Shares.
(a) Notwithstanding anything to the contrary contained in this
Agreement, any shares of capital stock of the Company that, as of the Effective
Time, are or may become "dissenting shares" within the meaning of Section
1300(b) of the California Corporations Code shall not be converted into or
represent the right to receive Parent Common Stock in accordance with Section
1.5 (or cash in lieu of fractional shares in accordance with Section 1.8(a)),
and the holder or holders of such shares shall be entitled only to such rights
as may be granted to such holder or holders in Chapter 13 of the California
General Corporation Law; provided, however, that if the status of any such
shares as "dissenting shares" shall not be perfected, or if any such shares
shall lose their status as "dissenting shares," then, as of the later of the
Effective Time or the time of the failure to perfect such status or the loss of
such status, such shares shall automatically be converted into and shall
represent only the right to receive (upon the surrender of the certificate or
certificates representing such shares) Parent Common Stock in accordance with
Section 1.5 (and cash in lieu of fractional shares in accordance with Section
1.8(a)).
(b) The Company shall give Parent (i) prompt notice of any written
demand received by the Company prior to the Effective Time to require the
Company to purchase shares of capital stock of the Company pursuant to Chapter
13 of the California General Corporation Law and of any other demand, notice or
instrument delivered to the Company prior to the Effective Time pursuant to the
California General Corporation Law, and (ii) the opportunity to participate in
all negotiations and proceedings with respect to any such demand, notice or
instrument. The Company shall not make any payment or settlement offer prior to
the Effective Time with respect to any such demand unless Parent shall have
consented in writing to such payment or settlement offer.
1.10 Escrow of Parent Common Stock. Upon the Closing, Parent shall withhold
the shares of Parent Common Stock to be delivered to the Escrow Agent pursuant
to Section 1.8(a)(ii) (the "Escrow Shares") and deliver such shares to U.S.
Trust Company, N.A., as escrow agent (the "Escrow Agent"), to be held by the
Escrow Agent as collateral to (i) secure the rights of the Indemnitees under
Section 9 hereof, and (ii) satisfy the obligations of the Company pursuant to
Section 12.3 hereof. The Escrow Shares shall be held pursuant to the provisions
of an escrow agreement substantially in the form of Exhibit E (the "Escrow
Agreement"). The Escrow Shares will be represented by a certificate or
certificates issued in the name of the Escrow Agent and will be held by the
Escrow Agent for a period of one year from the Closing Date (the "Escrow
Period") except to the extent any Company shareholder elects to substitute cash
for such Company Shareholder's portion of the Escrow Shares in accordance with
the terms of the Escrow Agreement, in which case such substituted cash shall be
held by the Escrow Agent for the remainder of the Escrow Period; provided
however that in the event any Indemnitee has made a claim under Section 9 or
Section 12.3 prior to the end of the Escrow Period, then the Escrow Period shall
continue until such claim is fully and finally resolved. In the event that this
Agreement is adopted by the Company's shareholders, then all such shareholders
shall, without
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any further act of any Company shareholder, be deemed to have consented to and
approved (i) the use of the Escrow Shares (or substituted cash) as collateral to
secure the rights of the Indemnitees under Section 9 in the manner set forth
herein and in the Escrow Agreement, (ii) the use of the Escrow Shares (or
substituted cash) to fulfill any obligations arising pursuant to Section 12.3,
and (iii) the appointment of the Company Shareholders' Representative (as
defined in Section 12.1) as the representative under the Escrow Agreement of the
Persons receiving Merger Consideration under this Agreement and as the attorney-
in-fact and agent for and on behalf of each such Person (other than holders of
Dissenting Shares).
1.11 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.12 Further Action. If, at any time after the Effective Time, any further
action is determined by Parent to be necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation or Parent with
full right, title and possession of and to all rights and property of Merger Sub
and the Company, the officers and directors of the Surviving Corporation and
Parent shall be fully authorized (in the name of Merger Sub, in the name of the
Company and otherwise) to take such action.
2. Representations and Warranties of the Company
The Company represents and warrants, to Parent and Merger Sub as of
the date hereof, subject to such exceptions as are disclosed in the Disclosure
Schedule, as follows:
2.1 Due Organization; No Subsidiaries; Etc.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of California and has all necessary
power and authority: (i) to conduct its business in the manner in which its
business is currently being conducted; (ii) to own and use its assets in the
manner in which its assets are currently owned and used; and (iii) to perform
its obligations under all Company Contracts.
(b) Except as set forth in Part 2.1 of the Disclosure Schedule, the
Company has not conducted any business under or otherwise used, for any purpose
or in any jurisdiction, any fictitious name, assumed name, trade name or other
name, other than the name "OnPREM Networks Corporation."
(c) The Company is not and has not been required to be qualified,
authorized, registered or licensed to do business as a foreign corporation in
any jurisdiction other than the jurisdictions identified in Part 2.1 of the
Disclosure Schedule, except where the failure to be so qualified, authorized,
registered or licensed has not had and will not have a Material Adverse Effect
on the Company. The Company is in good standing as a foreign corporation in each
of the jurisdictions identified in Part 2.1 of the Disclosure Schedule.
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(d) Part 2.1 of the Disclosure Schedule accurately sets forth (i) the
names of the members of the Company's board of directors, (ii) the names of the
members of each committee of the Company's board of directors, and (iii) the
names and titles of the Company's officers.
(e) The Company does not own any controlling interest in any Entity
and, except for the equity interests identified in Part 2.1 of the Disclosure
Schedule, the Company has never owned, beneficially or otherwise, any shares or
other securities of, or any direct or indirect equity interest in, any Entity.
The Company has not agreed and is not obligated to make any future investment in
or capital contribution to any Entity. The Company has not guaranteed and is not
responsible or liable for any obligation of any of the Entities in which it owns
or has owned any equity interest.
2.2 Articles of Incorporation and Bylaws; Records. The Company has
delivered to Parent accurate and complete copies of: (1) the Company's articles
of incorporation and bylaws, including all amendments thereto; (2) the stock
records of the Company; and (3) except as set forth in Part 2.2 of the
Disclosure Schedule, the minutes of all of the meetings and other proceedings
(including any actions taken by written consent or otherwise without a meeting)
of the shareholders of the Company, the board of directors of the Company and
all committees of the board of directors of the Company. There has not been any
violation of any of the provisions of the Company's certificate of incorporation
or bylaws, and the Company has not taken any action that, at the time of such
action, was inconsistent in any material respect with any resolution adopted by
the Company's shareholders, the Company's board of directors or any committee of
the Company's board of directors. The books of account, stock records and minute
books of the Company are accurate, up-to-date and complete in all material
respects.
2.3 Capitalization, Etc.
(a) The authorized capital stock of the Company consists of: (i)
50,000,000 shares of Common Stock ($.001 par value per share), of which
4,817,315 shares have been issued and are outstanding as of the date of this
Agreement; and (ii) 12,513,949 shares of Preferred Stock ($.001 par value per
share), (A) 4,827,586 of which have been designated "Series A Preferred Stock,"
and 4,215,513 of which have been issued and are outstanding as of the date of
this Agreement and (B) 7,686,363 of which have been designated "Series B
Preferred Stock," all of which have been issued and are outstanding as of the
date of this Agreement. As of the date hereof and as of the Effective Time, each
outstanding share of Series A Preferred Stock of the Company is and shall be
convertible into one share of Company Common Stock and each outstanding share of
Series B Preferred Stock of the Company is and shall be convertible into one
share of Company Common Stock. All of the outstanding shares of Company Common
Stock, Series A Preferred Stock of the Company and Series B Preferred Stock of
the Company have been duly authorized and validly issued, and are fully paid and
non-assessable. All outstanding shares of Company Common Stock, Series A
Preferred Stock of the Company, Series B Preferred Stock of the Company, all
outstanding Company Options, and all outstanding warrants to purchase shares of
the Company's capital stock have been issued and granted in compliance with all
applicable federal and state securities laws and other applicable Legal
Requirements, and (ii) all requirements set forth in applicable restricted stock
purchase agreements and other applicable Contracts. Part 2.3 of the Disclosure
Schedule provides an
8
accurate and complete (i) list of each holder of all outstanding shares of
Company Common Stock, Series A Preferred Stock, Series B Preferred Stock, all
outstanding Company Options and all outstanding warrants to purchase shares of
the Company's capital stock identifying each holder by name, address and
certificate number (when applicable), and (ii) a description of the terms of
each repurchase option, if any, which is held by the Company and to which any
shares of capital stock of the Company is subject.
(b) The Company has reserved 3,050,000 shares of Company Common Stock
for issuance under the Company Stock Option Plans, of which options to purchase
2,490,375 shares are outstanding as of the date of this Agreement, options for
215,625 shares have been exercised to date, and 344,000 shares remain available
for future grant. Part 2.3 of the Disclosure Schedule accurately sets forth,
with respect to each option to purchase Common Stock of the Company outstanding
as of the date hereof (whether vested or unvested) (the "Company Options"): (i)
the name of the holder of such Company Option; (ii) the total number of shares
of Company Common Stock that are subject to such Company Option and the number
of shares of Company Common Stock with respect to which such Company Option is
immediately exercisable; (iii) the date on which such Company Option was granted
and the term of such Company Option; (iv) the vesting schedule for such Company
Option; (v) the exercise price per share of Company Common Stock purchasable
under such Company Option; and (vi) whether such Company Option has been
designated an "incentive stock option" as defined in Section 422 of the Code.
Except as set forth in Part 2.3 of the Disclosure Schedule, there is no: (i)
outstanding subscription, option, call, warrant or right (whether or not
currently exercisable) to acquire any shares of capital stock or other
securities of the Company; (ii) outstanding security, instrument or obligation
that is or may become convertible into or exchangeable for any shares of capital
stock or other securities of the Company; (iii) Contract under which the Company
is or may become obligated to sell or otherwise issue any shares of its capital
stock or any other securities of the Company; or (iv) to the knowledge of the
Company, condition or circumstance that may give rise to or provide a basis for
the assertion of a claim by any Person to the effect that such Person is
entitled to acquire or receive any shares of capital stock or other securities
of the Company.
(c) Except as set forth in Part 2.3 of the Disclosure Schedule, the
Company has never repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities of the Company. All securities so reacquired
by the Company were reacquired in compliance with (i) the applicable provisions
of the CGCL and all other applicable Legal Requirements, and (ii) all
requirements set forth in applicable restricted stock purchase agreements and
other applicable Contracts.
2.4 Financial Statements.
(a) The Company has delivered to Parent the following financial
statements and notes (collectively, the "Company Financial Statements"):
(i) The unaudited balance sheet of the Company as of June 30,
1999 and the related unaudited income statements, statements of shareholders'
equity and statements of cash flows of the Company for the fiscal year then
ended.
9
(ii) The unaudited balance sheet of the Company as of December
31, 1999 (the "Unaudited Interim Balance Sheet"), and the related unaudited
income statement of the Company for the six months then ended.
(b) The Company Financial Statements are accurate and complete in all
material respects and present fairly the financial position of the Company as of
the respective dates thereof and the results of operations and (in the case of
the financial statements referred to in Section 2.4(a)(i)) cash flows of the
Company for the period covered thereby. The Company Financial Statements have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered (except that the
financial statements referred to in Section 2.4(a)(ii) do not contain footnotes
and are subject to normal and recurring year-end audit adjustments, which will
not, individually or in the aggregate, be material in magnitude).
2.5 Absence of Changes. Except as set forth in Part 2.5 of the Disclosure
Schedule, since December 31, 1999:
(a) up to and including the date of this Agreement, there has not
been any material adverse change in the Company's business, financial condition,
assets, liabilities or results of operations and, to the knowledge of the
Company, no event has occurred that will, or could reasonably be expected to,
have a Material Adverse Effect on the Company;
(b) the Company has not declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock of the Company, and has not repurchased, redeemed or otherwise reacquired
any shares of capital stock or other securities of the Company;
(c) the Company has not amended or waived any of its rights under, or
permitted the acceleration of vesting under, (i) any provision of any Company
Stock Option Plan, (ii) any provision of any agreement evidencing any
outstanding Company Option, or (iii) any restricted stock purchase agreement;
(d) there has been no amendment to the Company's articles of
incorporation or bylaws, and the Company has not effected or been a party to any
Acquisition Transaction, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction;
(e) the Company has not formed any subsidiary or acquired any equity
interest in any other Entity;
(f) up to and including the date of this Agreement, the Company has
not made any capital expenditure which, when added to all other capital
expenditures made on behalf of the Company since December 31, 1999, exceeds
$75,000;
(g) the Company has not (i) entered into any Contract that is or
would constitute a Material Contract (as defined in Section 2.10(a)), or (ii)
amended or prematurely terminated, or waived any material right or remedy under,
any such Material Contract;
10
(h) the Company has not (i) acquired, leased or licensed any right or
other asset from any other Person, (ii) sold or otherwise disposed of, or leased
or licensed, any right or other asset to any other Person, or (iii) waived or
relinquished any right, except for immaterial rights or other immaterial assets
acquired, leased, licensed or disposed of in the ordinary course of business and
consistent with the Company's past practices;
(i) the Company has not written off as uncollectible, or established
any extraordinary reserve with respect to, any account receivable or other
indebtedness;
(j) the Company has not made any pledge of any of its assets or
otherwise permitted any of its assets to become subject to any Encumbrance,
except for pledges of immaterial assets made in the ordinary course of business;
(k) the Company has not (i) lent money to any Person (other than
pursuant to routine travel advances made to employees in the ordinary course of
business), or (ii) incurred or guaranteed any indebtedness for borrowed money;
(l) the Company has not (i) established or adopted any Employee
Benefit Plan, or (ii) paid any bonus or made any profit-sharing or similar
payment to, or increased the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its directors,
officers or employees;
(m) the Company has not changed any of its methods of accounting or
accounting practices in any respect;
(n) the Company has not made any Tax election;
(o) the Company has not commenced or settled any Legal Proceeding and
the Company has not been notified of any pending or threatened litigation;
(p) the Company has not entered into any material transaction or
taken any other material action outside the ordinary course of business; and
(q) the Company has not agreed or committed to take any of the
actions referred to in clauses "(c)" through "(p)" above.
2.6 Title to Assets.
(a) The Company owns, and has good, valid and marketable title to,
all assets purported to be owned by it, including: (i) all assets reflected on
the Unaudited Interim Balance Sheet; (ii) all assets referred to in Parts 2.7
and 2.9 of the Disclosure Schedule; and (iii) all other assets reflected in the
Company's books and records as being owned by the Company. Except as set forth
in Part 2.6 of the Disclosure Schedule, all of said assets are owned by the
Company free and clear of any liens or other Encumbrances, except for (x) any
lien for current taxes not yet due and payable, and (y) Encumbrances that have
arisen in the ordinary course of business and that do not (in any case or in the
aggregate) materially detract from the value of the assets subject thereto or
materially impair the operations of the Company.
11
(b) Part 2.6 of the Disclosure Schedule identifies all assets that
are material to the business of the Company and that are being leased or
licensed to the Company (except for any Proprietary Asset that is licensed to
the Company under any third party software license generally available to the
public).
2.7 Bank Accounts; Receivables.
(a) Part 2.7(a) of the Disclosure Schedule provides accurate
information with respect to each account maintained by or for the benefit of the
Company at any bank or other financial institution including the name of the
bank or financial institution, the account number and the balance as of the date
hereof.
(b) Part 2.7(b) of the Disclosure Schedule provides an accurate and
complete breakdown and aging of all accounts receivable, notes receivable and
other receivables of the Company as of December 31, 1999. Except as set forth in
Part 2.7(b) of the Disclosure Schedule, all existing accounts receivable of the
Company (including those accounts receivable reflected on the Unaudited Interim
Balance Sheet that have not yet been collected and those accounts receivable
that have arisen since December 31, 1999 and have not yet been collected) (i)
represent valid obligations of customers of the Company arising from bona fide
transactions entered into in the ordinary course of business, and (ii) are
current and will be collected in full when due, without any counterclaim or set
off (net of an allowance for doubtful accounts not to exceed $10,000 in the
aggregate).
2.8 Equipment; Leasehold.
(a) All material items of equipment and other tangible assets owned
by or leased to the Company are in good condition and repair (ordinary wear and
tear excepted).
(b) The Company does not own any real property or any interest in
real property, except for the leasehold created under the real property lease
identified in Part 2.10 of the Disclosure Schedule.
2.9 Proprietary Assets.
(a) Part 2.9(a)(i) of the Disclosure Schedule sets forth, with
respect to each Proprietary Asset owned by the Company and registered with any
Governmental Body or for which an application has been filed with any
Governmental Body, (i) a brief description of such Proprietary Asset, and (ii)
the names of the jurisdictions covered by the applicable registration or
application. Part 2.9(a)(ii) of the Disclosure Schedule identifies and provides
a brief description of all other Proprietary Assets owned by the Company that
are material to the business of the Company. Part 2.9(a)(iii) of the Disclosure
Schedule identifies and provides a brief description of, and identifies any
ongoing royalty or payment obligations in excess of $10,000 with respect to,
each Proprietary Asset that is licensed or otherwise made available to the
Company by any Person and is material to the business of the Company (except for
any Proprietary Asset that is licensed to the Company under any third party
software license generally available to the public), and identifies the Contract
under which such Proprietary Asset is being licensed or otherwise made available
to the Company. The Company has good, valid and marketable title to all of the
12
Company Proprietary Assets identified in Parts 2.9(a)(i) and 2.9(a)(ii) of the
Disclosure Schedule, free and clear of all Encumbrances, except for (i) any lien
for current taxes not yet due and payable, and (ii) Encumbrances that have
arisen in the ordinary course of business and that do not (individually or in
the aggregate) materially detract from the value of the assets subject thereto
or materially impair the operations of the Company. The Company has a valid
right to use, license and otherwise exploit all Proprietary Assets identified in
Part 2.9(a)(iii) of the Disclosure Schedule. Except as set forth in Part
2.9(a)(iv) of the Disclosure Schedule, the Company owns or has licensed all
Proprietary Assets that are material to the business of the Company and the
Company has not developed jointly with any other Person any Proprietary Asset
that is material to the business of the Company with respect to which such other
Person has any rights. Except as set forth in Part 2.9(a)(v) of the Disclosure
Schedule, there is no Company Contract (with the exception of end user license
agreements in the form previously delivered by the Company to Parent) pursuant
to which any Person has any right (whether or not currently exercisable) to use,
license or otherwise exploit any Company Proprietary Asset.
(b) The Company has taken reasonable measures and precautions to
protect and maintain the confidentiality, secrecy and value of all material
Company Proprietary Assets (except Company Proprietary Assets whose value would
be unimpaired by disclosure). Without limiting the generality of the foregoing,
except as set forth in Part 2.9(b) of the Company Disclosure Schedule, (i) all
current and former employees of the Company who are or were involved in, or who
have contributed to, the creation or development of any material Company
Proprietary Asset have executed and delivered to the Company an agreement
(containing no exceptions to or exclusions from the scope of its coverage) that
is substantially identical to the form of Confidential Information and Invention
Assignment Agreement previously delivered by the Company to Parent, and (ii) all
current and former consultants and independent contractors to the Company who
are or were involved in, or who have contributed to, the creation or development
of any material Company Proprietary Asset have executed and delivered to the
Company an agreement (containing no exceptions to or exclusions from the scope
of its coverage) that is substantially identical to the form of Consultant
Confidential Information and Invention Assignment Agreement previously delivered
to Parent. No current or former employee, officer, director, shareholder,
consultant or independent contractor has any right, claim or interest in or with
respect to any Company Proprietary Asset.
(c) To the knowledge of the Company: (i) all patents, trademarks,
service marks and copyrights held by the Company are valid, enforceable and
subsisting; (ii) none of the Company Proprietary Assets and no Proprietary Asset
that is currently being developed by the Company (either by itself or with any
other Person) infringes, misappropriates or conflicts with any Proprietary Asset
owned or used by any other Person; (iii) none of the products that are or have
been designed, created, developed, assembled, manufactured or sold by the
Company is infringing, misappropriating or making any unlawful or unauthorized
use of any Proprietary Asset owned or used by any other Person, and none of such
products has at any time infringed, misappropriated or made any unlawful or
unauthorized use of, and the Company has not received any notice or other
communication (in writing or otherwise) of any actual, alleged, possible or
potential infringement, misappropriation or unlawful or unauthorized use of, any
Proprietary Asset owned or used by any other Person; and (iv) no other Person is
infringing, misappropriating or making any unlawful or unauthorized use of, and
no Proprietary Asset
13
owned or used by any other Person infringes or conflicts with, any material
Company Proprietary Asset.
(d) The Company Proprietary Assets constitute all the Proprietary
Assets necessary to enable the Company to conduct its business in the manner in
which such business has been and is being conducted. The Company has not (i)
licensed any of the material Company Proprietary Assets to any Person on an
exclusive basis, or (ii) entered into any covenant not to compete or Contract
limiting its ability to exploit fully any material Company Proprietary Assets or
to transact business in any market or geographical area or with any Person.
(e) Except as set forth in Part 2.9(e)(i) of the Disclosure Schedule,
the Company has not delivered to any Person, or permitted the disclosure or
delivery to any escrow agent or other Person, of any Company Source Code. No
event has occurred, and no circumstance or condition exists, that (with or
without notice or lapse of time) will, or could reasonably be expected to,
result in the delivery to any Person of any Company Source Code. Part
2.10(a)(ii) of the Company Disclosure Schedule identifies each Contract pursuant
to which the Company has deposited or is required to deposit with an
escrowholder or any other Person any Company Source Code, and further describes
whether the execution of this Agreement or the consummation of any of the
transactions contemplated hereby could reasonably be expected to result in the
release or disclosure of any Company Source Code.
(f) To the knowledge of the Company, except as set forth in Part
2.9(f)(i) of the Company Disclosure Schedule, each computer, computer program
and other item of software (whether installed on a computer or on any other
piece of equipment, including firmware) that is owned or licensed by the Company
for its internal business operations is Year 2000 Compliant. Except as set forth
in Part 2.9(f)(ii) of the Company Disclosure Schedule, each computer program and
other item of software that has been designed, developed, sold or licensed to
any Person by the Company is Year 2000 Compliant. Except as set forth in Part
2.9(f)(iii) of the Company Disclosure Schedule, the Company has conducted
sufficient Year 2000 compliance testing for each computer, computer program and
item of software referred to in the preceding two sentences to be able to
determine whether such computer, computer program and item of software is Year
2000 Compliant, and has obtained warranties or other written assurances from
each of its suppliers to the effect that the products and services provided by
such suppliers to the Company is Year 2000 Compliant. As used in this Section
2.9, "Year 2000 Compliant" means, with respect to a computer, computer program
or other item of software (i) the functions, calculations, and other computing
processes of the computer, program or software (collectively, "Processes")
perform in a consistent and correct manner without interruption regardless of
whether the dates on which the Processes are actually performed are before, on,
or after January 1, 2000 and regardless of whether the dates input to the
applicable computer system are before, on, or after January 1, 2000; (ii) the
computer, program or software accepts, calculates, compares, sorts, extracts,
sequences, and otherwise processes date inputs and date values, and returns and
displays date values, in a consistent and correct manner regardless of whether
the dates used are before, on, or after January 1, 2000; (iii) the computer,
program or software accepts and responds to year input, if any, in a manner that
resolves any ambiguities as to century in a defined, predetermined, and
appropriate manner; (iv) the computer, program or software stores and displays
date information in ways that are unambiguous as to the determination of the
century; and (v) leap years will be determined by the following standard (A)
14
if dividing the year by 4 yields an integer, it is a leap year, except for years
ending in 00, but (B) a year ending in 00 is a leap year if dividing it by 400
yields an integer.
(g) Except with respect to demonstration or trial copies, no product,
system, program or software module designed, developed, sold, licensed or
otherwise made available by the Company to any Person contains any "back door"
(except for any "back door" which is customary and accepted in the industry in
which the Company operates for such product, system, program or software
module), "time bomb," "Trojan horse," "worm," "drop dead device," "virus" or
other software routines or hardware components designed to permit unauthorized
access or to disable or erase software, hardware or data without the consent of
the user (except for any "back door" which is customary and accepted in the
industry in which the Company operates for such product, system, program or
software module).
2.10 Contracts.
(a) Part 2.10 of the Disclosure Schedule identifies:
(i) each Company Contract relating to the employment of, or
the performance of services by, any current employee, consultant or independent
contractor;
(ii) each Company Contract relating to the acquisition,
transfer, use, development, sharing or license of any technology or any
Proprietary Asset (except for any Proprietary Asset that is licensed to the
Company under any third party software license generally available to the
public);
(iii) each Company Contract imposing any restriction on the
Company's right or ability (A) to compete with any other Person, (B) to acquire
any product or other asset or any services from any other Person, to sell any
product or other asset to or perform any services for any other Person or to
transact business or deal in any other manner with any other Person, or (C)
develop or distribute any technology;
(iv) each Company Contract creating or involving any agency
relationship, distribution arrangement or franchise relationship;
(v) each Company Contract relating to the acquisition,
issuance or transfer of any securities;
(vi) each Company Contract relating to the creation of any
Encumbrance with respect to any material asset of the Company;
(vii) each Company Contract involving or incorporating any
guaranty, any pledge, any performance or completion bond, any indemnity or any
surety arrangement;
(viii) each Company Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits, losses, costs
or liabilities;
15
(ix) each Company Contract relating to the purchase or sale of
any product or other asset by or to, or the performance of any services by or
for, any Related Party (as defined in Section 2.18);
(x) each Company Contract constituting or relating to a
Government Contract or Government Bid;
(xi) any other Company Contract that has a term of more than
60 days and that may not be terminated by the Company (without penalty) within
60 days after the delivery of a termination notice by the Company;
(xii) any other Company Contract that contemplates or involves
(A) the payment or delivery of cash or other consideration in an amount or
having a value in excess of $10,000 in the aggregate, or (B) the performance of
services having a value in excess of $10,000 in the aggregate; and
(xiii) each Company Contract constituting a commitment of any
Person to purchase products (including products in development) of the Company.
(Company Contracts in the respective categories described in clauses "(i)"
through "(xiii)" above are referred to in this Agreement as "Material
Contracts.")
(b) The Company has delivered to Parent accurate and complete copies
of all written Material Contracts, including all written amendments thereto.
Part 2.10 of the Disclosure Schedule provides an accurate description of the
terms of each Company Contract that is not in written form. Each Contract
identified in Part 2.10 of the Disclosure Schedule is valid and in full force
and effect, and, to the knowledge of the Company, is enforceable by the Company
in accordance with its terms.
(c) Except as set forth in Part 2.10 of the Disclosure Schedule:
(i) the Company has not violated or breached, or committed
any default under, any Material Contract, and, to the knowledge of the Company,
no other Person has violated or breached, or committed any default under, any
Material Contract;
(ii) to the knowledge of the Company, no event has occurred,
and no circumstance or condition exists, that (with or without notice or lapse
of time) will, or could reasonably be expected to, (A) result in a violation or
breach of any of the provisions of any Material Contract, (B) give any Person
the right to declare a default or exercise any remedy under any Material
Contract, (C) give any Person the right to accelerate the maturity or
performance of any Material Contract, or (D) give any Person the right to
cancel, terminate or modify any Material Contract;
(iii) since the Company's inception, the Company has not
received any notice or other communication regarding any actual or possible
violation or breach of, or default under, any Material Contract; and
16
(iv) the Company has not waived any of its material rights
under any Material Contract.
(d) No Person is renegotiating any amount paid or payable to the
Company under any Material Contract or any other material term or provision of
any Material Contract.
(e) Part 2.10 of the Disclosure Schedule identifies and provides a
brief description of each bid, offer, award, written proposal, term sheet or
similar document relating to any proposed contract that has been submitted by
the Company since January 1, 1999 (which, if accepted, would become a Company
Contract).
2.11 Liabilities.
(a) The Company has no accrued, contingent or other liabilities of
any nature, either matured or unmatured (whether or not required to be reflected
in financial statements in accordance with generally accepted accounting
principles, and whether due or to become due), except for: (i) liabilities
identified as such in the "liabilities" column of the Unaudited Interim Balance
Sheet; (ii) accounts payable or accrued salaries that have been incurred by the
Company since December 31, 1999 in the ordinary course of business and
consistent with the Company's past practices; (iii) liabilities under the
Material Contracts, to the extent the nature and magnitude of such liabilities
can be specifically ascertained by reference to the text of such Company
Contracts; and (iv) the liabilities identified in Part 2.11 of the Disclosure
Schedule.
2.12 Compliance with Legal Requirements. The Company is, and has at all
times since its inception been, in compliance with all applicable Legal
Requirements, except where the failure to comply with such Legal Requirements
has not had, and would not reasonably be expected to have, a Material Adverse
Effect on the Company. Except as set forth in Part 2.12 of the Disclosure
Schedule, since its inception the Company has not received any notice or other
communication from any Governmental Body regarding any actual or possible
violation of, or failure to comply with, any Legal Requirement.
2.13 Governmental Authorizations. Part 2.13 of the Disclosure Schedule
identifies each material Governmental Authorization held by the Company, and the
Company has delivered to Parent accurate and complete copies of all Governmental
Authorizations identified in Part 2.13 of the Disclosure Schedule. The
Governmental Authorizations identified in Part 2.13 of the Disclosure Schedule
are valid and in full force and effect, and collectively constitute all
Governmental Authorizations necessary to enable the Company to conduct its
business in the manner in which its business is currently being conducted. The
Company is, and at all times since its inception has been, in substantial
compliance with the terms and requirements of the respective Governmental
Authorizations identified in Part 2.13 of the Disclosure Schedule. Since the
date of its inception, the Company has not received any notice or other
communication from any Governmental Body regarding (a) any actual or possible
violation of or failure to comply with any term or requirement of any
Governmental Authorization identified in Part 2.13 of the Disclosure Schedule,
or (b) any actual or possible revocation, withdrawal, suspension, cancellation,
termination or modification of any Governmental Authorization identified in Part
2.13 of the Disclosure Schedule.
17
2.14 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of the
Company with any Governmental Body with respect to any taxable period ending on
or before the Closing Date (the "Company Returns") (i) have been or will be
filed on or before the applicable due date (including any extensions of such due
date), and (ii) have been, or will be when filed, accurately and completely
prepared in all material respects in compliance with all applicable Legal
Requirements. All amounts shown on the Company Returns to be due on or before
the Closing Date have been or will be paid on or before the Closing Date. The
Company has made available to Parent accurate and complete copies of all Company
Returns filed since the date of the inception of the Company which have been
requested by Parent.
(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with generally accepted accounting principles. The Company
will establish, in the ordinary course of business and consistent with its past
practices, reserves adequate for the payment of all Taxes for the period from
December 31, 1999 through the Closing Date, and the Company will disclose the
dollar amount of such reserves to Parent on or prior to the Closing Date.
(c) No Company Return relating to income Taxes has ever been examined
or audited by any Governmental Body. Except as set forth in Part 2.14 of the
Disclosure Schedule, there have been no examinations or audits of any Company
Return. The Company has made available to Parent accurate and complete copies of
all audit reports and similar documents (to which the Company has access)
relating to the Company Returns. Except as set forth in Part 2.14 of the
Disclosure Schedule, no extension or waiver of the limitation period applicable
to any of the Company Returns has been granted (by the Company or any other
Person), and no such extension or waiver has been requested from the Company.
(d) Except as set forth in Part 2.14 of the Disclosure Schedule, no
claim or Proceeding is pending or has been threatened against or with respect to
the Company in respect of any Tax. There are no unsatisfied liabilities for
Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by the Company with respect to any Tax (other than
liabilities for Taxes asserted under any such notice of deficiency or similar
document which are being contested in good faith by the Company and with respect
to which adequate reserves for payment have been established). There are no
liens for Taxes upon any of the assets of the Company except liens for current
Taxes not yet due and payable. The Company has not entered into or become bound
by any agreement or consent pursuant to Section 341(f) of the Code. The Company
has not been, and the Company will not be, required to include any adjustment in
taxable income for any tax period (or portion thereof) pursuant to Section 481
or 263A of the Code or any comparable provision under state or foreign Tax laws
as a result of transactions or events occurring, or accounting methods employed,
prior to the Closing.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of the Company that, considered individually or
considered collectively with any other such Contracts, will, or could reasonably
be expected to, give rise directly or indirectly to the payment of any
18
amount that would not be deductible pursuant to Section 280G or Section 162 of
the Code. The Company is not, and has never been, a party to or bound by any tax
indemnity agreement, tax sharing agreement, tax allocation agreement or similar
Contract.
2.15 Employee and Labor Matters; Benefit Plans.
(a) Part 2.15(a) of the Disclosure Schedule identifies each salary,
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance pay, termination pay, hospitalization, medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "Plans") sponsored,
maintained, contributed to or required to be contributed to by the Company for
the benefit of any employee of the Company ("Employee"), except for Plans which
would not require the Company to make payments or provide benefits having a
value in excess of $25,000 in the aggregate. Part 2.15(a) of the Disclosure
Schedule sets forth the citizenship status of every employee of the Company
(whether such employee is a United States citizen or otherwise) and, with
respect to non-United States citizens, identifies the visa or other similar
permit under which such employee is working for the Company and the dates of
issuance and expiration of such visa or other similar permit.
(b) Except as set forth in Part 2.15(a) of the Disclosure Schedule,
the Company does not maintain, sponsor or contribute to, and, to the knowledge
of the Company, has not at any time in the past maintained, sponsored or
contributed to, any employee pension benefit plan (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not excluded from coverage under specific Titles or Merger Subtitles
of ERISA) for the benefit of Employees or former Employees (a "Pension Plan").
(c) The Company maintains, sponsors or contributes only to those
employee welfare benefit plans (as defined in Section 3(1) of ERISA, whether or
not excluded from coverage under specific Titles or Merger Subtitles of ERISA)
for the benefit of Employees or former Employees which are described in Part
2.15(c) of the Disclosure Schedule (the "Welfare Plans"), none of which is a
multiemployer plan (within the meaning of Section 3(37) of ERISA).
(d) With respect to each Plan, the Company has delivered to Parent:
(i) an accurate and complete copy of such Plan (including all
amendments thereto);
(ii) an accurate and complete copy of the most recent annual
report, if required under ERISA, with respect to such Plan;
(iii) an accurate and complete copy of the most recent summary
plan description, together with each Summary of Material Modifications, if
required under ERISA, with respect to such Plan, and all material employee
communications relating to such Plan;
(iv) if such Plan is funded through a trust or any third party
funding vehicle, an accurate and complete copy of the trust or other funding
agreement (including all
19
amendments thereto) and accurate and complete copies the most recent financial
statements thereof;
(v) accurate and complete copies of all Contracts relating to
such Plan, including service provider agreements, insurance contracts, minimum
premium contracts, stop-loss agreements, investment management agreements,
subscription and participation agreements and recordkeeping agreements; and
(vi) an accurate and complete copy of the most recent
determination letter received from the Internal Revenue Service with respect to
such Plan (if such Plan is intended to be qualified under Section 401(a) of the
Code).
(e) The Company is not required to be, and, to the knowledge of the
Company, has never been required to be, treated as a single employer with any
other Person under Section 4001(b)(1) of ERISA or Section 414(b), (c), (m) or
(o) of the Code. The Company has never been a member of an "affiliated service
group" within the meaning of Section 414(m) of the Code. To the knowledge of the
Company, the Company has never made a complete or partial withdrawal from a
multiemployer plan, as such term is defined in Section 3(37) of ERISA, resulting
in "withdrawal liability," as such term is defined in Section 4201 of ERISA
(without regard to subsequent reduction or waiver of such liability under either
Section 4207 or 4208 of ERISA).
(f) The Company does not have any commitment to create any additional
Welfare Plan or any Pension Plan, or to modify or change any existing Welfare
Plan or Pension Plan (other than to comply with applicable law) in a manner that
would affect any Employee.
(g) Except as set forth in Part 2.15(g) of the Disclosure Schedule,
no Welfare Plan provides death, medical or health benefits (whether or not
insured) with respect to any current or former Employee after any such
Employee's termination of service (other than (i) benefit coverage mandated by
applicable law, including coverage provided pursuant to Section 4980B of the
Code, (ii) deferred compensation benefits accrued as liabilities on the
Unaudited Interim Balance Sheet, and (iii) benefits the full cost of which are
borne by current or former Employees (or the Employees' beneficiaries)).
(h) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements, including
but not limited to ERISA and the Code.
(j) Each of the Plans intended to be qualified under Section 401(a)
of the Code has received a favorable determination from the Internal Revenue
Service, and the Company is not aware of any reason why any such determination
letter should be revoked.
20
(k) Except as set forth in Part 2.15(k) of the Disclosure Schedule,
neither the execution, delivery or performance of this Agreement, nor the
consummation of the Merger or any of the other transactions contemplated by this
Agreement, will result in any payment (including any bonus, golden parachute or
severance payment) to any current or former Employee or director of the Company
(whether or not under any Plan), or materially increase the benefits payable
under any Plan, or result in any acceleration of the time of payment or vesting
of any such benefits.
(l) Part 2.15(l) of the Disclosure Schedule contains a list of all
salaried employees of the Company as of the date of this Agreement, and
correctly reflects, in all material respects, their salaries, any other
compensation payable to them (including compensation payable pursuant to bonus,
deferred compensation or commission arrangements), their dates of employment and
their positions. The Company is not a party to any collective bargaining
contract or other Contract with a labor union involving any of its Employees.
All of the Company's employees are "at will" employees.
(m) Part 2.15(m) of the Disclosure Schedule identifies each Employee
who is not fully available to perform work because of disability or other leave
and sets forth the basis of such leave and the anticipated date of return to
full service.
(n) The Company is in compliance in all material respects with all
applicable Legal Requirements and Contracts relating to employment, employment
practices, wages, bonuses and terms and conditions of employment, including
employee compensation matters.
(o) Except as set forth in Part 2.15(o) of the Disclosure Schedule,
the Company is not aware of any facts, events or circumstances regarding one or
more employees of the Company, which facts, events or circumstances would
indicate (i) the consummation of the Merger or any of the other transactions
contemplated by this Agreement will have a material adverse effect on the
Company's labor relations, or (ii) any of the Company's employees intends to
terminate his or her employment with the Company.
2.16 Environmental Matters. The Company is in compliance in all material
respects with all applicable Environmental Laws, which compliance includes the
possession by the Company of all permits and other Governmental Authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof. The Company has not received any notice or other
communication (in writing or otherwise), whether from a Governmental Body,
citizens group, employee or otherwise, that alleges that the Company is not in
compliance with any Environmental Law, and, to the knowledge of the Company,
there are no circumstances that may prevent or interfere with the Company's
material compliance with any Environmental Law in the future. To the knowledge
of the Company, no current or prior owner of any property leased or controlled
by the Company has received any notice or other communication (in writing or
otherwise), whether from a Government Body, citizens group, employee or
otherwise, that alleges that such current or prior owner or the Company is not
in compliance with any Environmental Law. All Governmental Authorizations
currently held by the Company pursuant to Environmental Laws are identified in
Part 2.16 of the Disclosure Schedule. (For purposes of this Section 2.16: (i)
"Environmental Law" means any federal, state, local or foreign Legal Requirement
relating to pollution or protection of human health or the
21
environment (including ambient air, surface water, ground water, land surface or
subsurface strata), including any law or regulation relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; and (ii) "Materials of Environmental Concern" include
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products and any other substance that is now regulated by any
Environmental Law.)
2.17 Insurance. Part 2.17 of the Disclosure Schedule identifies all
insurance policies maintained by, at the expense of or for the benefit of the
Company and identifies any material claims made thereunder, and the Company has
delivered to Parent accurate and complete copies of the insurance policies
identified on Part 2.17 of the Disclosure Schedule. Each of the insurance
policies identified in Part 2.17 of the Disclosure Schedule is in full force and
effect. Since the Company's inception, the Company has not received any notice
or other communication regarding any actual or possible (a) cancellation or
invalidation of any insurance policy identified in Part 2.17 of the Disclosure
Schedule, (b) refusal of any coverage or rejection of any claim under any
insurance policy, or (c) material adjustment in the amount of the premiums
payable with respect to any insurance policy identified in Part 2.17 of the
Disclosure Schedule.
2.18 Related Party Transactions. Except as set forth in Part 2.18 of the
Disclosure Schedule: (a) no Related Party has any direct or indirect interest in
any material asset used in or otherwise relating to the business of the Company;
(b) no Related Party is indebted to the Company; (c) since the Company's
inception, no Related Party has entered into, or has had any direct or indirect
financial interest in, any material Contract, transaction or business dealing
involving the Company; (d) no Related Party is competing, or has at any time
since the Company's inception competed, directly or indirectly, with the
Company; and (e) no Related Party has any claim or right against the Company
(other than rights under Company Options and rights to receive compensation for
services performed as an employee of the Company). (For purposes of this Section
2.18 each of the following shall be deemed to be a "Related Party": (i) each
individual who is, or who has at any time since the Company's inception been, an
officer of the Company; (ii) each member of the immediate family of each of the
individuals referred to in clause "(i)" above; and (iii) any trust or other
Entity (other than the Company) in which any one of the individuals referred to
in clauses "(i)" and "(ii)" above holds (or in which more than one of such
individuals collectively hold), beneficially or otherwise, a material voting,
proprietary or equity interest.)
2.19 Legal Proceedings; Orders.
(a) Except as set forth in Part 2.19 of the Disclosure Schedule,
there is no pending Legal Proceeding, and to the knowledge of the Company, no
Person has threatened to commence any Legal Proceeding: (i) that involves the
Company or any of the assets owned by the Company or any Person whose liability
the Company has retained or assumed, either contractually or by operation of
law; or (ii) that challenges, or that may reasonably be expected to have the
effect of preventing, delaying, making illegal or otherwise interfering with,
the Merger or any of the other transactions contemplated by this Agreement. To
the knowledge of the Company, except as set forth in Part 2.19 of the Disclosure
Schedule, no event has occurred,
22
and no claim, dispute or other condition or circumstance exists, is likely to
result in the commencement of any such Legal Proceeding.
(b) Except as set forth in Part 2.19 of the Disclosure Schedule, no
Legal Proceeding has ever been commenced by or has ever been pending against the
Company.
(c) There is no order, writ, injunction, judgment or decree to which
the Company, or any of the assets owned by the Company, is subject. To the
knowledge of the Company, no officer or other employee of the Company is subject
to any order, writ, injunction, judgment or decree that prohibits such officer
or other employee from engaging in or continuing any conduct, activity or
practice necessary for the Company's business.
2.20 Authority; Binding Nature of Agreement. The Company has all requisite
corporate right, power and authority to enter into and to perform its
obligations under this Agreement; and the execution, delivery and performance by
the Company of this Agreement have been duly authorized by all necessary action
on the part of the Company and its board of directors and this Agreement and the
Merger have been unanimously approved by the board of directors of the Company.
The affirmative vote of (i) a majority of the shares of Company Common Stock
that are outstanding on the first date on which a signed written consent of a
Company shareholder approving this Agreement is received by the Company, and
(ii) a majority of the shares of Series A Preferred Stock of the Company and a
majority of the shares of Series B Preferred Stock of the Company, voting
separately as independent classes (on an as-converted-basis), that are
outstanding on the first date on which a signed written consent of a Company
shareholder approving this Agreement is received by the Company, is the only
vote of the shareholders of the Company needed to approve and adopt this
Agreement and approve the Merger and the transactions contemplated hereby (the
"Required Company Shareholder Vote"). This Agreement, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
2.21 Non-Contravention; Consents. Except as set forth in Part 2.21 of the
Company Disclosure Schedule, neither (1) the execution, delivery or performance
of this Agreement or any of the other agreements listed as an exhibit to this
Agreement, nor (2) the consummation of the Merger or any of the other
transactions contemplated by this Agreement, will directly or indirectly (with
or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of the Company's articles of incorporation or bylaws, or (ii) any
resolution adopted by the Company's shareholders, the Company's board of
directors or any committee of the Company's board of directors;
(b) contravene, conflict with or result in a violation of any Legal
Requirement or any order, writ, injunction, judgment or decree to which the
Company, or any of the assets owned or used by the Company, is subject;
23
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by the Company or that otherwise necessary to conduct to the
Company's business as currently conducted or to own any of the assets owned by
the Company;
(d) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any Material Contract, or give
any Person the right to (i) declare a default or exercise any remedy under any
Material Contract, (ii) accelerate the maturity or performance of any such
Material Contract, or (iii) cancel, terminate or modify any such Material
Contract; or
(e) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned by the Company (except for
Encumbrances that will not, in any case or in the aggregate, materially detract
from the value of the assets subject thereto or materially impair the operations
of the Company).
Except as set forth in Part 2.21 of the Disclosure Schedule, and except for
filings made, notices given and Consents obtained prior to the date of this
Agreement, the Company is not and will not be required to make any filing with
or give any notice to, or to obtain any Consent from, any Person in connection
with (x) the execution, delivery or performance by the Company of this Agreement
or any of the other agreements referred to in this Agreement, or (y) the
consummation by the Company of the Merger or any of the other transactions
contemplated by this Agreement.
2.22 Customers. Part 2.22 of the Disclosure Schedule identifies (i) each
Person to whom the Company has provided demonstration versions of its products
and (ii) each Person that has committed (whether oral or written and whether
pursuant to an agreement or purchase order or otherwise) to purchase existing
products or products being developed by the Company, and sets forth for each
such Person the quantities or amounts of such products that such Person has
committed to purchase (the "Purchase Commitments") and whether such commitment
is oral or written. The Company has provided to Parent true and complete copies
of all documents evidencing such Purchase Commitments. All such Purchase
Commitments are in full force and effect, have not been withdrawn, amended,
modified or terminated and are enforceable by the Company and, upon consummation
of the Merger, will be enforceable by Parent, against the other party to such
Purchase Commitments. No fact, condition or circumstance exists that would give
any party the right to withdraw, amend, modify or terminate any Purchase
Commitment and no Person has given any notice to the Company, and the Company
has no reason to believe, that any Person intends to withdraw, amend, modify or
terminate any Purchase Commitment.
2.23 Product Development. Part 2.23 of the Disclosure Schedule sets forth
for each product being developed by or on behalf of the Company a true and
correct product development status, including the dates on which the development
of each such product or product feature is currently estimated to be completed.
Part 2.23 of the Disclosure Schedule was prepared in good faith by the Company's
management based on assumptions the Company believed, at the time Part 2.23 was
prepared, to be reasonable. To the best of the Company's knowledge, no fact,
condition or circumstance exists that would materially impair or delay the
development of any
24
such products or cause the assumptions on which Part 2.23 of the Disclosure
Schedule was based to become unreasonable or untrue (excluding facts, conditions
and circumstances related to the Merger or to Parent's control of the Company
following the Merger).
2.24 Financial Advisor. Except for Chase H&Q, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or any of the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. The total of all fees, commissions and other amounts that have been
paid by the Company to Chase H&Q or any of its affiliates and all fees,
commissions and other amounts that may become payable to Chase H&Q or any of its
affiliates by the Company in connection with the Merger will not exceed the sum
of the following: (A) One Million Dollars ($1,000,000), (B) three percent (3%)
of the value in excess of One Hundred Million Dollars ($100,000,000), if any, of
the aggregate number of shares of Parent Common Stock issued (or issuable
pursuant to assumed options) in connection with the Merger, based on the fair
market value of Parent Common Stock on the Closing Date, (C) amounts incurred by
Chase H&Q for reasonable out-of-pocket expenses for services associated with the
Merger, which in the aggregate shall not exceed one hundred thousand dollars
($100,000) and (D) up to one hundred thousand dollars ($100,000) incurred in
connection with the preparation and delivery of a fairness opinion by Chase H&Q.
The Company has furnished to Parent accurate and complete copies of all
agreements under which any such fees, commissions or other amounts have been
paid or may become payable and all indemnification and other agreements related
to the engagement of Chase H&Q.
2.25 Certain Business Practices. Neither the Company nor any director,
officer, agent or employee of the Company on behalf of the Company has (i) used
any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, or (iii) made any other unlawful payment.
2.26 Full Disclosure.
(a) The representations and warranties of the Company in this
Agreement (as qualified by the Disclosure Schedule) taken as a whole do not (i)
contain any untrue statement of a material fact, or (ii) omit to state a
material fact necessary in order to make the representations, warranties and
information contained herein (in the light of the circumstances under which such
representations, warranties and information were made or provided) not
misleading.
3. Representations and Warranties of Parent and Merger Sub
Parent and Merger Sub represent and warrant to the Company as follows:
3.1 Corporate Existence and Power. Each of Parent and Merger Sub is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate power required to conduct
its business as now conducted, and is duly qualified to do business and is in
good standing in each jurisdiction in which the conduct
25
of its business or the ownership or leasing of its properties requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on Parent's business, financial condition or results of
operations.
3.2 Authority; Binding Nature of Agreement. Parent and Merger Sub have the
absolute and unrestricted right, power and authority to perform their
obligations under this Agreement; and the execution, delivery and performance by
Parent and Merger Sub of this Agreement (including the contemplated issuance of
Parent Common Stock in the Merger in accordance with this Agreement) have been
duly authorized by all necessary action on the part of Parent and Merger Sub and
their respective boards of directors. No vote of Parent's stockholders is needed
to adopt this Agreement or approve the Merger. This Agreement constitutes the
legal, valid and binding obligation of Parent and Merger Sub, enforceable
against them in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
3.3 Capitalization. The authorized capital stock of the Parent consists
of: (i) 100,000,000 shares of Common Stock ($.001 par value per share), of which
47,790,180 shares have been issued and are outstanding as of the date of this
Agreement. All of the outstanding shares of Parent Common Stock have been duly
authorized and validly issued, and are fully paid and non-assessable. All
outstanding shares of Parent Common Stock, all outstanding Parent Options, and
all outstanding warrants to purchase shares of the Parent's capital stock have
been issued and granted in compliance with all applicable federal and state
securities laws and other applicable Legal Requirements. Parent has reserved
16,466,766 shares of its common stock for issuance under the Parent Stock Option
Plans, of which, as of the date of this Agreement, options to purchase
10,378,024 shares are outstanding options for 4,156,792 shares have been
exercised to date, and 1,931,950 shares remain available for future grant. In
addition, Parent has granted options to purchase an aggregate 400,000 shares of
its common stock, pursuant to options outside of the Parent Stock Option Plans
and has outstanding warrants to purchase an aggregate of 472,202 shares of its
common stock. Except as set forth in this Section 3.3, there is no outstanding
option, warrant or right (whether or not currently exercisable) issued by Parent
to acquire any shares of capital stock or other securities of Parent.
3.4 SEC Filings; Financial Statements.
(a) Parent has delivered to the Company accurate and complete copies
(excluding copies of exhibits) of each report, registration statement (on a form
other than Form S-8) and definitive proxy statement filed by Parent with the SEC
between January 1, 1999 and the date of this Agreement (the "Parent SEC
Documents"). As of the time it was filed with the SEC (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing), each of the Parent SEC Documents complied in all material respects
with the applicable requirements of the Securities Act or the Exchange Act (as
the case may be). None of the Parent SEC Documents (as amended or superceded by
a filing prior to the date of this Agreement) contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
26
(b) The financial statements contained in the Parent SEC Documents
(including the notes thereto): (i) complied as to form in all material respects
with the published rules and regulations of the SEC applicable thereto; (ii)
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered, except as may be
indicated in the notes to such financial statements and (in the case of
unaudited statements) as permitted by Form 10-Q of the SEC, and except that
unaudited financial statements may not contain footnotes and are subject to
year-end audit adjustments; and (iii) fairly present the financial position of
Parent and its subsidiaries as of the respective dates thereof and the results
of operations of Parent for the periods covered thereby.
3.5 No Conflict. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Parent and Merger Sub
are not prohibited by, and will not violate or conflict with, (i) any provision
of the certificate of incorporation or bylaws of Parent or Merger Sub, or (ii)
any provision of any material contract of Parent or Merger Sub.
3.6 Valid Issuance. Subject to Section 1.5(c), the shares of Parent Common
Stock to be issued pursuant to Section 1.5(a) will, when issued in accordance
with the provisions of this Agreement, be validly issued, fully paid and
nonassessable.
4. Certain Covenants of the Company
4.1 Access and Investigation. During the period from the date of this
Agreement through the earlier of the Effective Time or the termination of this
Agreement pursuant to Section 9, (the "Pre-Closing Period"), promptly following
any request by Parent or Parent's Representatives the Company shall, and shall
cause its Representatives to: (a) provide Parent and Parent's Representatives
with reasonable access to the Company's Representatives, personnel and assets
and to all existing books, records, Tax Returns, work papers and other documents
and information relating to the Company; (b) provide Parent and Parent's
Representatives with copies of such existing books, records, Tax Returns, work
papers and other documents and information relating to the Company, and with
such additional financial, operating and other data and information regarding
the Company, as Parent or Parent's Representatives may reasonably request; and
(c) provide Parent and Parent's Representatives with all accounting records and
financial data relating to the Company and prepare any financial schedules
necessary or helpful to enable Parent's auditors to complete an audit of the
Company's financial statements as soon as possible after the date of this
Agreement.
4.2 Operation of the Company's Business. During the Pre-Closing Period:
(a) the Company shall conduct its business and operations in the
ordinary course and in substantially the same manner as such business and
operations have been conducted prior to the date of this Agreement;
(b) the Company shall use its reasonable best efforts to preserve
intact its current business organization, keep available the services of its
current officers and employees and maintain its relations and good will with all
suppliers, customers, landlords, creditors, employees and other Persons having
business relationships with the Company;
27
(c) the Company shall keep in full force and effect all insurance
policies identified in Part 2.17 of the Disclosure Schedule;
(d) the Company shall cause its officers to report regularly (but in
no event less frequently than weekly) to Parent concerning the status of the
Company's business;
(e) the Company shall not declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any shares of capital
stock of the Company, and shall not repurchase, redeem or otherwise reacquire
any shares of capital stock or other securities of the Company (except that the
Company may repurchase Company Common Stock from former employees pursuant to
the terms of existing restricted stock purchase agreements);
(f) the Company shall not sell, issue or authorize the issuance of
(i) any capital stock or other securities of the Company, (ii) any option or
right to acquire any capital stock or other securities of the Company, or (iii)
any instrument convertible into or exchangeable for any capital stock or other
securities of the Company (except that the Company shall be permitted to (A)
issue shares of Company Common Stock (x) to employees and directors upon the
exercise of Company Options, (y) to holders of warrants to purchase shares of
the Company's Common Stock upon exercise thereof, and (z) to issue shares of
Company Common Stock upon the conversion of shares of Series A Preferred Stock
of the Company or Series B Preferred Stock of the Company outstanding as of the
date of this Agreement and (B) grant options to its new employees in the
ordinary course of business consistent with past practices; provided that the
exercise price of any such options is not less than ninety percent (90%) of the
fair market value of Parent Common Stock on the date of grant multiplied by the
Applicable Fraction);
(g) the Company shall not amend or waive any of its rights under, or
permit the acceleration of vesting under, (i) any provision of any Company Stock
Option Plan, (ii) any provision of any agreement evidencing any outstanding
Company Option, (iii) any provision of any agreement evidencing any warrant to
purchase shares of the Company's Common Stock, or (iv) any provision of any
restricted stock purchase agreement (unless acceleration of vesting is required
under any Company Stock Option Plan, Company Option, warrant or other
agreement);
(h) the Company shall not amend or permit the adoption of any
amendment to the Company's articles of incorporation or bylaws, or effect or
permit the Company to become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction (except that the Company may issue shares of Company
Common Stock upon the conversion of shares of its outstanding Series A Preferred
Stock and Series B Preferred Stock);
(i) the Company shall not form any subsidiary or acquire any equity
interest in any other Entity;
(j) the Company shall not make any capital expenditure, except for
capital expenditures that, when added to all other capital expenditures made on
behalf of the Company during the Pre-Closing Period, do not exceed $100,000 per
month;
28
(k) the Company shall not (i) enter into, or permit any of the assets
owned by it to become bound by, any Material Contract, or (ii) amend or
prematurely terminate, or waive any material right or remedy under, any Material
Contract;
(l) the Company shall not (i) acquire, lease or license any right or
other asset from any other Person (except for any third party software license
generally available to the public), (ii) sell or otherwise dispose of, or lease
or license, any right or other asset to any other Person, or (iii) waive or
relinquish any right, except for assets acquired, leased, licensed or disposed
of by the Company pursuant to Contracts that are not Material Contracts;
(m) the Company shall not (i) lend money to any Person (except that
the Company may make routine travel advances to employees in the ordinary course
of business), or (ii) incur or guarantee any indebtedness for borrowed money;
(n) the Company shall not (i) establish, adopt or amend any Employee
Benefit Plan, or (ii) pay any bonus (including any hiring bonus) or make any
profit-sharing payment, cash incentive payment or similar payment to, or
increase the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees, except as contemplated and agreed by the Company prior to the date
hereof and described in Parts 2.10 or 2.11 of the Disclosure Schedule, or (iii)
hire any new employee whose aggregate annual compensation exceeds $110,000;
(o) the Company shall not change any of its methods of accounting or
accounting practices in any material respect;
(p) the Company shall not make any Tax election;
(q) the Company shall not commence or settle any material Legal
Proceeding (other than Legal Proceedings related to the breach of this Agreement
or the agreements referred to herein by Parent or Merger Sub);
(r) the Company shall not agree or commit to take any of the actions
described in clauses "(e)" through "(q)" above.
Notwithstanding the foregoing, the Company may take any action described in
clauses "(e)" through "(r)" above if Parent gives its prior written consent to
the taking of such action by the Company, which consent will not be unreasonably
withheld (it being understood that Parent's withholding of consent to any action
will not be deemed unreasonable if Parent determines in good faith that the
taking of such action would not be in the best interests of Parent or would not
be in the best interests of the Company).
4.3 Notification; Updates to Disclosure Schedule.
(a) During the Pre-Closing Period, the Company shall promptly notify
Parent in writing of:
(i) the discovery by the Company of any event, condition, fact
or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or
29
constitutes an inaccuracy in or breach of any representation or warranty made by
the Company in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute an inaccuracy in or breach of any representation or warranty made by
the Company in this Agreement if (A) such representation or warranty had been
made as of the time of the occurrence, existence or discovery of such event,
condition, fact or circumstance, or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement;
(iii) any breach of any covenant or obligation of the Company;
and
(iv) any event, condition, fact or circumstance that would make
the timely satisfaction of any condition set forth in Section 7 or Section 8
impossible or unlikely.
(b) If any event, condition, fact or circumstance that is required to
be disclosed pursuant to Section 4.3(a) requires any change in the Disclosure
Schedule, or if any such event, condition, fact or circumstance would require
such a change assuming the Disclosure Schedule were dated as of the date of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, then the Company shall promptly deliver to Parent an update to the
Disclosure Schedule specifying such change. No such update shall be deemed to
supplement or amend the Disclosure Schedule for the purpose of (i) determining
the accuracy of any of the representations and warranties made by the Company in
this Agreement, or (ii) determining whether any condition set forth in Section 6
has been satisfied.
4.4 No Negotiation. During the Pre-Closing Period, the Company shall not,
directly or indirectly, and shall not authorize or permit its officers,
directors, employees, shareholders, agents, or affiliates to directly or
indirectly:
(a) solicit or encourage the initiation or submission of any
expression of interest, inquiry, proposal or offer from any Person (other than
Parent) relating to a possible Acquisition Transaction;
(b) participate in any discussions or negotiations or enter into any
agreement with, or provide any information (other than information that would
otherwise be required to be disclosed by the Company in a report filed pursuant
to the Exchange Act, if the Company were subject to the reporting requirements
of the Exchange Act) to, any Person (other than Parent) relating to or in
connection with a possible Acquisition Transaction; or
(c) entertain, consider or accept any proposal or offer from any
Person (other than Parent) relating to a possible Acquisition Transaction;
provided, however, that nothing in the above paragraphs is intended to conflict
with the fiduciary duties of the Company's Board of Directors under applicable
California law.
The Company shall, and shall cause each of its Representatives to,
immediately discontinue any ongoing discussions or negotiations (other than any
ongoing discussions with
30
Parent) relating to a possible Acquisition Transaction, and shall promptly
provide Parent with an oral description of any bona fide expression of interest,
inquiry, proposal or offer relating to a possible Acquisition Transaction that
is received by the Company or by any of the Company's Representatives from any
Person (other than Parent), provided, however, that the Company shall not be
required to disclose any information to Parent hereunder if such disclosure
would constitute a breach of the Company's obligations under any confidentiality
agreement between the Company and a third party entered into prior to the date
hereof and a copy of which has been previously provided to Parent or its
Representatives.
5. Certain Covenants of Parent and Merger Sub
(a) Notification. During the Pre-Closing Period, the Parent and/or
Merger Sub, as applicable, shall promptly notify Company in writing of:
(i) the discovery by the Parent or Merger Sub of any event,
condition, fact or circumstance that occurred or existed on or prior to the date
of this Agreement and that caused or constitutes an inaccuracy in or breach of
any representation or warranty made by the Parent or Merger Sub in this
Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute an inaccuracy in or breach of any representation or warranty made by
the Parent or Merger Sub in this Agreement if (A) such representation or
warranty had been made as of the time of the occurrence, existence or discovery
of such event, condition, fact or circumstance, or (B) such event, condition,
fact or circumstance had occurred, arisen or existed on or prior to the date of
this Agreement;
(iii) any breach of any covenant or obligation of the Parent or
Merger Sub; and
(iv) any event, condition, fact or circumstance that would make
the timely satisfaction of any condition set forth in Section 7 or Section 8
impossible or unlikely.
6. Additional Covenants of the Parties
6.1 Filings and Consents. As promptly as practicable after the execution
of this Agreement, each party to this Agreement (a) shall make all filings (if
any) and give all notices (if any) required to be made and given by such party
in connection with the Merger and the other transactions contemplated by this
Agreement, and (b) shall use all commercially reasonable efforts to obtain all
Consents (if any) required to be obtained (pursuant to any applicable Legal
Requirement or Contract, or otherwise) by such party in connection with the
Merger and the other transactions contemplated by this Agreement. The Company
shall (upon request) promptly deliver to Parent a copy of each such filing made,
each such notice given and each such Consent obtained by the Company during the
Pre-Closing Period.
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6.2 Information Statement; Shareholder Approval.
(a) As promptly as practicable after the date of this Agreement,
Parent and the Company shall prepare an information statement relating to the
approval of the Merger by the Company's shareholders (the "Information
Statement").
(b) The Company shall take all action necessary under all applicable
Legal Requirements to solicit the written consent of the shareholders of the
Company entitled to vote upon the adoption and approval of this Agreement and
the approval of the Merger and will, as soon as practicable after the date of
this Agreement, mail to each holder of capital stock of the Company a copy of
the Information Statement, a form of action by written consent and such other
documents as Parent deems are necessary to comply with applicable law or are
otherwise reasonably appropriate. The Company shall use its reasonable best
efforts to ensure that the Required Company Shareholder Vote will be obtained as
promptly as practicable after the Information Statement is first sent to the
shareholders of the Company.
(c) The board of directors of the Company shall unanimously recommend
that the Company's shareholders adopt and approve this Agreement and approve the
Merger. The Information Statement shall include a statement to the effect that
the board of directors of the Company has unanimously recommended that the
Company's shareholders adopt and approve this Agreement and approve the Merger.
Neither the board of directors of the Company nor any committee thereof shall
withdraw, amend or modify, or propose or resolve to withdraw, amend or modify,
in a manner adverse to Parent, the unanimous recommendation of the board of
directors of the Company that the Company's shareholders adopt and approve this
Agreement and approve the Merger.
6.3 Public Announcements. During the Pre-Closing Period, (a) the Company
shall not (and the Company shall not permit any of its Representatives to) issue
any press release or make any public statement regarding this Agreement or the
Merger, or regarding any of the other transactions contemplated by this
Agreement, without Parent's prior written consent, and (b) Parent will use
reasonable best efforts to consult with the Company prior to issuing any press
release or making any public statement regarding the Merger or any of the other
transactions contemplated hereby provided that nothing herein shall be deemed to
prohibit Parent from making any public disclosure Parent deems necessary or
appropriate under applicable laws.
6.4 Best Efforts. During the Pre-Closing Period, (a) the Company shall use
its reasonable best efforts to cause the conditions set forth in Section 7 to be
satisfied on a timely basis, and (b) Parent and Merger Sub shall use their
reasonable best efforts to cause the conditions set forth in Section 8 to be
satisfied on a timely basis. Neither Parent, Merger Sub nor the Company shall
engage in any action that could reasonably be expected to cause the Merger to
fail to qualify as a "reorganization" under Section 368(a) of the Code.
6.5 Tax Matters. Prior to the Closing, Parent and the Company shall
execute and deliver, to Xxxxxx Godward llp and to Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx PC, tax representation letters (which will be used in connection with the
legal opinions contemplated by Sections 7.6(f) and 8.3(b)).
32
6.6 Employment and Noncompetition Agreements. Prior to the Closing, the
Company shall use its reasonable best efforts to cause each of the Persons
identified on Exhibit F to execute and deliver to the Company and Parent an
Employment Agreement in the form of Exhibit G and a Noncompetition Agreement in
the form of Exhibit H.
6.7 Termination of Agreements. Prior to the Closing, the Company shall
enter into, and shall use its reasonable best efforts to cause the Company
shareholder party to the following agreements to enter into, an agreement
reasonably satisfactory in form and content to Parent (and conditioned and
effective upon the Closing), terminating all such shareholders' rights under the
following agreements: (i) the Amended and Restated Investor Rights Agreement
dated as of November 17, 1999 among the Company and such shareholders.
6.8 Deleted.
6.9 Termination of Employee Plans. At the Closing, the Company shall
terminate the Company Stock Option Plans and all other employee benefit plans of
the Company.
6.10 FIRPTA Matters. At the Closing, (a) the Company shall deliver to
Parent a statement (in such form as may be reasonably requested by counsel to
Parent) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of the
United States Treasury Regulations, and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Xxxxxxx 0.000 - 0(x)(0)
xx xxx Xxxxxx Xxxxxx Treasury Regulations.
6.11 Indemnification of Directors and Officers.
(a) From and after the Effective Time, Parent will, or will cause the
Surviving Corporation to, fulfill and honor in all respects the obligations of
the Company pursuant to its Articles of Incorporation and Bylaws. The
certificate of incorporation and bylaws of the Surviving Corporation will
contain the provisions with respect to indemnification set forth in the Articles
of Incorporation and By-laws attached hereto as Exhibit B and Exhibit C,
respectively, which provisions will not be amended, repealed or otherwise
modified for a period of six (6) years from the Effective Time in any manner
that would adversely affect the rights thereunder of individuals who,
immediately prior to the Effective Time, were directors, officers, employees or
agents of the Company, unless such modification is required by law.
(b) From and after the Effective Time, Parent will, and will cause
the Surviving Corporation, to the fullest extent permitted under the Surviving
Corporation's Articles of Incorporation or Bylaws, to indemnify and hold
harmless, each current and former director or officer of the Company
(collectively, the "Indemnified D&Os") against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, to the extent arising out of or pertaining to any action or
omission in his or her capacity as a current or former director or officer of
the Company for a period of six (6) years after the date hereof.
This Section 6.11 will survive the consummation of the Merger at the Effective
Time, is intended to benefit Parent, the Surviving Corporation and the
Indemnified D&Os, and will be binding on
33
all successors and assigns of Parent and the Surviving Corporation. Nothing
contained in this Section 6.11 shall, for any reason, be construed as or have
the effect of impeding Parent's ability to proceed against the Escrow Shares in
the event of a breach of any of the Company's representations, warranties or
covenants contained in this Agreement as more fully provided in Section 10.
6.12 S-8 Registration Statement. Parent will file a Registration Statement
on Form S-8 for the shares of Parent Common Stock issuable with respect to
assumed Company Options as soon as reasonably practical after the Effective Time
(and in any event within 10 business days) and will use its reasonable best
efforts to maintain the effectiveness of such registration statement thereafter
for so long as any of such Company Options remain outstanding.
6.13 Employment Offers. Not less than five (5) days prior to the Closing,
Parent will make offers of employment to all employees of the Company which
offers will include commercially reasonably salary, benefits and other terms.
7. Conditions Precedent to Obligations of Parent and Merger Sub
The obligations of Parent and Merger Sub to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the satisfaction or waiver, at or prior to the Closing, of each of the
following conditions:
7.1 Accuracy of Representations.
(A) The representations and warranties of the Company contained in
this Agreement shall be accurate in all respects as of the date of this
Agreement and (B) the representations and warranties of the Company contained in
Sections 2.3, 2.5, 2.6, 2.9, 2.11, 2.12, 2.15, 2.18, 2.19, 2.20 and 2.21 of this
Agreement shall be accurate in all respects as of the Closing Date as if made on
and as of the Closing Date (except for those representations and warranties
which address matters only as of a particular date, which shall remain true and
correct as of such date), except that any inaccuracies in the representations
and warranties described in (A) and (B) above 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
Effect on the Company; provided, however, that, for purposes of determining the
accuracy of such representations and warranties as of the Closing Date, (i) all
"Material Adverse Effect" qualifications and other materiality qualifications,
and any similar qualifications, contained in such representations and warranties
shall be disregarded, and (ii) any update of or modification to the Disclosure
Schedule made or purported to have been made after the date of this Agreement
shall be disregarded.
7.2 Performance of Covenants. All of the covenants and obligations that
the Company is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
7.3 Shareholder Approval. This Agreement shall have been duly adopted and
approved and the Merger shall have been duly approved in accordance with
applicable law and the Company's Articles of Incorporation, including the vote
of the holders of not less than 95%
34
of the voting stock of the Company (calculated on an as-converted basis) that is
issued and outstanding as of the Closing Date.
7.4 Consents. All Consents required to be obtained from Governmental
Authorities in connection with the Merger and the other transactions
contemplated by this Agreement and all Consents identified in Part 7.4 of the
Disclosure Schedule shall have been obtained and shall be in full force and
effect.
7.5 Employees. Eighty percent (80%) of the employees performing work for
the Company who are employed by Tri-Net, including all of the employees
identified on Exhibit J, shall have accepted employment with Parent to become
effective upon the Closing Date.
7.6 Agreements and Documents. Parent shall have received the following
agreements and documents, each of which shall be in full force and effect:
(a) Employment Agreements in the form of Exhibit G, executed by the
Persons identified on Exhibit F;
(b) Noncompetition Agreements in the form of H, executed by the
Persons identified on Exhibit F;
(c) Release of Claims signed by Xxxxxx X. Xxxxxxx, XX, Xxxxx X. Xxx
and Xxxxxx X. Xxxxxxxx, in a form mutually acceptable to Parent and such
releasor.
(d) an estoppel certificate, dated as of a date not more than five
days prior to the Closing Date and satisfactory in form and content to Parent,
executed by Landlord of the Company;
(e) a legal opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx PC, dated as
of the Closing Date, in the form of Exhibit K;
(f) a legal opinion of Cooley Godward LLP, or if for any reason Xxxxxx
Godward LLP does not render such a legal opinion, a legal opinion of Wilson,
Sonsini, Xxxxxxxx & Xxxxxx PC, dated as of the Closing Date, to the effect that
the Merger will constitute a reorganization within the meaning of Section 368 of
the Code (it being understood that, in rendering such opinion, such counsel may
rely upon the tax representation letters referred to in Section 6.5);
(g) written resignations of all directors of the Company, effective as
of the Effective Time;
(h) an Escrow Agreement in the form of Exhibit E, executed by the
Company Shareholders' Representative and the Escrow Agent;
(i) an opinion from Chase H&Q to the Company that the consideration to
be paid to the shareholders of the Company is fair from a financial point of
view to such shareholders;
35
(j) confirmations of receipt of information regarding Parent, dated
concurrently with the Voting Agreement, from each of the Company's Shareholders
who signed the Voting Agreement in the form provided to such shareholders with
the Voting Agreement; and
(k) a certificate signed on behalf of the Company by the Chief
Executive Officer of the Company representing and warranting that the conditions
set forth in Sections 7.1 and 7.2 have been duly satisfied (the "Company
Compliance Certificate").
7.7 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or applicable to
the Merger that makes consummation of the Merger illegal.
7.8 Conversion of Outstanding Preferred Stock; Exercise of Outstanding
Warrants. All of the outstanding shares of the Company's Series A Preferred
Stock and Series B Preferred Stock shall have automatically converted into
shares of the Company's Common Stock in accordance with Article III
(B)(4)(b)(ii) and (c)(ii) of the Company's articles of incorporation. All of the
outstanding warrants to purchase shares of the Company's capital stock shall
have been exercised in accordance with their terms.
7.9 Promissory Notes. All amounts owing under any promissory notes made
by the Company shall be paid in full.
7.10 Dissenting Shares. The holders of no more than 5% of the total shares
of Company Common Stock, Series A Preferred Stock and Series B Preferred Stock
of the Company shall have perfected or be entitled to exercise dissenters'
rights under Chapter 13 of the CGCL.
8. Conditions Precedent to Obligations of the Company
The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction or waiver, at or prior to the Closing, of the following conditions:
8.1 Accuracy of Representations. The representations and warranties of
Parent and Merger Sub contained in this Agreement shall be accurate in all
respects as of the date of this Agreement and as of the Closing Date as if made
on and as of the Closing Date (except for those representations and warranties
which address matters only as of a particular date which shall remain true and
correct as of such date), except that any inaccuracies in such representations
and warranties will be disregarded if the circumstances giving rise to all such
inaccuracies (considered collectively) do not constitute, and would not
reasonably be expected to have, a Material Adverse Effect on Parent; provided,
however, that, for purposes of determining the accuracy of such representations
and warranties as of the Closing Date, all "Material Adverse Effect"
qualifications and other materiality qualifications, and any similar
qualifications, contained in such representations and warranties shall be
disregarded.
36
8.2 Performance of Covenants. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all material
respects.
8.3 Documents. The Company shall have received the following documents:
(a) a legal opinion of Xxxxxx Godward llp, dated as of the Closing
Date, in the form of Exhibit L;
(b) a legal opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx PC, or if for
any reason Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx PC does not render such legal
opinion, a legal opinion of Xxxxxx Godward llp), dated as of the Closing Date,
to the effect that the Merger will constitute a reorganization within the
meaning of Section 368 of the Code (it being understood that, in rendering such
opinion, such counsel may rely upon the tax representation letters referred to
in Section 6.5);
(c) an Escrow Agreement in the form of Exhibit E, executed by Parent
and the Escrow Agent; and
(d) a certificate signed on behalf of Parent by the Chief Executive
Officer of Parent representing and warranting that the conditions set forth in
Sections 8.1 and 8.2 have been duly satisfied.
8.4 Shareholder Approval. This Agreement shall have been duly adopted and
approved and the Merger shall have been duly approved by the Required Company
Shareholder Vote.
8.5 Listing. The shares of Parent Common Stock to be issued in the Merger
shall have been approved for quotation (subject to notice of issuance) on the
Nasdaq.
8.6 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or applicable to
the Merger that makes consummation of the Merger illegal.
9. Termination
9.1 Termination Events. This Agreement may be terminated prior to the
Closing:
(a) by Parent if Parent reasonably determines that the satisfaction of
any condition set forth in Section 7 has become impossible (other than as a
result of any failure on the part of Parent or Merger Sub to comply with or
perform any covenant or obligation of Parent or Merger Sub set forth in this
Agreement);
37
(b) by the Company if the Company reasonably determines that the
satisfaction of any condition set forth in Section 8 has become impossible
(other than as a result of any failure on the part of the Company to comply with
or perform any covenant or obligation set forth in this Agreement or in any
other agreement or instrument delivered to Parent);
(c) by Parent if any of the Company's covenants contained in this
Agreement shall have been breached in any material respect; provided, however,
that Parent may not terminate this Agreement under this Section 9.1(d) on
account of a breach of a covenant by the Company that is curable by the Company
unless the Company fails to cure such breach within 15 days after receiving
written notice from Parent of such breach;
(d) by the Company if any of Parent's covenants contained in this
Agreement shall have been breached in any material respect; provided, however,
that the Company may not terminate this Agreement under this Section 9.1(d) on
account of a breach of a covenant by Parent or Merger Sub that is curable by
Parent unless Parent fails to cure such breach within 15 days after receiving
written notice from the Company of such breach;
(e) by Parent if the Closing has not taken place on or before April
30, 2000 (other than as a result of any failure on the part of Parent or Merger
Sub to comply with or perform any covenant or obligation of Parent or Merger Sub
set forth in this Agreement or in any other agreement or instrument delivered by
the Company);
(f) by the Company if the Closing has not taken place on or before
April 30, 2000 (other than as a result of the failure on the part of the Company
to comply with or perform any covenant or obligation of the Company set forth in
this Agreement or in any other agreement or instrument delivered to Parent); or
(g) by the mutual consent of Parent and the Company.
9.2 Termination Procedures. If Parent wishes to terminate this Agreement
pursuant to Section 9.1(a), Section 9.1(c), Section 9.1(d) or Section 9.1(g),
Parent shall deliver to the Company a written notice stating that Parent is
terminating this Agreement and setting forth a brief description of the basis on
which Parent is terminating this Agreement. If the Company wishes to terminate
this Agreement pursuant to Section 9.1(b), Section 9.1(e), Section 9.1(f) or
Section 9.1(h), the Company shall deliver to Parent a written notice stating
that the Company is terminating this Agreement and setting forth a brief
description of the basis on which the Company is terminating this Agreement.
9.3 Effect of Termination. If this Agreement is terminated pursuant to
Section 9.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) neither the Company nor Parent shall be
relieved of any obligation or liability arising from any inaccuracy or prior
breach by such party of any representation, warranty, covenant or other
provision of this Agreement; (b) the parties shall, in all events, remain bound
by and continue to be subject to the provisions set forth in Section 10; and (c)
the Company and Parent shall, in all events, remain bound by and continue to be
subject to Section 6.3.
38
10. Registration of Shares.
10.1 Registration Statement.
(a) As soon as possible after the Closing Date, Parent shall prepare
and, in no event later than March 21, 2000, file with the SEC a registration
statement on Form S-1 (the "Registration Statement") with respect to 100% of the
shares of Parent Common Stock issued in the Merger to each Participating Holder
(as defined in Section 10.1(c)).
(b) Parent shall use commercially reasonable efforts: (a) to cause
the Registration Statement to be declared effective by the SEC as soon as
practicable after the Closing Date; and (b) to cause the Registration Statement
to remain effective until the earlier of (i) the second anniversary of the
Closing Date, or (ii) the date on which the distribution described in the
Registration Statement is completed.
(c) Parent shall (at its own expense):
(i) prepare and file with the SEC such amendments to the
Registration Statement, and such supplements to the related prospectuses, as may
be required in order to comply with the applicable provisions of the Securities
Act;
(ii) furnish to the respective Participating Holders such
numbers of copies of a prospectus conforming to the requirements of the
Securities Act as they may reasonably request in order to facilitate the
disposition of the shares covered by the Registration Statement;
(iii) use reasonable best efforts to register and qualify the
shares covered by the Registration Statement under the securities laws of such
states as the respective Participating Holders may reasonably request, provided,
however, that Parent shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any of such states; and
(iv) file a Notification of Listing of Additional Shares with
the Nasdaq National Market with respect to the Parent Common Stock.
(d) Notwithstanding anything to the contrary contained herein, no
Person who receives Parent Common Stock in the Merger shall have any rights
under this Section 10 unless such Person (i) executes a written agreement
satisfactory in form and content to Parent, confirming that such Person wishes
to be allowed to sell Parent Common Stock pursuant to the Registration Statement
and agrees to be bound by the provisions of this Section 10, and (ii) delivers
such written agreement (as executed by such Person) to Parent within 15 days
after Parent delivers the form of such written agreement to such Person. Parent
shall deliver such written agreements to each former shareholder of the Company
within two days following the Closing Date. (A Person who receives Parent Common
Stock in the Merger and who executes and delivers such an agreement is referred
to in this Section 10 as a "Participating Holder.")
39
(e) Notwithstanding anything to the contrary contained herein, all of
Parent's obligations under this Section 10.1 (including its obligation to
maintain the effectiveness of the Registration Statement) shall terminate and
expire as of the earliest date on which all shares of Parent Common Stock issued
in the Merger can be sold pursuant to Rule 144 under the Securities Act.
10.2 Damages. In the event that Parent fails to file the Registration
Statement with the SEC within the time period specified in Section 10.1(a) of
this Agreement, Parent shall pay $3,375,000 to the former securityholders of the
Company (on a pro rata basis based on the number of Escrow Shares originally
contributed to the Escrow). The parties agree that this Section 10.2 shall
provide the sole remedy for any damages suffered as a result of a breach of
Parent's failure to file the Registration Statement within such time period.
10.3 Piggyback Registrations. Parent shall notify all Participating Holders
in writing at least fifteen (15) days prior to the filing of any registration
statement under the Securities Act for purposes of a public offering of
securities of Parent (including, but not limited to, registration statements
relating to secondary offerings of securities of Parent, but excluding
registration statements relating to employee benefit plans or with respect to
corporate reorganizations or other transactions under Rule 145 of the Securities
Act) and will afford each such Participating Holder an opportunity to include in
such registration statement all or part of such shares of Parent Common Stock
held by such Participating Holder. Each Participating Holder desiring to include
in any such registration statement all or any part of the Parent Common Stock
held by it shall, within fifteen (15) days after the above-described notice from
Parent, so notify Parent in writing. Such notice shall state the intended method
of disposition of the shares of Parent Common Stock by such Participating
Holder. If a Participating Holder decides not to include all of its shares of
Parent Common Stock in any registration statement thereafter filed by Parent,
such Participating Holder shall nevertheless continue to have the right to
include any shares of Parent Common Stock in any subsequent registration
statement or registration statements as may be filed by Parent with respect to
offerings of its securities, all upon the terms and conditions set forth herein.
(a) Underwriting. If the registration statement under which Parent
gives notice under this Section 10.3 is for an underwritten offering, Parent
shall so advise the Participating Holders. In such event, the right of any such
Participating Holder to be included in a registration pursuant to this Section
10.3 shall be conditioned upon such Participating Holder's participation in such
underwriting, the deregistration of any Parent Common Stock to be registered on
behalf of such Participating Holder under this Section 10.3 which was previously
registered pursuant to Section 10.1, and the inclusion of such shares of Parent
Common Stock in the underwriting to the extent provided herein. All
Participating Holders proposing to distribute their shares of Parent Common
Stock through such underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by Parent. Notwithstanding any other provision of the Agreement, if
the underwriter determines in good faith that marketing factors require a
limitation of the number of shares to be underwritten, the number of shares that
may be included in the underwriting shall be allocated, first, to Parent;
second, to any stockholder of Parent who has registration rights under any
agreement executed prior to the date of this Agreement on a pro rata basis;
third, to the Participating Holders on a pro rata basis based on the total
number of shares of Parent Common
40
Stock held by the Participating Holders; and fourth, to any shareholder of
Parent (other than a Participating Holder or a holder who has registration
rights pursuant to an agreement executed prior to this agreement) on a pro rata
basis. If any Participating Holder disapproves of the terms of any such
underwriting, such Participating Holder may elect to withdraw therefrom by
written notice to Parent and the underwriter, delivered at least ten (10)
business days prior to the effective date of the registration statement. Any
shares of Parent Common Stock excluded or withdrawn from such underwriting shall
be excluded and withdrawn from the registration. For any Participating Holder
which is a partnership or corporation, the partners, retired partners and
shareholders of such Participating Holder, or the estates and family members of
any such partners and retired partners and any trusts for the benefit of any of
the foregoing person shall be deemed to be a single "Participating Holder," and
any pro rata reduction with respect to such "Participating Holder" shall be
based upon the aggregate amount of shares carrying registration rights owned by
all entities and individuals included in such "Participating Holder," as defined
in this sentence.
(b) Right to Terminate Registration. Parent shall have the right to
terminate or withdraw any registration initiated by it under this Section 10.3
prior to the effectiveness of such registration whether or not any Participating
Holder has elected to include securities in such registration.
10.4 Indemnification.
(a) Parent agrees to indemnify, to the extent permitted by law, each
Participating Holder, its directors and officers and each Person who controls
such Participating Holder (within the meaning of the Securities Act) against all
Damages suffered by such Participating Holder as a result of any untrue or
alleged untrue statement of material fact contained in the Registration
Statement or in the related prospectuses or preliminary prospectuses (or in any
amendment thereof or supplement thereto) or as a result of any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as such untrue
statement or omission or alleged untrue statement or omission results from or is
contained in any information furnished in writing to Parent by such
Participating Holder for use therein or results from such Participating Holder's
failure to deliver a copy of a Registration Statement or related prospectus (or
any amendment thereof or supplement thereto) after Parent has furnished such
Participating Holder with a sufficient number of copies thereof.
(b) In connection with the Registration Statement, each Participating
Holder (i) shall furnish to Parent in writing such information and affidavits as
Parent reasonably requests for use in connection with such Registration
Statement or the related prospectus, and (ii) to the extent permitted by law,
will indemnify Parent, its directors and officers and each Person who controls
Parent (within the meaning of the Securities Act) against all Damages suffered
by such person or a result of any untrue or alleged untrue statement of material
fact contained in such Registration Statement or in the related prospectus or
preliminary prospectus (or in any amendment thereof or supplement thereto) or
from any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, but only to
the extent that such untrue statement or omission or alleged untrue
41
statement or omission results from or is contained in any information or
affidavit furnished in writing by such Participating Holder.
(c) Any Person entitled to indemnification under this Section 10 will
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification, and (ii) unless in the indemnified
party's reasonable judgment a conflict of interest exists between the
indemnified party and the indemnifying party with respect to such claim, permit
the indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party will not be subject to any liability for any consent to
the entry of any judgment or any settlement made by the indemnified party
without the indemnifying party's consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will pay the fees and expenses of only one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest exists between such indemnified party and any other
indemnified party with respect to such claim (in which case the indemnifying
party will pay the fees and expenses of additional counsel).
(d) If the indemnification provided for in this Section 10.4 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any losses, claims, damages or liabilities referred to herein,
the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by a
Participating Holder hereunder exceed the net proceeds from the offering
received by such Participating Holder.
10.5 Transferability of Registration Rights. The rights of Participating
Holders under this Section 10 are not transferable except in connection with:
(a) a transfer by will or intestacy; and (b) estate planning transfers
consisting of gifts to the spouse or issue of the transferor, or to a charity
qualified under Section 501(c)(3) of the Code.
10.6 Delay of Registration. During the first six (6) months following the
date that the Registration Statement is declared effective by the SEC, Parent
may suspend the use of the Registration Statement (and the Participating Holders
hereby agree not to offer or sell any shares of Parent Common Stock pursuant to
the Registration Statement during such suspension), for two (2) separate
periods, each of which shall not exceed thirty (30) days, if Parent, in its
reasonable judgment, believes:
42
(a) that the filing of the Registration Statement or the offering or
sale of Parent Common Stock pursuant thereto, or the making of any required
disclosure in connection therewith, could reasonably be expected to have an
adverse effect upon (i) a pending or scheduled offering of Parent's securities,
(ii) an acquisition, merger, consolidation, joint venture, equity investment or
other potentially significant transaction or event, or (iii) any negotiations,
discussions or proposal with respect to any of the foregoing; and
(b) that the failure to disclose any material information with respect
to any of the foregoing could result in a violation of the Securities Act, the
Exchange Act or any provision of any state securities law.
In the event Parent reasonably believes that any of the foregoing
circumstances are continuing after either such thirty-day period, it may, with
the consent of the holders of a majority of the shares of Parent Common Stock
subject (or to be subject) to the Registration Statement (which consent shall
not be unreasonably withheld) extend such thirty-day period for one additional
thirty-day period.
(c) Notwithstanding anything to the contrary contained in this Section
10.6, Parent shall not suspend the use of the Registration Statement during the
first ten (10) trading days following the date the Registration Statement is
declared effective by the SEC without the consent of the holders of a majority
of the shares of Parent Common Stock subject (or to be subject) to the
Registration Statement.
10.7 Amendment of Section 10. Notwithstanding anything to the contrary
contained in this Agreement, the provisions of this Section 10 may be amended by
Parent at any time with the consent of the holders of a majority of the shares
of Parent Common Stock subject (or to be subject) to the Registration Statement.
11. Indemnification, Etc.
11.1 Survival of Representations, Etc.
(a) The representations and warranties made by the Company (including
the representations and warranties set forth in Section 2 and the
representations set forth in the Company Compliance Certificate) shall survive
the Closing and shall expire on the first anniversary of the Closing Date;
provided, however, that if, at any time prior to the first anniversary of the
Closing Date, any Indemnitee (acting in good faith) delivers to the Company
Shareholders' Representative a written notice alleging the existence of an
inaccuracy in or a breach of any of the representations and warranties made by
the Company (and setting forth in reasonable detail the basis for such
Indemnitee's belief that such an inaccuracy or breach may exist) and asserting a
claim for recovery under Section 11.2 based on such alleged inaccuracy or
breach, then the claim asserted in such notice shall survive the first
anniversary of the Closing until such time as such claim is fully and finally
resolved. All representations and warranties made by Parent and Merger Sub shall
terminate and expire as of the Effective Time, and any liability of Parent or
Merger Sub with respect to such representations and warranties shall thereupon
cease; provided, however, that nothing herein shall limit the right of the
former shareholders of the Company to bring an action under applicable
securities laws after the
43
Termination Date. All covenants made herein and intended to be performed after
the Closing by Parent and Merger Sub shall survive the Closing.
(b) The representations, warranties, covenants and obligations of the
Company, and the rights and remedies that may be exercised by the Indemnitees,
shall not be limited or otherwise affected by or as a result of any information
furnished to, or any investigation made by or knowledge of, any of the
Indemnitees or any of their Representatives.
11.2 Indemnification.
(a) From and after the Closing Date (but subject to Section 11.1(a)),
each Indemnitee shall be held harmless and indemnified from and against, and
shall be compensated, reimbursed and paid for, any Damages which are directly or
indirectly suffered or incurred by any Indemnitee or to which any Indemnitee
otherwise becomes subject (regardless of whether or not such Damages relate to
any third-party claim) and which arise from or as a result of: (i) any
inaccuracy in or breach of any representation or warranty of the Company set
forth in this Agreement (without giving effect to any "Material Adverse Effect"
or other materiality qualification or any similar qualification contained or
incorporated directly or indirectly in such representation or warranty, and
without giving effect to any update to the Disclosure Schedule delivered by the
Company to Parent prior to the Closing) or in the Company Compliance
Certificate; (ii) any inaccuracy in or breach of any representation or warranty
made by the Company in this Agreement (without giving effect to any "Material
Adverse Effect" or other materiality qualification or any similar qualification
contained or incorporated directly or indirectly in such representation or
warranty, and without giving effect to any update to the Disclosure Schedule
delivered by the Company to Parent prior to the Closing) or in the Company
Compliance Certificate as if such representation or warranty were made on and as
of the Closing Date, (iii) any breach of any covenant or obligation of the
Company (including the covenants set forth in Sections 4 and 5); or (iv) any
Legal Proceeding relating to any inaccuracy or breach of the type referred to in
clauses "(i)" or "(ii)" or "(iii)" above (including any Legal Proceeding
commenced by any Indemnitee for the purpose of enforcing any of its rights under
this Section 11).
(b) In the event the Surviving Corporation suffers, incurs or
otherwise becomes subject to any Damages as a result of or in connection with
any inaccuracy in or breach of any representation, warranty, covenant or
obligation, then (without limiting any of the rights of the Surviving
Corporation as an Indemnitee) Parent shall also be deemed, by virtue of its
ownership of the stock of the Surviving Corporation, to have incurred Damages as
a result of and in connection with such inaccuracy or breach; provided, however,
that to the extent the Surviving Corporation is indemnified for any Damages,
Parent's right of indemnification that arises by virtue of its ownership of the
stock of the Surviving Corporation shall be correspondingly reduced.
11.3 Threshold. No Indemnitee shall be entitled to indemnification pursuant
to Section 11.2(a) for any inaccuracy in or breach of any of the Company's
representations and warranties set forth in this Agreement or the Company
Compliance Certificate until such time as the total amount of all Damages
(including the Damages arising from such inaccuracy or breach and all other
Damages arising from any other inaccuracies in or breaches of any
representations
44
or warranties) that have been directly or indirectly suffered or incurred by any
one or more of the Indemnitees, or to which any one or more of the Indemnitees
has or have otherwise become subject, exceeds $250,000 in the aggregate,
provided that if the total amount of such Damages exceeds $250,000, then any
Indemnitee that has suffered or incurred any Damages shall be entitled to be
indemnified against and compensated, reimbursed and paid for all of such Damages
and not merely that portion of such Damages exceeding $250,000.)
11.4 Right of Offset of Indemnification Claims. Subject to Section 11.3, in
the event any Indemnitee shall suffer any Damages for which such Indemnitee is
entitled to indemnification under this Section 11, such Indemnitee's sole
recourse other than for claims related to fraud shall be to recover such Damages
by obtaining that number of Escrow Shares equal in value (as determined in
accordance with the terms and conditions of the Escrow Agreement) to the
aggregate amount of such Damages; provided, however, that to the extent any cash
is substituted for Escrow Shares in accordance with the terms of the Escrow
Agreement, all or a portion of such Damages shall be recovered in cash as set
forth in the Escrow Agreement. Notwithstanding any provision of this Agreement
to the contrary, except for recourse to the Escrow Shares (and/or substituted
cash, if any) as provided in the preceding sentences and except for fraud in no
event shall any securityholder of the Company be liable to Parent, the Surviving
Corporation or any other Indemnitee or anyone claiming through any of them under
this Section 11 or any other theory of liability for Damages or other amounts in
connection with the transactions contemplated by this Agreement or any of the
agreements referenced in this Agreement.
11.5 No Contribution. The Company shareholders shall not have and shall not
exercise or assert (or attempt to exercise or assert), any right of
contribution, right of indemnity or other right or remedy against the Surviving
Corporation in connection with any indemnification obligation or any other
liability to which such shareholders may become subject under or in connection
with this Agreement or the Escrow Agreement.
11.6 Defense of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against the
Surviving Corporation, against Parent or against any other Person) with respect
to which any of the Indemnitees may be entitled to indemnification pursuant to
this Section 11, Parent shall have the right, at its election, to proceed with
the defense of such claim or Legal Proceeding on its own. If Parent so proceeds
with the defense of any such claim or Legal Proceeding:
(a) all reasonable expenses relating to the defense of such claim or
Legal Proceeding shall be satisfied out of the Escrow Shares (and/or substituted
cash, if any) in the manner set forth in the Escrow Agreement; and
(b) Parent shall have the right to settle, adjust or compromise such
claim or Legal Proceeding with the prior written consent of the Company
Shareholders' Representative; provided, however, that such consent shall not be
unreasonably withheld.
Parent shall give the Company Shareholders' Representative prompt notice of
the commencement of any such Legal Proceeding against Parent or the Surviving
Corporation; provided, however, that any failure on the part of Parent to so
notify the Company Shareholders'
45
Representative shall not limit any of the Indemnitees' rights to indemnification
under this Section 11 (except to the extent such failure materially prejudices
the defense of such Legal Proceeding). If Parent does not elect to proceed with
the defense of any such claim or Legal Proceeding, the Company Shareholders'
Representative may proceed with the defense of such claim or Legal Proceeding
with counsel reasonably satisfactory to Parent; provided, however, that the
Company Shareholders' Representative may not settle, adjust or compromise any
such claim or Legal Proceeding without the prior written consent of Parent
(which consent may not be unreasonably withheld).
11.7 Exercise of Remedies by Indemnitees Other Than Parent. No Indemnitee
(other than Parent or any successor thereto or assign thereof) shall be
permitted to assert any indemnification claim or exercise any other remedy under
this Agreement or under the Escrow Agreement unless Parent (or any successor
thereto or assign thereof) shall have consented to the assertion of such
indemnification claim or the exercise of such other remedy.
11.8 Determination of Damages; Mitigation. Nothing in this Agreement shall
in any way diminish any obligation on the part of Parent and/or the surviving
Corporation under applicable law to attempt to mitigate its loss. If, prior to
the Termination Date, the amount of any Damages is reduced (i) by recovery,
settlement or otherwise under or pursuant to any insurance coverage or (ii)
pursuant to any claim, recovery, settlement or otherwise against or with any
person or entity that is not an affiliate of an Indemnitee, the amount of such
reduction that is realized prior to the Termination Date, in each case less any
costs or expenses of recovery (including reasonable attorneys fees and
expenses), will be repaid by the Indemnitees to the Escrow Agent to be
controlled pursuant to the terms of the Escrow Agreement.
12. Miscellaneous Provisions
12.1 Company Shareholders' Representative. The shareholders of the Company,
by adopting and approving this Agreement, and by approving the Merger and the
transactions contemplated thereby, hereby irrevocably appoint Xxx Xxxxxxx as
their agent for purposes of Section 11 and the Escrow Agreement (the "Company
Shareholders' Representative"), and Xxx Xxxxxxx hereby accepts his appointment
as the Company Shareholders' Representative for purposes of Section 11 and the
Escrow Agreement. Parent shall be entitled to deal exclusively with the Company
Shareholders' Representative on all matters relating to Section 11 and the
Escrow Agreement, and shall be entitled to rely conclusively (without further
evidence of any kind whatsoever) on any document executed or purported to be
executed on behalf of any Company shareholder by the Company Shareholders'
Representative, and on any other action taken or purported to be taken on behalf
of any Company shareholder by the Company Shareholders' Representative, as fully
binding upon such Company shareholder. If the Company Shareholders'
Representative shall die, become disabled or otherwise be unable to fulfill his
responsibilities as agent of the Company shareholders, then Xxxxxx Xxxxx shall,
within ten days after such death or disability, appoint a successor
representative reasonably satisfactory to Parent. Any such successor shall
become the "Company Shareholders' Representative" for purposes of Section 11,
the Escrow Agreement and this Section 12.1. If for any reason there is no
Company Shareholders' Representative at any time, all references herein to the
Company Shareholders' Representative shall be deemed to refer to Xxx Xxxxxxx.
46
12.2 Further Assurances. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
12.3 Fees and Expenses. Each party to this Agreement shall bear and pay all
fees, costs and expenses (including legal fees and accounting fees) that have
been incurred or that are incurred by such party in connection with the
transactions contemplated by this Agreement, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) the
investigation and review conducted by Parent and its Representatives with
respect to the Company's business (and the furnishing of information to Parent
and its Representatives in connection with such investigation and review), (b)
the negotiation, preparation and review of this Agreement (including the
Disclosure Schedule) and all agreements, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
transactions contemplated by this Agreement, (c) the preparation and submission
of any filing or notice required to be made or given in connection with any of
the transactions contemplated by this Agreement, and the obtaining of any
Consent required to be obtained in connection with any of such transactions, and
(d) the consummation of the Merger; provided however, that, to the extent the
total amount of all such fees, costs and expenses incurred by or for the benefit
of the Company (including all such fees, costs and expenses incurred prior to
the date of this Agreement and including the amount of all special bonuses and
other amounts that may become payable to any officers of the Company or other
Persons in connection with the consummation of the transactions contemplated by
this Agreement but excluding (i) all amounts payable to Chase H&Q up to the
amount set forth in Section 2.24 hereof, and (ii) all accounting fees incurred
in connection with the transactions contemplated by this Agreement) exceeds
$300,000 in the aggregate, such fees, costs and expenses shall be paid and
satisfied by the cancellation of that number of Escrow Shares equal in value
based on the Designated Parent Stock Price (and substituted cash, if any) to the
total of such fees, costs and expenses in excess of $300,000.
12.4 Attorneys' Fees. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
47
12.5 Notices. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to Parent:
Copper Mountain Networks, Inc.
00000 Xxxxxxx Xxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxx Godward llp
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
if to the Company:
OnPREM Networks Corporation
00000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx PC
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
12.6 Time of the Essence. Time is of the essence of this Agreement.
12.7 Headings. The underlined or bolded headings contained in this
Agreement are for convenience of reference only, shall not be deemed to be a
part of this Agreement and shall not be referred to in connection with the
construction or interpretation of this Agreement.
12.8 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.
48
12.9 Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
12.10 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and assigns (if
any). The Company shall not assign this Agreement or any rights or obligations
hereunder (by operation of law or otherwise) to any Person. Parent may freely
assign any or all of its rights under this Agreement (including its rights, but
not its obligations under Section 11), in whole or in part, to any other Person
without obtaining the consent or approval of any other party hereto or of any
other Person.
12.11 Remedies Cumulative; Specific Performance. Except as otherwise
provided in this Agreement, the rights and remedies of the parties hereto shall
be cumulative (and not alternative). The parties to this Agreement agree that,
in the event of any breach or threatened breach by any party to this Agreement
of any covenant, obligation or other provision set forth in this Agreement for
the benefit of any other party to this Agreement, such other party shall be
entitled (in addition to any other remedy that may be available to it) to (a) a
decree or order of specific performance or mandamus to enforce the observance
and performance of such covenant, obligation or other provision, and (b) an
injunction restraining such breach or threatened breach.
12.12 Waiver. No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
12.13 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered prior to the Effective Time on behalf of all of the parties hereto.
12.14 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
12.15 Parties in Interest. Except for the provisions of Sections 1.5, 1.6
and 9, none of the provisions of this Agreement is intended to provide any
rights or remedies to any Person other than the parties hereto and their
respective successors and assigns (if any).
49
12.16 Entire Agreement. This Agreement and the other agreements referred to
herein set forth the entire understanding of the parties hereto relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof and thereof; provided, however, that the Mutual Non-Disclosure
Agreement executed by Parent and the Company on August 6, 1999 shall not be
superseded by this Agreement and shall remain in effect in accordance with its
terms until the earlier of (a) the Effective Time, or (b) the date on which such
Mutual Non-Disclosure Agreement is terminated in accordance with its terms.
12.17 Construction.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement
to "Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
50
In Witness Whereof, the parties hereto have caused this Agreement to be executed
and delivered as of the day and year first written above.
Copper Mountain Networks, Inc., a
Delaware corporation.
By: /s/ XXXXXXX X. XXXXXXX
______________________________
Copper Mountain Acquisition Corp.,
a Delaware corporation.
By: /s/ XXXXXXX X. XXXXXXX
______________________________
OnPrem Networks Corporation, a
California corporation.
By: /s/ XXXXXX X. XXXXXXX, XX
______________________________
[SIGNATURE PAGE TO AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION]
Exhibit A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
Acquisition Transaction. "Acquisition Transaction" shall mean any
transaction involving:
(a) any sale, license, lease, exchange, transfer, disposition or
acquisition of any portion of the business or assets of the Company or any
direct or indirect subsidiary or division of the Company, except for immaterial
amounts of the business or assets in the ordinary course of business;
(b) the issuance, grant, disposition or acquisition of (A) any capital
stock or other equity security of the Company or any direct or indirect
subsidiary of the Company (other than issuances of Common Stock pursuant to
options outstanding as of the date hereof), (B) any option, call, warrant or
right (whether or not immediately exercisable) to acquire any capital stock or
other equity security of the Company or any direct or indirect subsidiary of the
Company other than options issued or granted in the ordinary course of business
or in connection with the hiring of any new employee; or (C) any security,
instrument or obligation that is or may become convertible into or exchangeable
for any capital stock or other equity security of the Company or any direct or
indirect subsidiary of the Company; or
(c) any merger, consolidation, business combination, share exchange,
reorganization or similar transaction or series of related transactions
involving the Company or any direct or indirect subsidiary of the Company.
Agreement. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached (including the Disclosure
Schedule), as it may be amended from time to time.
Company Contract. "Company Contract" shall mean any Contract: (a) to which
the Company is a party; (b) by which the Company or any of its assets is or may
become bound or under which the Company has, or may become subject to, any
obligation; or (c) under which the Company has or may acquire any right or
interest.
Company Proprietary Asset. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Company.
Company Source Code. "Company Source Code" shall mean any source code, or
any portion, aspect or segment of any source code, comprising any Proprietary
Asset owned by or licensed to the Company.
Company Stock Option Plans. "Company Stock Option Plans" shall mean the
Company's 1998 Stock Plan.
1.
Consent. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
Contract. "Contract" shall mean any legally binding written, oral or other
agreement, contract, subcontract, lease, understanding, instrument, note,
warranty, insurance policy, benefit plan, commitment or undertaking of any
nature.
Damages. "Damages" shall include any loss, damage, injury, decline in
value, liability, claim, demand, settlement, judgment, award, fine, penalty,
Tax, fee (including reasonable attorneys' fees), charge, cost (including costs
of investigation) or expense of any nature.
Disclosure Schedule. "Disclosure Schedule" shall mean the schedule (dated
as of the date of the Agreement) delivered to Parent on behalf of the Company.
Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
Entity. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
Government Bid. "Government Bid" shall mean any quotation, bid or proposal
submitted to any Governmental Body or any proposed prime contractor or higher-
tier subcontractor of any Governmental Body.
Government Contract. "Government Contract" shall mean any prime contract,
subcontract, letter contract, purchase order or delivery order executed or
submitted to or on behalf of any Governmental Body or any prime contractor or
higher-tier subcontractor, or under which any Governmental Body or any such
prime contractor or subcontractor otherwise has or may acquire any right or
interest.
Governmental Authorization. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
2.
Governmental Body. "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
Indemnitees. "Indemnitees" shall mean the following Persons: (a) Parent;
(b) Parent's current and future affiliates (including the Surviving
Corporation); (c) the respective successors and assigns of the Persons referred
to in clauses "(a)", and "(b)" above.
Legal Proceeding. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, any court or other Governmental Body or any arbitrator or arbitration
panel.
Legal Requirement. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
Material Adverse Effect. A violation or other matter will be deemed to have
a "Material Adverse Effect" on the relevant party if such violation or other
matter has had or is reasonably likely to have a material adverse effect on the
party's business, financial condition, assets, liabilities or results of
operations (except for violations or other matters that are caused by conditions
affecting the United States economy as a whole or conditions affecting the
industry in which the party operates as a whole).
Nasdaq. "Nasdaq" shall mean the Nasdaq National Stock Market.
Parent Stock Option Plans. "Parent Stock Option Plans" means the 1996
Equity Incentive Plan and the 1999 Non Employee-Directors' Stock Option Plan.
Person. "Person" shall mean any individual, Entity or Governmental Body.
Proprietary Asset. "Proprietary Asset" shall mean any: (a) patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, invention, design, blueprint, engineering drawing,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset; or (b) right to use or exploit any of the
foregoing.
Representatives. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
3.
SEC. "SEC" shall mean the United States Securities and Exchange Commission.
Securities Act. "Securities Act" shall mean the Securities Act of 1933, as
amended.
Tax. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
Tax Return. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
4.
Exhibit B
FORM OF AMENDED AND RESTATED ARTICLES OF INCORPORATION OF THE SURVIVING
CORPORATION
5.
RESTATED ARTICLES OF INCORPORATION
OF
ONPREM NETWORKS CORPORATION
______________ and ______________ hereby certify that:
ONE: They are the duly elected and acting President and Secretary, respectively,
of OnPREM Networks Corporation, a California corporation (the "Corporation"
or the "Company").
TWO: The Articles of Incorporation of this corporation are hereby amended and
restated to read as follows:
I.
The name of this corporation is OnPREM Networks Corporation.
II.
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III.
The corporation is authorized to issue only one class of stock, to be
designated Common Stock. The total number of shares of Common Stock presently
authorized is Thirty Million (30,000,000).
IV.
The liability of the directors of this corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
(a) This corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) for breach of duty
to the corporation and its
1.
shareholders through bylaw provisions or through agreements with the agents, or
through shareholder resolutions, or otherwise, in excess of the indemnification
otherwise permitted by Section 317 of the California Corporations Code, subject
to the limits on such excess indemnification set forth in Section 204 of the
California Corporations Code.
(b) Any repeal or modification of this Article shall only be prospective
and shall not affect the rights under this Article in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
THREE: The foregoing amendment and restatement of the Articles of
Incorporation has been duly approved by the Board of Directors of this
Corporation.
FOUR: The foregoing amendment and restatement of the Articles of
Incorporation has been duly approved by the required vote of shareholders in
accordance with Section 902 of the California Corporations Code. The Corporation
has one class of stock outstanding and such class of stock is entitled to vote
with respect to the amendment herein set forth. The total number of outstanding
shares of Common Stock of the Corporation is ___________________. The number of
shares voting in favor of the amendment equaled or exceeded the vote required.
The percentage vote required was more than fifty percent (50%) of the
outstanding Common Stock voting as a class.
2.
The undersigned, _________________ and _________________, the President and
Secretary, respectively, of ONPREM NETWORKS CORPORATION, declare under penalty
of perjury under the laws of the State of California that the matters set out in
the foregoing Certificate are true of their own knowledge.
Executed at _______________, California on __________, 2000.
______________________________________
, President
______________________________________
, Secretary
3.
Exhibit C
FORM OF AMENDED AND RESTATED BYLAWS OF THE SURVIVING CORPORATION
1.
AMENDED AND RESTATED BYLAWS
OF
ONPREM NETWORKS CORPORATION
(A CALIFORNIA CORPORATION)
1.
Table Of Contents
Page
ARTICLE I OFFICES........................................................................................ 1
Section 1. Principal Office...................................................................... 1
Section 2. Other Offices......................................................................... 1
ARTICLE II CORPORATE SEAL................................................................................. 1
Section 3. Corporate Seal........................................................................ 1
ARTICLE III SHAREHOLDERS' MEETINGS AND VOTING RIGHTS....................................................... 1
Section 4. Place of Meetings..................................................................... 1
Section 5. Annual Meetings....................................................................... 1
Section 6. Postponement of Annual Meeting........................................................ 2
Section 7. Special Meetings...................................................................... 2
Section 8. Notice of Meetings.................................................................... 2
Section 9. Manner of Giving Notice............................................................... 3
Section 10. Quorum and Transaction of Business.................................................... 4
Section 11. Adjournment and Notice of Adjourned Meetings.......................................... 4
Section 12. Waiver of Notice, Consent to Meeting or Approval of Minutes........................... 4
Section 13. Action by Written Consent Without a Meeting........................................... 5
Section 14. Voting................................................................................ 6
Section 15. Persons Entitled to Vote or Consent................................................... 6
Section 16. Proxies............................................................................... 7
Section 17. Inspectors of Election................................................................ 7
ARTICLE IV BOARD OF DIRECTORS............................................................................. 8
Section 18. Powers................................................................................ 8
Section 19. Number of Directors................................................................... 8
Section 20. Election of Directors, Term, Qualifications........................................... 8
Section 21. Resignations.......................................................................... 8
Section 22. Removal............................................................................... 8
Section 23. Vacancies............................................................................. 9
Section 24. Regular Meetings...................................................................... 9
Section 25. Electronic Participation.............................................................. 9
Section 26. Special Meetings...................................................................... 10
i.
Table Of Contents
(continued)
Page
Section 27. Notice of Meetings.................................................................... 10
Section 28. Place of Meetings..................................................................... 10
Section 29. Action by Written Consent Without a Meeting........................................... 10
Section 30. Quorum and Transaction of Business.................................................... 10
Section 31. Adjournment........................................................................... 11
Section 32. Organization.......................................................................... 11
Section 33. Compensation.......................................................................... 11
Section 34. Committees............................................................................ 11
ARTICLE V OFFICERS....................................................................................... 12
Section 35. Officers.............................................................................. 12
Section 36. Appointment........................................................................... 12
Section 37. Inability to Act...................................................................... 12
Section 38. Resignations.......................................................................... 12
Section 39. Removal............................................................................... 12
Section 40. Vacancies............................................................................. 13
Section 41. Chairman of the Board................................................................. 13
Section 42. President............................................................................. 13
Section 43. Vice Presidents....................................................................... 13
Section 44. Secretary............................................................................. 13
Section 45. Chief Financial Officer............................................................... 14
Section 46. Compensation.......................................................................... 15
ARTICLE VI CONTRACTS, LOANS, BANK ACCOUNTS, CHECKS AND DRAFTS............................................. 15
Section 47. Execution of Contracts and Other Instruments.......................................... 15
Section 48. Loans................................................................................. 15
Section 49. Bank Accounts......................................................................... 15
Section 50. Checks, Drafts, Etc................................................................... 16
ARTICLE VII CERTIFICATES FOR SHARES AND THEIR TRANSFER..................................................... 16
Section 51. Certificate for Shares................................................................ 16
Section 52. Transfer on the Books................................................................. 16
ii.
Table of Contents
(Continued)
Page
Section 53. Lost, Destroyed and Stolen Certificates............................................... 16
Section 54. Issuance, Transfer and Registration of Shares......................................... 17
ARTICLE VIII INSPECTION OF CORPORATE RECORDS................................................................ 17
Section 55. Inspection by Directors............................................................... 17
Section 56. Inspection by Shareholders............................................................ 17
(a) Inspection of Corporate Records....................................................... 17
(b) Inspection of Bylaws.................................................................. 18
Section 57. Written Form.......................................................................... 18
ARTICLE IX MISCELLANEOUS.................................................................................. 18
Section 58. Fiscal Year........................................................................... 18
Section 59. Annual Report......................................................................... 18
Section 60. Record Date........................................................................... 19
Section 61. Bylaw Amendments...................................................................... 19
Section 62. Construction and Definition........................................................... 20
ARTICLE X INDEMNIFICATION................................................................................ 20
Section 63. Indemnification of Directors, Officers, Employees And Other Agents.................... 20
(a) Directors and Executive Officers...................................................... 20
(b) Other Officers, Employees and Other Agents............................................ 20
(c) Determination by the Corporation...................................................... 20
(d) Good Faith............................................................................ 21
(e) Expenses.............................................................................. 21
(f) Enforcement........................................................................... 21
(g) Non-Exclusivity of Rights............................................................. 22
(h) Survival of Rights.................................................................... 22
(i) Insurance............................................................................. 22
(j) Amendments............................................................................ 22
(k) Employee Benefit Plans................................................................ 22
(l) Saving Clause......................................................................... 23
(m) Certain Definitions................................................................... 23
iii.
AMENDED AND RESTATED BYLAWS
OF
ONPREM NETWORKS CORPORATION
(A CALIFORNIA CORPORATION)
ARTICLE I
OFFICES
SECTION 1. Principal Office. The principal executive office of the
corporation shall be located at such place as the Board of Directors may from
time to time authorize. If the principal executive office is located outside
this state, and the corporation has one or more business offices in this state,
the Board of Directors shall fix and designate a principal business office in
the State of California.
SECTION 2. Other Offices. Additional offices of the corporation shall be
located at such place or places, within or outside the State of California, as
the Board of Directors may from time to time authorize.
ARTICLE II
CORPORATE SEAL
SECTION 3. Corporate Seal. If the Board of Directors adopts a corporate
seal such seal shall have inscribed thereon the name of the corporation and the
state and date of its incorporation. If and when a seal is adopted by the Board
of Directors, such seal may be engraved, lithographed, printed, stamped,
impressed upon, or affixed to any contract, conveyance, certificate for shares,
or other instrument executed by the corporation.
ARTICLE III
SHAREHOLDERS' MEETINGS AND VOTING RIGHTS
SECTION 4. Place of Meetings. Meetings of shareholders shall be held at
the principal executive office of the corporation, or at any other place, within
or outside the State of California, which may be fixed either by the Board of
Directors or by the written consent of all persons entitled to vote at such
meeting, given either before or after the meeting and filed with the Secretary
of the Corporation.
SECTION 5. Annual Meetings. The annual meeting of the shareholders of the
corporation shall be held on any date and time which may from time to time be
designated by the Board of Directors. At such annual meeting, directors shall
be elected and any other business may be transacted which may properly come
before the meeting.
1.
Section 6. Postponement of Annual Meeting. The Board of Directors and the
President shall each have authority to hold at an earlier date and/or time, or
to postpone to a later date and/or time, the annual meeting of shareholders.
Section 7. Special Meetings.
(a) Special meetings of the shareholders, for any purpose or
purposes, may be called by the Board of Directors, the Chairman of the Board of
Directors, the President, or the holders of shares entitled to cast not less
than ten percent (10%) of the votes at the meeting.
(b) Upon written request to the Chairman of the Board of Directors,
the President, any vice president or the Secretary of the corporation by any
person or persons (other than the Board of Directors) entitled to call a special
meeting of the shareholders, such officer forthwith shall cause notice to be
given to the shareholders entitled to vote, that a meeting will be held at a
time requested by the person or persons calling the meeting, such time to be not
less than thirty-five (35) nor more than sixty (60) days after receipt of such
request. If such notice is not given within twenty (20) days after receipt of
such request, the person or persons calling the meeting may give notice thereof
in the manner provided by law or in these bylaws. Nothing contained in this
Section 7 shall be construed as limiting, fixing or affecting the time or date
when a meeting of shareholders called by action of the Board of Directors may be
held.
Section 8. Notice of Meetings. Except as otherwise may be required by law
and subject to subsection 7(b) above, written notice of each meeting of
shareholders shall be given to each shareholder entitled to vote at that meeting
(see Section 15 below), by the Secretary, assistant secretary or other person
charged with that duty, not less than ten (10) (or, if sent by third class mail,
thirty (30)) nor more than sixty (60) days before such meeting.
Notice of any meeting of shareholders shall state the date, place and hour
of the meeting and,
(a) in the case of a special meeting, the general nature of the
business to be transacted, and no other business may be transacted at such
meeting;
(b) in the case of an annual meeting, the general nature of matters
which the Board of Directors, at the time the notice is given, intends to
present for action by the shareholders;
(c) in the case of any meeting at which directors are to be elected,
the names of the nominees intended at the time of the notice to be presented by
management for election; and
(d) in the case of any meeting, if action is to be taken on any of
the following proposals, the general nature of such proposal:
2.
(1) a proposal to approve a transaction within the provisions of
California Corporations Code, Section 310 (relating to certain transactions in
which a director has a direct or indirect financial interest);
(2) a proposal to approve a transaction within the provisions of
California Corporations Code, Section 902 (relating to amending the Articles of
Incorporation of the corporation);
(3) a proposal to approve a transaction within the provisions of
California Corporations Code, Sections 181 and 1201 (relating to
reorganization);
(4) a proposal to approve a transaction within the provisions of
California Corporations Code, Section 1900 (winding up and dissolution);
(5) a proposal to approve a plan of distribution within the
provisions of California Corporations Code, Section 2007 (relating to certain
plans providing for distribution not in accordance with the liquidation rights
of preferred shares, if any).
At a special meeting, notice of which has been given in accordance with
this Section, action may not be taken with respect to business, the general
nature of which has not been stated in such notice. At an annual meeting,
action may be taken with respect to business stated in the notice of such
meeting, given in accordance with this Section, and, subject to subsection 8(d)
above, with respect to any other business as may properly come before the
meeting.
Section 9. Manner of Giving Notice. Notice of any meeting of shareholders
shall be given either personally or by first-class mail, or, if the corporation
has outstanding shares held of record by 500 or more persons (determined as
provided in California Corporations Code Section 605) on the record date for
such meeting, third-class mail, or telegraphic or other written communication,
addressed to the shareholder at the address of that shareholder appearing on the
books of the corporation or given by the shareholder to the corporation for the
purpose of notice. If no such address appears on the corporation's books or is
given, notice shall be deemed to have been given if sent to that shareholder by
first-class mail or telegraphic or other written communication to the
corporation's principal executive office, or if published at least once in a
newspaper of general circulation in the county where that office is located.
Notice shall be deemed to have been given at the time when delivered personally
or deposited in the mail or sent by telegram or other means of written
communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the corporation is returned to the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address, all
future notices shall be deemed to have been duly given without further mailing
if these shall be available to the shareholder on written demand by the
shareholder at the principal executive office of the corporation for a period of
one year from the date of the giving of the notice.
An affidavit of mailing of any notice or report in accordance with the
provisions of this Section 9, executed by the Secretary, Assistant Secretary or
any transfer agent, shall be prima facie evidence of the giving of the notice.
3.
Section 10. Quorum and Transaction of Business.
(a) At any meeting of the shareholders, a majority of the shares
entitled to vote, represented in person or by proxy, shall constitute a quorum.
If a quorum is present, the affirmative vote of the majority of shares
represented and voting at the meeting (which shares voting affirmatively also
constitute at least a majority of the required quorum) shall be the act of the
shareholders, unless the vote of a greater number or voting by classes is
required by law or by the Articles of Incorporation, and except as provided in
subsection (b) below.
(b) The shareholders present at a duly called or held meeting of the
shareholders at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum, provided that any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
(c) In the absence of a quorum, no business other than adjournment
may be transacted, except as described in subsection (b) above.
Section 11. Adjournment and Notice of Adjourned Meetings. Any meeting of
shareholders may be adjourned from time to time, whether or not a quorum is
present, by the affirmative vote of a majority of shares represented at such
meeting either in person or by proxy and entitled to vote at such meeting.
In the event any meeting is adjourned, it shall not be necessary to give
notice of the time and place of such adjourned meeting pursuant to Sections 8
and 9 of these bylaws; provided that if any of the following three events occur,
such notice must be given:
(a) announcement of the adjourned meeting's time and place is not
made at the original meeting which it continues or
(b) such meeting is adjourned for more than forty-five (45) days from
the date set for the original meeting or
(c) a new record date is fixed for the adjourned meeting.
At the adjourned meeting, the corporation may transact any business which
might have been transacted at the original meeting.
Section 12. Waiver of Notice, Consent to Meeting or Approval of Minutes.
(a) Subject to subsection (b) of this Section, the transactions of
any meeting of shareholders, however called and noticed, and wherever held,
shall be as valid as though made at a meeting duly held after regular call and
notice, if a quorum is present either in person or by proxy, and if, either
before or after the meeting, each of the persons entitled to vote but not
present in person or by proxy signs a written waiver of notice or a consent to
holding of the meeting or an approval of the minutes thereof.
4.
(b) A waiver of notice, consent to the holding of a meeting or
approval of the minutes thereof need not specify the business to be transacted
at nor the purpose of the meeting; provided that in the case of proposals
described in subsection (d) of Section 8 of these bylaws, the general nature of
such proposals must be described in any such waiver of notice and such proposals
can only be approved by waiver of notice, not by consent to holding of the
meeting or approval of the minutes.
(c) All waivers, consents and approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.
(d) A person's attendance at a meeting shall constitute waiver of
notice of and presence at such meeting, except when such person objects at the
beginning of the meeting to transaction of any business because the meeting is
not lawfully called or convened and except that attendance at a meeting is not a
waiver of any right to object to the consideration of matters which are required
by law or these bylaws to be in such notice (including those matters described
in subsection (d) of Section 8 of these bylaws), but are not so included if such
person expressly objects to consideration of such matter or matters at any time
during the meeting.
Section 13. Action by Written Consent Without a Meeting. Any action which
may be taken at any meeting of shareholders may be taken without a meeting and
without prior notice if written consents setting forth the action so taken are
signed by the holders of the outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Directors may not be elected by written consent except by unanimous written
consent of all shares entitled to vote for the election of directors; provided
that any vacancy on the Board of Directors (other than a vacancy created by
removal) which has not been filled by the board of directors may be filled by
the written consent of a majority of outstanding shares entitled to vote for the
election of directors.
Any written consent may be revoked pursuant to California Corporations Code
Section 603(c) prior to the time that written consents of the number of shares
required to authorize the proposed action have been filed with the Secretary.
Such revocation must be in writing and will be effective upon its receipt by the
Secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the Secretary shall give prompt
notice of any corporate action approved by the shareholders without a meeting to
those shareholders entitled to vote on such matters who have not consented
thereto in writing. This notice shall be given in the manner specified in
Section 9 of these bylaws. In the case of approval of (i) a transaction within
the provisions of California Corporations Code, Section 310 (relating to certain
transactions in which a director has an interest), (ii) a transaction within the
provisions of California Corporations Code, Section 317 (relating to
indemnification of agents of the corporation), (iii) a transaction within the
provisions of California Corporations Code, Sections 181 and 1201 (relating to
reorganization), and (iv) a plan of distribution within the provisions of
California Corporations Code, Section 2007 (relating to certain plans providing
for distribution not in accordance with the liquidation rights of preferred
shares, if any), the
5.
notice shall be given at least ten (10) days before the consummation of any
action authorized by that approval.
Section 14. Voting. The shareholders entitled to vote at any meeting of
shareholders shall be determined in accordance with the provisions of Section 15
of these bylaws, subject to the provisions of Sections 702 through 704 of the
California Corporations Code (relating to voting shares held by a fiduciary, in
the name of a corporation, or in joint ownership). Voting at any meeting of
shareholders need not be by ballot; provided, however, that elections for
directors must be by ballot if balloting is demanded by a shareholder at the
meeting and before the voting begins.
Every person entitled to vote at an election for directors may cumulate the
votes to which such person is entitled, i.e., such person may cast a total
number of votes equal to the number of directors to be elected multiplied by the
number of votes to which such person's shares are entitled, and may cast said
total number of votes for one or more candidates in such proportions as such
person thinks fit; provided, however, no shareholder shall be entitled to so
cumulate such shareholder's votes unless the candidates for which such
shareholder is voting have been placed in nomination prior to the voting and a
shareholder has given notice at the meeting, prior to the vote, of an intention
to cumulate votes. In any election of directors, the candidates receiving the
highest number of votes, up to the number of directors to be elected, are
elected.
Except as may be otherwise provided in the Articles of Incorporation or by
law, and subject to the foregoing provisions regarding the cumulation of votes,
each shareholder shall be entitled to one vote for each share held.
Any shareholder may vote part of such shareholder's shares in favor of a
proposal and refrain from voting the remaining shares or vote them against the
proposal, other than elections to office, but, if the shareholder fails to
specify the number of shares such shareholder is voting affirmatively, it will
be conclusively presumed that the shareholder's approving vote is with respect
to all shares such shareholder is entitled to vote.
No shareholder approval, other than unanimous approval of those entitled to
vote, will be valid as to proposals described in subsection 8(d) of these bylaws
unless the general nature of such business was stated in the notice of meeting
or in any written waiver of notice.
Section 15. Persons Entitled to Vote or Consent. The Board of Directors may
fix a record date pursuant to Section 60 of these bylaws to determine which
shareholders are entitled to notice of and to vote at a meeting or consent to
corporate actions, as provided in Sections 13 and 14 of these bylaws. Only
persons in whose name shares otherwise entitled to vote stand on the stock
records of the corporation on such date shall be entitled to vote or consent.
If no record date is fixed:
(a) The record date for determining shareholders entitled to notice
of or to vote at a meeting of shareholders shall be at the close of business on
the business day next preceding the day notice is given or, if notice is waived,
at the close of business on the business day next preceding the day on which the
meeting is held;
6.
(b) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors has been taken, shall be the day on which the first
written consent is given;
(c) The record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto, or the sixtieth (60th) day
prior to the date of such other action, whichever is later.
A determination of shareholders of record entitled to notice of or to vote
at a meeting of shareholders shall apply to any adjournment of the meeting
unless the Board of Directors fixes a new record date for the adjourned meeting;
provided, however, that the Board of Directors shall fix a new record date if
the meeting is adjourned for more than forty-five (45) days from the date set
for the original meeting.
Shares of the corporation held by its subsidiary or subsidiaries (as
defined in California Corporations Code, Section 189(b)) are not entitled to
vote in any matter.
Section 16. Proxies. Every person entitled to vote or execute consents may
do so either in person or by one or more agents authorized to act by a written
proxy executed by the person or such person's duly authorized agent and filed
with the Secretary of the corporation; provided that no such proxy shall be
valid after the expiration of eleven (11) months from the date of its execution
unless otherwise provided in the proxy. The manner of execution, suspension,
revocation, exercise and effect of proxies is governed by law.
Section 17. Inspectors of Election. Before any meeting of shareholders, the
Board of Directors may appoint any persons, other than nominees for office, to
act as inspectors of election at the meeting or its adjournment. If no
inspectors of election are so appointed, the chairman of the meeting may, and on
the request of any shareholder or a shareholder's proxy shall, appoint
inspectors of election at the meeting. The number of inspectors shall be either
one (1) or three (3). If inspectors are appointed at a meeting on the request of
one or more shareholders or proxies, the majority of shares represented in
person or proxy shall determine whether one (1) or three (3) inspectors are to
be appointed. If any person appointed as inspector fails to appear or fails or
refuses to act, the chairman of the meeting may, and upon the request of any
shareholder or a shareholder's proxy shall, appoint a person to fill that
vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting power
of each, the shares represented at the meeting, the existence of a quorum, and
the authenticity, validity, and effect of proxies;
(b) Receive votes, ballots, or consents;
(c) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
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(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
ARTICLE IV
BOARD OF DIRECTORS
Section 18. Powers. Subject to the provisions of law or any limitations in
the Articles of Incorporation or these bylaws, as to action required to be
approved by the shareholders or by the outstanding shares, the business and
affairs of the corporation shall be managed and all corporate powers shall be
exercised, by or under the direction of the Board of Directors. The Board of
Directors may delegate the management of the day-to-day operation of the
business of the corporation to a management company or other person, provided
that the business and affairs of the corporation shall be managed and all
corporate powers shall be exercised under the ultimate direction of the Board of
Directors.
Section 19. Number of Directors.. The authorized number of directors of
the corporation shall be two (2), until changed by a duly adopted amendment to
these bylaws approved by the affirmative vote of a majority of the outstanding
shares entitled to vote; provided, an amendment reducing the number of directors
to less than five (5), cannot be adopted if votes cast against its adoption at a
meeting or shares not consenting to it in the case of action by written consent
are equal to more than 16-2/3 percent of the outstanding shares entitled to
vote. No reduction of the authorized number of directors shall remove any
director prior to the expiration of such director's term of office.
Section 20. Election of Directors, Term, Qualifications. The directors
shall be elected at each annual meeting of shareholders to hold office until the
next annual meeting. Each director, including a director elected or appointed to
fill a vacancy, shall hold office either until the expiration of the term for
which elected or appointed and until a successor has been elected and qualified,
or until his death, resignation or removal. Directors need not be shareholders
of the corporation.
Section 21. Resignations. Any director of the corporation may resign
effective upon giving written notice to the Chairman of the Board, the
President, the Secretary or the Board of Directors of the corporation, unless
the notice specifies a later time for the effectiveness of such resignation. If
the resignation specifies effectiveness at a future time, a successor may be
elected pursuant to Section 23 of these bylaws to take office on the date that
the resignation becomes effective.
Section 22. Removal. The Board of Directors may declare vacant the office
of a director who has been declared of unsound mind by an order of court or who
has been convicted of a felony.
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The entire Board of Directors or any individual director may be removed
from office without cause by the affirmative vote of a majority of the
outstanding shares entitled to vote on such removal; provided, however, that
unless the entire Board is removed, no individual director may be removed when
the votes cast against such director's removal, or not consenting in writing to
such removal, would be sufficient to elect that director if voted cumulatively
at an election at which the same total number of votes cast were cast (or, if
such action is taken by written consent, all shares entitled to vote were voted)
and the entire number of directors authorized at the time of such director's
most recent election were then being elected.
Section 23. Vacancies. A vacancy or vacancies on the Board of Directors
shall be deemed to exist in case of the death, resignation or removal of any
director, or upon increase in the authorized number of directors or if
shareholders fail to elect the full authorized number of directors at an annual
meeting of shareholders or if, for whatever reason, there are fewer directors on
the Board of Directors, than the full number authorized. Such vacancy or
vacancies, other than a vacancy created by the removal of a director, may be
filled by a majority of the remaining directors, though less than a quorum, or
by a sole remaining director. A vacancy created by the removal of a director may
be filled only by the affirmative vote of a majority of the shares represented
and voting at a duly held meeting at which a quorum is present (which shares
voting affirmatively also constitute at least a majority of the required quorum)
or by the written consent of shareholders pursuant to Section 13 hereinabove.
The shareholders may elect a director at any time to fill any vacancy not filled
by the directors. Any such election by written consent, other than to fill a
vacancy created by removal, requires the consent of a majority of the
outstanding shares entitled to vote. Any such election by written consent to
fill a vacancy created by removal requires the consent of all of the outstanding
shares entitled to vote.
If, after the filling of any vacancy by the directors, the directors then
in office who have been elected by the shareholders constitute less than a
majority of the directors then in office, any holder or holders of an aggregate
of five percent (5%) or more of the shares outstanding at that time and having
the right to vote for such directors may call a special meeting of shareholders
to be held to elect the entire Board of Directors. The term of office of any
director shall terminate upon such election of a successor.
Section 24. Regular Meetings. Immediately after each annual meeting of
shareholders, and at such place fixed by the Board of Directors, or if no such
place is fixed at the place of the annual meeting, the Board of Directors shall
hold a regular meeting for the purposes of organization, the appointment of
officers and the transaction of other business. Other regular meetings of the
Board of Directors shall be held at such times, places and dates as fixed in
these bylaws or by the Board of Directors; provided, however, that if the date
for such a meeting falls on a legal holiday, then the meeting shall be held at
the same time on the next succeeding full business day. Regular meetings of the
Board of Directors held pursuant to this Section 24 may be held without notice.
Section 25. Electronic Participation. So long as permitted by statute,
directors may participate in a meeting through any means of communication,
including conference telephone, electronic video screen communication, or other
communications equipment. Participating in a meeting pursuant to this section
constitutes presence in person at that meeting if each participating director is
provided the means to communicate with all of the other directors
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concurrently and (a) the meeting is held by conference telephone or video
conferencing or other communications mode enabling participants to determine,
through voice or image recognition, that a participant is or is not a director
entitled to participate in the meeting or (b) another communications device
(such as a computer modem) is used in conjunction with another method
(determined in the discretion of the chairperson of the meeting) enabling
participants to determine that a participant is or is not a director entitled to
participate in the meeting. Such verification method may include use of
passwords or similar codes for gaining access to the meeting or encryption and
authentication technology approved in the discretion of the chairperson.
Section 26. Special Meetings. Special meetings of the Board of Directors
for any purpose may be called by the Chairman of the Board or the President or
any vice president or the Secretary of the corporation or any two (2) directors.
Section 27. Notice of Meetings. Notice of the date, time and place of all
meetings of the Board of Directors, other than regular meetings held pursuant to
Section 24 above shall be delivered personally, orally or in writing, or by
telephone, including a voice messaging system or other system or technology
designed to record and communication messages, telegraph, facsimile, electronic
mail or other electronic means, to each director, at least forty-eight (48)
hours before the meeting, or sent in writing to each director by first-class
mail, charges prepaid, at least four (4) days before the meeting. Such notice
may be given by the Secretary of the corporation or by the person or persons who
called a meeting. Such notice need not specify the purpose of the meeting.
Notice of any meeting of the Board of Directors need not be given to any
director who signs a waiver of notice of such meeting, or a consent to holding
the meeting or an approval of the minutes thereof, either before or after the
meeting, or who attends the meeting without protesting prior thereto or at its
commencement such director's lack of notice. All such waivers, consents and
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 28. Place of Meetings. Meetings of the Board of Directors may be
held at any place within or without the state which has been designated in the
notice of the meeting or, if not stated in the notice or there is no notice,
designated in the bylaws or by resolution of the Board of Directors.
Section 29. Action by Written Consent Without a Meeting. Any action
required or permitted to be taken by the Board of Directors may be taken without
a meeting, if all members of the Board of Directors individually or collectively
consent in writing to such action. Such written consent or consents shall be
filed with the minutes of the proceedings of the Board of Directors. Such action
by written consent shall have the same force and effect as a unanimous vote of
such directors.
Section 30. Quorum and Transaction of Business. A majority of the
authorized number of directors shall constitute a quorum for the transaction of
business. Every act or decision done or made by a majority of the directors
present at a meeting duly held at which a quorum is present shall be the act of
the Board of Directors, unless the law, the Articles of Incorporation or these
bylaws specifically require a greater number. A meeting at which a quorum is
initially present may continue to transact business, notwithstanding withdrawal
of
10.
directors, if any action taken is approved by at least a majority of the number
of directors constituting a quorum for such meeting. In the absence of a quorum
at any meeting of the Board of Directors, a majority of the directors present
may adjourn the meeting, as provided in Section 31 of these bylaws.
Section 31. Adjournment. Any meeting of the Board of Directors, whether or
not a quorum is present, may be adjourned to another time and place by the
affirmative vote of a majority of the directors present. If the meeting is
adjourned for more than twenty-four (24) hours, notice of such adjournment to
another time or place shall be given prior to the time of the adjourned meeting
to the directors who were not present at the time of the adjournment.
Section 32. Organization. The Chairman of the Board shall preside at every
meeting of the Board of Directors, if present. If there is no Chairman of the
Board or if the Chairman is not present, a Chairman chosen by a majority of the
directors present shall act as chairman. The Secretary of the corporation or, in
the absence of the Secretary, any person appointed by the Chairman shall act as
secretary of the meeting.
Section 33. Compensation. Directors and members of committees may receive
such compensation, if any, for their services, and such reimbursement for
expenses, as may be fixed or determined by the Board of Directors.
Section 34. Committees. The Board of Directors may, by resolution adopted
by a majority of the authorized number of directors, designate one or more
committees, each consisting of two (2) or more directors, to serve at the
pleasure of the Board of Directors. The Board of Directors, by a vote of the
majority of authorized directors, may designate one or more directors as
alternate members of any committee, to replace any absent member at any meeting
of such committee. Any such committee shall have authority to act in the manner
and to the extent provided in the resolution of the Board of Directors, and may
have all the authority of the Board of Directors in the management of the
business and affairs of the corporation, except with respect to:
(a) the approval of any action for which shareholders' approval or
approval of the outstanding shares also is required by the California
Corporations Code;
(b) the filling of vacancies on the Board of Directors or any of its
committees;
(c) the fixing of compensation of directors for serving on the Board
of Directors or any of its committees;
(d) the adoption, amendment or repeal of these bylaws;
(e) the amendment or repeal of any resolution of the Board of
Directors which by its express terms is not so amendable or repealable;
(f) a distribution to shareholders, except at a rate or in a periodic
amount or within a price range determined by the Board of Directors; or
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(g) the appointment of other committees of the Board of Directors or
the members thereof.
Any committee may from time to time provide by resolution for regular
meetings at specified times and places. If the date of such a meeting falls on a
legal holiday, then the meeting shall be held at the same time on the next
succeeding full business day. No notice of such a meeting need be given. Such
regular meetings need not be held if the committee shall so determine at any
time before or after the time when such meeting would otherwise have taken
place. Special meetings may be called at any time in the same manner and by the
same persons as stated in Sections 26 and 27 of these bylaws for meetings of the
Board of Directors. The provisions of Sections 25, 28, 29, 30, 31 and 32 of
these bylaws shall apply to committees, committee members and committee meetings
as if the words "committee" and "committee member" were substituted for the word
"Board of Directors", and "director", respectively, throughout such sections.
ARTICLE V
OFFICERS
Section 35. Officers. The corporation shall have a Chairman of the Board
or a President or both, a Secretary, a Chief Financial Officer and such other
officers with such titles and duties as the Board of Directors may determine.
Any two or more offices may be held by the same person.
Section 36. Appointment. All officers shall be chosen and appointed by the
Board of Directors; provided, however, the Board of Directors may empower the
chief executive officer of the corporation to appoint such officers, other than
Chairman of the Board, President, Secretary or Chief Financial Officer, as the
business of the corporation may require. All officers shall serve at the
pleasure of the Board of Directors, subject to the rights, if any, of an officer
under a contract of employment.
Section 37. Inability to Act. In the case of absence or inability to act
of any officer of the corporation or of any person authorized by these bylaws to
act in such officer's place, the Board of Directors may from time to time
delegate the powers or duties of such officer to any other officer, or any
director or other person whom it may select, for such period of time as the
Board of Directors deems necessary.
Section 38. Resignations. Any officer may resign at any time upon written
notice to the corporation, without prejudice to the rights, if any, of the
corporation under any contract to which such officer is a party. Such
resignation shall be effective upon its receipt by the Chairman of the Board,
the President, the Secretary or the Board of Directors, unless a different time
is specified in the notice for effectiveness of such resignation. The
acceptance of any such resignation shall not be necessary to make it effective
unless otherwise specified in such notice.
Section 39. Removal. Any officer may be removed from office at any time,
with or without cause, but subject to the rights, if any, of such officer under
any contract of employment, by the Board of Directors or by any committee to
whom such power of removal has been duly
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delegated, or, with regard to any officer who has been appointed by the chief
executive officer pursuant to Section 36 above, by the chief executive officer
or any other officer upon whom such power of removal may be conferred by the
Board of Directors.
Section 40. Vacancies. A vacancy occurring in any office for any cause may
be filled by the Board of Directors, in the manner prescribed by this Article of
the bylaws for initial appointment to such office.
Section 41. Chairman of the Board. The Chairman of the Board, if there be
such an officer, shall, if present, preside at all meetings of the Board of
Directors and shall exercise and perform such other powers and duties as may be
assigned from time to time by the Board of Directors or prescribed by these
bylaws. If no President is appointed, the Chairman of the Board is the general
manager and chief executive officer of the corporation, and shall exercise all
powers of the President described in Section 42 below.
Section 42. President. Subject to such powers, if any, as may be given by
the Board of Directors to the Chairman of the Board, if there be such an
officer, the President shall be the general manager and chief executive officer
of the corporation and shall have general supervision, direction, and control
over the business and affairs of the corporation, subject to the control of the
Board of Directors. The President may sign and execute, in the name of the
corporation, any instrument authorized by the Board of Directors, except when
the signing and execution thereof shall have been expressly delegated by the
Board of Directors or by these bylaws to some other officer or agent of the
corporation. The President shall have all the general powers and duties of
management usually vested in the president of a corporation, and shall have such
other powers and duties as may be prescribed from time to time by the Board of
Directors or these bylaws. The President shall have discretion to prescribe the
duties of other officers and employees of the corporation in a manner not
inconsistent with the provisions of these bylaws and the directions of the Board
of Directors.
Section 43. Vice Presidents. In the absence or disability of the
President, in the event of a vacancy in the office of President, or in the event
such officer refuses to act, the Vice President shall perform all the duties of
the President and, when so acting, shall have all the powers of, and be subject
to all the restrictions on, the President. If at any such time the corporation
has more than one vice president, the duties and powers of the President shall
pass to each vice president in order of such vice president's rank as fixed by
the Board of Directors or, if the vice presidents are not so ranked, to the vice
president designated by the Board of Directors. The vice presidents shall have
such other powers and perform such other duties as may be prescribed for them
from time to time by the Board of Directors or pursuant to Sections 35 and 36 of
these bylaws or otherwise pursuant to these bylaws.
Section 44. Secretary. The Secretary shall:
(a) Keep, or cause to be kept, minutes of all meetings of the
corporation's shareholders, Board of Directors, and committees of the Board of
Directors, if any. Such minutes shall be kept in written form.
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(b) Keep, or cause to be kept, at the principal executive office of
the corporation, or at the office of its transfer agent or registrar, if any, a
record of the corporation's shareholders, showing the names and addresses of all
shareholders, and the number and classes of shares held by each. Such records
shall be kept in written form or any other form capable of being converted into
written form.
(c) Keep, or cause to be kept, at the principal executive office of
the corporation, or if the principal executive office is not in California, at
its principal business office in California, an original or copy of these
bylaws, as amended.
(d) Give, or cause to be given, notice of all meetings of
shareholders, directors and committees of the Board of Directors, as required by
law or by these bylaws.
(e) Keep the seal of the corporation, if any, in safe custody.
(f) Exercise such powers and perform such duties as are usually
vested in the office of secretary of a corporation, and exercise such other
powers and perform such other duties as may be prescribed from time to time by
the Board of Directors or these bylaws.
If any assistant secretaries are appointed, the assistant secretary, or one
of the assistant secretaries in the order of their rank as fixed by the Board of
Directors or, if they are not so ranked, the assistant secretary designated by
the Board of Directors, in the absence or disability of the Secretary or in the
event of such officer's refusal to act or if a vacancy exists in the office of
Secretary, shall perform the duties and exercise the powers of the Secretary and
discharge such duties as may be assigned from time to time pursuant to these
bylaws or by the Board of Directors.
Section 45. Chief Financial Officer. The Chief Financial Officer shall:
(a) Be responsible for all functions and duties of the treasurer of
the corporation.
(b) Keep and maintain, or cause to be kept and maintained, adequate
and correct books and records of account for the corporation.
(c) Receive or be responsible for receipt of all monies due and
payable to the corporation from any source whatsoever; have charge and custody
of, and be responsible for, all monies and other valuables of the corporation
and be responsible for deposit of all such monies in the name and to the credit
of the corporation with such depositaries as may be designated by the Board of
Directors or a duly appointed and authorized committee of the Board of
Directors.
(d) Disburse or be responsible for the disbursement of the funds of
the corporation as may be ordered by the Board of Directors or a duly appointed
and authorized committee of the Board of Directors.
(e) Render to the chief executive officer and the Board of Directors
a statement of the financial condition of the corporation if called upon to do
so.
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(f) Exercise such powers and perform such duties as are usually
vested in the office of chief financial officer of a corporation, and exercise
such other powers and perform such other duties as may be prescribed by the
Board of Directors or these bylaws.
If any assistant financial officer is appointed, the assistant financial
officer, or one of the assistant financial officers, if there are more than one,
in the order of their rank as fixed by the Board of Directors or, if they are
not so ranked, the assistant financial officer designated by the Board of
Directors, shall, in the absence or disability of the Chief Financial Officer or
in the event of such officer's refusal to act, perform the duties and exercise
the powers of the Chief Financial Officer, and shall have such powers and
discharge such duties as may be assigned from time to time pursuant to these
bylaws or by the Board of Directors.
Section 46. Compensation. The compensation of the officers shall be fixed
from time to time by the Board of Directors, and no officer shall be prevented
from receiving such compensation by reason of the fact that such officer is also
a director of the corporation.
ARTICLE VI
CONTRACTS, LOANS, BANK ACCOUNTS, CHECKS AND DRAFTS
Section 47. Execution of Contracts and Other Instruments. Except as these
bylaws may otherwise provide, the Board of Directors or its duly appointed and
authorized committee may authorize any officer or officers, agent or agents, to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and such authorization may be general or confined
to specific instances. Except as so authorized or otherwise expressly provided
in these bylaws, no officer, agent, or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or in any amount.
Section 48. Loans. No loans shall be contracted on behalf of the
corporation and no negotiable paper shall be issued in its name, unless and
except as authorized by the Board of Directors or its duly appointed and
authorized committee. When so authorized by the Board of Directors or such
committee, any officer or agent of the corporation may effect loans and advances
at any time for the corporation from any bank, trust company, or other
institution, or from any firm, corporation or individual, and for such loans and
advances may make, execute and deliver promissory notes, bonds or other
evidences of indebtedness of the corporation and, when authorized as aforesaid,
may mortgage, pledge, hypothecate or transfer any and all stocks, securities and
other property, real or personal, at any time held by the corporation, and to
that end endorse, assign and deliver the same as security for the payment of any
and all loans, advances, indebtedness, and liabilities of the corporation. Such
authorization may be general or confined to specific instances.
Section 49. Bank Accounts. The Board of Directors or its duly appointed and
authorized committee from time to time may authorize the opening and keeping of
general and/or special bank accounts with such banks, trust companies, or other
depositaries as may be selected by the Board of Directors, its duly appointed
and authorized committee or by any officer
15.
or officers, agent or agents, of the corporation to whom such power may be
delegated from time to time by the Board of Directors. The Board of Directors or
its duly appointed and authorized committee may make such rules and regulations
with respect to said bank accounts, not inconsistent with the provisions of
these bylaws, as are deemed advisable.
Section 50. Checks, Drafts, Etc. All checks, drafts or other orders for
the payment of money, notes, acceptances or other evidences of indebtedness
issued in the name of the corporation shall be signed by such officer or
officers, agent or agents, of the corporation, and in such manner, as shall be
determined from time to time by resolution of the Board of Directors or its duly
appointed and authorized committee. Endorsements for deposit to the credit of
the corporation in any of its duly authorized depositaries may be made, without
counter-signature, by the President or any vice president or the Chief Financial
Officer or any assistant financial officer or by any other officer or agent of
the corporation to whom the Board of Directors or its duly appointed and
authorized committee, by resolution, shall have delegated such power or by hand-
stamped impression in the name of the corporation.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 51. Certificate for Shares. Every holder of shares in the
corporation shall be entitled to have a certificate signed in the name of the
corporation by the Chairman or Vice Chairman of the Board or the President or a
Vice President and by the Chief Financial Officer or an assistant financial
officer or by the Secretary or an assistant secretary, certifying the number of
shares and the class or series of shares owned by the shareholder. Any or all of
the signatures on the certificate may be facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if such person were an officer, transfer
agent or registrar at the date of issue.
In the event that the corporation shall issue any shares as only partly
paid, the certificate issued to represent such partly paid shares shall have
stated thereon the total consideration to be paid for such shares and the amount
paid thereon.
Section 52. Transfer on the Books. Upon surrender to the Secretary or
transfer agent (if any) of the corporation of a certificate for shares of the
corporation duly endorsed, with reasonable assurance that the endorsement is
genuine and effective, or accompanied by proper evidence of succession,
assignment or authority to transfer and upon compliance with applicable federal
and state securities laws and if the corporation has no statutory duty to
inquire into adverse claims or has discharged any such duty and if any
applicable law relating to the collection of taxes has been complied with, it
shall be the duty of the corporation, by its Secretary or transfer agent, to
cancel the old certificate, to issue a new certificate to the person entitled
thereto and to record the transaction on the books of the corporation.
Section 53. Lost, Destroyed and Stolen Certificates. The holder of any
certificate for shares of the corporation alleged to have been lost, destroyed
or stolen shall notify the
16.
corporation by making a written affidavit or affirmation of such fact. Upon
receipt of said affidavit or affirmation the Board of Directors, or its duly
appointed and authorized committee or any officer or officers authorized by the
Board so to do, may order the issuance of a new certificate for shares in the
place of any certificate previously issued by the corporation and which is
alleged to have been lost, destroyed or stolen. However, the Board of Directors
or such authorized committee, officer or officers may require the owner of the
allegedly lost, destroyed or stolen certificate, or such owner's legal
representative, to give the corporation a bond or other adequate security
sufficient to indemnify the corporation and its transfer agent and/or registrar,
if any, against any claim that may be made against it or them on account of such
allegedly lost, destroyed or stolen certificate or the replacement thereof. Said
bond or other security shall be in such amount, on such terms and conditions
and, in the case of a bond, with such surety or sureties as may be acceptable to
the Board of Directors or to its duly appointed and authorized committee or any
officer or officers authorized by the Board of Directors to determine the
sufficiency thereof. The requirement of a bond or other security may be waived
in particular cases at the discretion of the Board of Directors or its duly
appointed and authorized committee or any officer or officers authorized by the
Board of Directors so to do.
Section 54. Issuance, Transfer and Registration of Shares. The Board of
Directors may make such rules and regulations, not inconsistent with law or with
these bylaws, as it may deem advisable concerning the issuance, transfer and
registration of certificates for shares of the capital stock of the corporation.
The Board of Directors may appoint a transfer agent or registrar of transfers,
or both, and may require all certificates for shares of the corporation to bear
the signature of either or both.
ARTICLE VIII
INSPECTION OF CORPORATE RECORDS
Section 55. Inspection by Directors. Every director shall have the
absolute right at any reasonable time to inspect and copy all books, records,
and documents of every kind of the corporation and any of its subsidiaries and
to inspect the physical properties of the corporation and any of its
subsidiaries. Such inspection may be made by the director in person or by agent
or attorney, and the right of inspection includes the right to copy and make
extracts.
Section 56. Inspection by Shareholders.
(a) Inspection of Corporate Records.
(1) A shareholder or shareholders holding at least five (5%)
percent in the aggregate of the outstanding voting shares of the corporation or
who hold at least one percent of such voting shares and have filed a Schedule
14B with the United States Securities and Exchange Commission relating to the
election of directors of the corporation shall have an absolute right to do
either or both of the following:
(i) Inspect and copy the record of shareholders' names and
addresses and shareholdings during usual business hours upon five (5) business
days' prior written demand upon the corporation; or
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(ii) Obtain from the transfer agent, if any, for the
corporation, upon five business days' prior written demand and upon the tender
of its usual charges for such a list (the amount of which charges shall be
stated to the shareholder by the transfer agent upon request), a list of the
shareholders' names and addresses who are entitled to vote for the election of
directors and their shareholdings, as of the most recent record date for which
it has been compiled or as of a date specified by the shareholder subsequent to
the date of demand.
(2) The record of shareholders shall also be open to inspection
and copying by any shareholder or holder of a voting trust certificate at any
time during usual business hours upon written demand on the corporation, for a
purpose reasonably related to such holder's interest as a shareholder or holder
of a voting trust certificate.
(3) The accounting books and records and minutes of proceedings
of the shareholders and the Board of Directors and of any committees of the
Board of Directors of the corporation and of each of its subsidiaries shall be
open to inspection, copying and making extracts upon written demand on the
corporation of any shareholder or holder of a voting trust certificate at any
reasonable time during usual business hours, for a purpose reasonably related to
such holder's interests as a shareholder or as a holder of such voting trust
certificate.
(4) Any inspection, copying, and making of extracts under this
subsection (a) may be done in person or by agent or attorney.
(b) Inspection of Bylaws. The original or a copy of these bylaws
shall be kept as provided in Section 44 of these bylaws and shall be open to
inspection by the shareholders at all reasonable times during office hours. If
the principal executive office of the corporation is not in California, and the
corporation has no principal business office in the state of California, a
current copy of these bylaws shall be furnished to any shareholder upon written
request.
Section 57. Written Form. If any record subject to inspection pursuant to
Section 56 above is not maintained in written form, a request for inspection is
not complied with unless and until the corporation at its expense makes such
record available in written form.
ARTICLE IX
MISCELLANEOUS
Section 58. Fiscal Year. Unless otherwise fixed by resolution of the Board
of Directors, the fiscal year of the corporation shall end on the 31st day of
December in each calendar year.
Section 59. Annual Report.
(a) Subject to the provisions of Section 59(b) below, the Board of
Directors shall cause an annual report to be sent to each shareholder of the
corporation in the manner provided in Section 9 of these bylaws not later than
one hundred twenty (120) days after the close of the corporation's fiscal year.
Such report shall include a balance sheet as of the end of
18.
such fiscal year and an income statement and statement of changes in financial
position for such fiscal year, accompanied by any report thereon of independent
accountants or, if there is no such report, the certificate of an authorized
officer of the corporation that such statements were prepared without audit from
the books and records of the corporation. When there are more than 100
shareholders of record of the corporation's shares, as determined by Section 605
of the California Corporations Code, additional information as required by
Section 1501(b) of the California Corporations Code shall also be contained in
such report, provided that if the corporation has a class of securities
registered under Section 12 of the United States Securities Exchange Act of
1934, that Act shall take precedence. Such report shall be sent to shareholders
at least fifteen (15) (or, if sent by third-class mail, thirty-five (35)) days
prior to the next annual meeting of shareholders after the end of the fiscal
year to which it relates.
(b) If and so long as there are fewer than 100 holders of record of
the corporation's shares, the requirement of sending of an annual report to the
shareholders of the corporation is hereby expressly waived.
Section 60. Record Date. The Board of Directors may fix a time in the
future as a record date for the determination of the shareholders entitled to
notice of or to vote at any meeting or entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any change, conversion or exchange of shares
or entitled to exercise any rights in respect of any other lawful action. The
record date so fixed shall not be more than sixty (60) days nor less than ten
(10) days prior to the date of the meeting nor more than sixty (60) days prior
to any other action or event for the purpose of which it is fixed. If no record
date is fixed, the provisions of Section 15 of these bylaws shall apply with
respect to notice of meetings, votes, and consents and the record date for
determining shareholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolutions relating
thereto, or the sixtieth (60th) day prior to the date of such other action or
event, whichever is later.
Only shareholders of record at the close of business on the record date
shall be entitled to notice and to vote or to receive the dividend, distribution
or allotment of rights or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the Articles of Incorporation,
by agreement or by law.
Section 61. Bylaw Amendments. Except as otherwise provided by law or
Section 19 of these bylaws, these bylaws may be amended or repealed by the Board
of Directors or by the affirmative vote of a majority of the outstanding shares
entitled to vote, including, if applicable, the affirmative vote of a majority
of the outstanding shares of each class or series entitled by law or the
Articles of Incorporation to vote as a class or series on the amendment or
repeal or adoption of any bylaw or bylaws; provided, however, after issuance of
shares, a bylaw specifying or changing a fixed number of directors or the
maximum or minimum number or changing from a fixed to a variable board or vice
versa may only be adopted by approval of the outstanding shares as provided
herein.
19.
Section 62. Construction and Definition. Unless the context requires
otherwise, the general provisions, rules of construction, and definitions
contained in the California Corporations Code shall govern the construction of
these bylaws.
Without limiting the foregoing, "shall" is mandatory and "may" is
permissive.
ARTICLE X
INDEMNIFICATION
Section 63. Indemnification of Directors, Officers, Employees And Other
Agents.
(a) Directors and Executive Officers. The corporation shall indemnify
its directors and executive officers to the fullest extent not prohibited by the
California General Corporation Law; provided, however, that the corporation may
limit the extent of such indemnification by individual contracts with its
directors and executive officers; and, provided, further, that the corporation
shall not be required to indemnify any director or executive officer in
connection with any proceeding (or part thereof) initiated by such person or any
proceeding by such person against the corporation or its directors, officers,
employees or other agents unless (i) such indemnification is expressly required
to be made by law, (ii) the proceeding was authorized by the board of directors
of the corporation or (iii) such indemnification is provided by the corporation,
in its sole discretion, pursuant to the powers vested in the corporation under
the California General Corporation Law.
(b) Other Officers, Employees and Other Agents. The corporation shall
have the power to indemnify its other officers, employees and other agents as
set forth in the California General Corporation Law.
(c) Determination by the Corporation. Promptly after receipt of a
request for indemnification hereunder (and in any event within ninety (90) days
thereof) a reasonable, good faith determination as to whether indemnification of
the director or executive officer is proper under the circumstances because such
director or executive officer has met the applicable standard of care shall be
made by:
(1) a majority vote of a quorum consisting of directors who are
not parties to such proceeding;
(2) if such quorum is not obtainable, by independent legal
counsel in a written opinion; or
(3) approval or ratification by the affirmative vote of a
majority of the shares of this corporation represented and voting at a duly held
meeting at which a quorum is present (which shares voting affirmatively also
constitute at least a majority of the required quorum) or by written consent of
a majority of the outstanding shares entitled to vote; where in each case the
shares owned by the person to be indemnified shall not be considered entitled to
vote thereon.
20.
(d) Good Faith.
(1) For purposes of any determination under this bylaw, a
director or executive officer shall be deemed to have acted in good faith and in
a manner he reasonably believed to be in the best interests of the corporation
and its shareholders, and, with respect to any criminal action or proceeding, to
have had no reasonable cause to believe that his conduct was unlawful, if his
action is based on information, opinions, reports and statements, including
financial statements and other financial data, in each case prepared or
presented by:
(i) one or more officers or employees of the corporation
whom the director or executive officer believed to be reliable and competent in
the matters presented;
(ii) counsel, independent accountants or other persons as
to matters which the director or executive officer believed to be within such
person's professional competence; and
(iii) with respect to a director, a committee of the Board
upon which such director does not serve, as to matters within such committee's
designated authority, which committee the director believes to merit confidence;
so long as, in each case, the director or executive officer acts without
knowledge that would cause such reliance to be unwarranted.
(2) The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he reasonably believed to be in the best interests of the
corporation and its shareholders or that he had reasonable cause to believe that
his conduct was unlawful.
(3) The provisions of this paragraph (d) shall not be deemed to
be exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standard of conduct set forth by the
California General Corporation Law.
(e) Expenses. The corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by any director or executive officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it shall be determined ultimately that such person is not entitled to
be indemnified under this bylaw or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (f) of this bylaw, no advance shall be made by the corporation if a
determination is reasonably and promptly made by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to the
proceeding (or, if no such quorum exists, by independent legal counsel in a
written opinion) that the facts known to the decision making party at the time
such determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in the
best interests of the corporation and its shareholders.
(f) Enforcement. Without the necessity of entering into an express
contract, all rights to indemnification and advances to directors and executive
officers under this bylaw
21.
shall be deemed to be contractual rights and be effective to the same extent and
as if provided for in a contract between the corporation and the director or
executive officer. Any right to indemnification or advances granted by this
bylaw to a director or executive officer shall be enforceable by or on behalf of
the person holding such right in the forum in which the proceeding is or was
pending or, if such forum is not available or a determination is made that such
forum is not convenient, in any court of competent jurisdiction if (i) the claim
for indemnification or advances is denied, in whole or in part, or (ii) no
disposition of such claim is made within ninety (90) days of request therefor.
The claimant in such enforcement action, if successful in whole or in part,
shall be entitled to be paid also the expense of prosecuting his claim. The
corporation shall be entitled to raise as a defense to any such action that the
claimant has not met the standards of conduct that make it permissible under the
California General Corporation Law for the corporation to indemnify the claimant
for the amount claimed. Neither the failure of the corporation (including its
board of directors, independent legal counsel or its shareholders) to have made
a determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in the California General Corporation Law, nor an
actual determination by the corporation (including its board of directors,
independent legal counsel or its shareholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of conduct.
(g) Non-Exclusivity of Rights. To the fullest extent permitted by the
corporation's Articles of Incorporation and the California General Corporation
Law, the rights conferred on any person by this bylaw shall not be exclusive of
any other right which such person may have or hereafter acquire under any
statute, provision of the Articles of Incorporation, bylaws, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding office. The
corporation is specifically authorized to enter into individual contracts with
any or all of its directors, officers, employees or agents respecting
indemnification and advances, to the fullest extent permitted by the California
General Corporation Law and the corporation's Articles of Incorporation.
(h) Survival of Rights. The rights conferred on any person by this
bylaw shall continue as to a person who has ceased to be a director or executive
officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(i) Insurance. The corporation, upon approval by the board of
directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this bylaw.
(j) Amendments. Any repeal or modification of this bylaw shall only
be prospective and shall not affect the rights under this bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.
(k) Employee Benefit Plans. The corporation shall indemnify the
directors and officers of the corporation who serve at the request of the
corporation as trustees, investment
22.
managers or other fiduciaries of employee benefit plans to the fullest extent
permitted by the California General Corporation Law.
(l) Saving Clause. If this bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and executive officer to
the fullest extent permitted by any applicable portion of this bylaw that shall
not have been invalidated, or by any other applicable law.
(m) Certain Definitions. For the purposes of this bylaw, the
following definitions shall apply:
(1) The term "proceeding" shall be broadly construed and shall
include, without limitation, the investigation, preparation, prosecution,
defense, settlement and appeal of any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, arbitrative or
investigative.
(2) The term "expenses" shall be broadly construed and shall
include, without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses of any
nature or kind incurred in connection with any proceeding, including expenses of
establishing a right to indemnification under this bylaw or any applicable law.
(3) The term the "corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this bylaw with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence had
continued.
(4) References to a "director," "officer," "employee," or
"agent" of the corporation shall include, without limitation, situations where
such person is or was serving at the request of the corporation as a director,
officer, employee, trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
23.
Exhibit D
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
Directors
---------
Xxxxxxx X. Xxxxxxx
Xxxx Xxxxxxxx
Officers
--------
Xxxxxxx X. Xxxxxxx - President and Chief Executive Officer
Xxxx Xxxxxxxx - Chief Financial Officer and Secretary
1.
Exhibit E
ESCROW AGREEMENT
1.
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") is entered into as of February __,
2000, by and among Copper Mountain Networks, Inc., a Delaware corporation
("Parent"), OnPREM Networks Corporation, a California corporation (the
"Company"), U.S. Trust Company, National Association (the "Escrow Agent"), and
Xxxxxx X. Xxxxxxx, XX (the "Shareholders' Representative"). Capitalized terms
used in this Agreement and not otherwise defined shall have the meanings given
them in the Merger Agreement (as defined below).
Recitals
A. Parent, Copper Mountain Acquisition Corp., a Delaware corporation
and wholly owned subsidiary of Parent, and the Company have entered into an
Agreement and Plan of Merger and Reorganization dated as of January 25, 2000
(the "Merger Agreement") pursuant to which Merger Sub will be merged with and
into the Company whereby the Company will be the surviving corporation (the
"Surviving Corporation").
B. The Merger Agreement provides that an escrow account will be
established as collateral for certain obligations owed to the Indemnitees by the
Company or by holders of the Company Stock (the "Company Shareholders") under
the Merger Agreement.
C. The parties hereto desire to establish the terms and conditions
pursuant to which such escrow account will be established and maintained.
Agreement
Now, Therefore, the parties hereby agree as follows:
1. Escrow Account.
(a) Escrow of Shares. On the Closing Date, Parent shall deliver to the
Escrow Agent a certificate or certificates for _______ shares of Parent Common
Stock (the "Escrow Shares") to be issued in the name of the Escrow Agent or its
nominee. The Escrow Shares shall be held as a trust fund and shall not be
subject to any lien, attachment, trustee process or any other judicial process
of any creditor of any party hereto. The Escrow Agent agrees to accept delivery
of the Escrow Shares and to hold the Escrow Shares in an escrow account (the
"Escrow Account") subject to the terms and conditions of this Agreement.
(b) Dividends, Etc. Any securities distributable in respect of or in
exchange for any of the Escrow Shares, whether by way of stock dividend, stock
splits or otherwise, shall be delivered to the Escrow Agent, who shall hold such
securities in the Escrow Account. Such securities shall be issued in the name
of the Escrow Agent or its nominee and shall be considered Escrow Shares for all
purposes hereof. Any cash dividend or property (other than securities)
distributable to the Company Shareholders in respect of the Escrow Shares shall
be delivered to the Escrow Agent, on behalf of the Company Shareholders, and
shall become part of the Escrow Account.
1.
(c) Voting of Shares. On any matter brought before the Stockholders of
Parent for a vote, the Escrow Agent shall deliver to the Shareholders'
Representative a notice of such vote promptly upon receiving a proxy or other
materials regarding such vote and the Shareholders' Representative shall deliver
notice to the Escrow Agent ("Voting Notice") setting forth the manner in which,
in proportion to the votes cast by the Company Shareholders, the Escrow Agent
shall vote the Escrow Shares. The Shareholders' Representative shall deliver
such Voting Notice to the Escrow Agent at least five days prior to the date of
the taking of any vote of the Stockholders of Parent (the "Voting Notice Date").
The Escrow Agent shall have no obligation to vote any of the Escrow Shares if no
Voting Notice is received prior to the Voting Notice Date or if such notice does
not clearly set forth the manner in which the Escrow Agent shall vote the Escrow
Shares. Otherwise, the Escrow Agent shall vote the Escrow Shares in accordance
with the Voting Notice.
(d) Transferability. The interests of the Company Shareholders in the
Escrow Shares shall not be assignable or transferable, other than by operation
of law.
(e) Escrow Agent's Power to Transfer. The Escrow Agent is hereby
granted the power to effect any transfer of the Escrow Shares permitted under
the terms of this Agreement.
(f) Cash Election. For a period of thirty (30) calendar days following
the date that the Securities and Exchange Commission declares effective the
Registration Statement on Form S-1 that will be filed by Parent subsequent to
the date of this Agreement registering for re-sale the shares issued to the
Company Shareholders pursuant to the Merger Agreement (the "Registration Date"),
each Company Shareholder shall have the option to substitute cash (the "Escrow
Cash") for the pro rata portion of Escrow Shares of such Company Shares being
held in the Escrow Account (the "Cash Election"). Parent will provide written
notice to the Escrow Agent of the Registration Date within five (5) days
thereof. Each Company Shareholder's pro rata portion of the Escrow Shares shall
be equal to the product of (i) the percentage set forth opposite such
shareholder's name on Attachment A hereto, and (ii) the aggregate number of
Escrow Shares delivered to the Escrow Agent pursuant to Section 1(a). The Escrow
Cash shall be held in the Escrow Account in accordance with this Agreement. The
Cash Election can only be made with respect to 100% of each Company
Shareholder's pro rata portion of the Escrow Shares (as set forth on Attachment
A) and will be deemed effective only if a check or wire transfer for the
appropriate amount is received by the Escrow Agent during the above-referenced
(30) thirty day period. For purposes of this Agreement, the "Escrow Cash" for
any particular Company Shareholder shall be that amount equal to the pro rata
portion of such Company Shareholder's Escrow Shares multiplied by the Designated
Parent Stock Value. Upon the expiration of such thirty (30) day period,
Attachment B hereto shall be completed by Escrow Agent, setting forth each
Company Shareholder's respective proportional allocation of either the Escrow
Shares or the Escrow Cash, as appropriate. Company Shareholders who make the
Cash Election will be required to complete paperwork as the Escrow Agent may
reasonably require with respect to such election. Any Escrow Cash shall be
invested in Federated Investors Treasury Obligations Fund or such other
investment as approved in writing by Parent and the Shareholder Representative.
2.
2. Administration of Escrow Account. The Escrow Agent shall administer
the Escrow Account as follows:
(a) Delivery of Claim Notice. If (i) any Indemnitee has incurred or
suffered any Damages for which it is or may be entitled to indemnification under
the Merger Agreement, or (ii) the Company exceeds the limitation on allowable
fees and costs set forth in Section 12.3 of the Merger Agreement, the Parent
shall, on behalf of such Indemnitee or for itself as claimant on or prior to the
Termination Date (as defined below), give written notice of such claim (a "Claim
Notice") to the Shareholders' Representative and the Escrow Agent. Each Claim
Notice shall state the basis for such claim and the amount of Damages or costs
incurred or suffered by such Indemnitee or claimant (the "Claimed Amount"). No
Indemnitee or claimant shall make any new claim for Damages or reimbursable fees
after __________,__, 2001 ( the "Termination Date").
(b) Response Notice; Uncontested Claims. Within 20 days of the date a
Claim Notice was sent to the Shareholders' Representative and the Escrow Agent
(the 20th day after the Claim Notice is sent being referred to herein as the
"Response Date"), the Shareholders' Representative shall provide to Parent and
to the Escrow Agent a written response (the "Response Notice") in which the
Shareholders' Representative shall: (i) agree that Escrow Shares having a
Designated Parent Stock Value (as calculated pursuant to Section 4 hereof) equal
to the full Claimed Amount may be released from the Escrow Account to the
Indemnitee or claimant, (ii) agree that Escrow Shares having a Designated Parent
Stock Value equal to part, but not all, of the Claimed Amount (the "Agreed
Amount") may be released from the Escrow Account to the Indemnitee or claimant,
or (iii) contest that any of the Escrow Shares be released from the Escrow
Account to the Indemnitee or claimant. The Shareholders' Representative may
contest the release of Escrow Shares having a Designated Parent Stock Value
equal to all or a portion of a Claimed Amount only based upon a good faith
belief that all or such portion of the Claimed Amount does not constitute
Damages for which the Indemnitee is entitled to indemnification under the Merger
Agreement or reimbursable fees for which Parent is entitled to reimbursement.
If no Response Notice is delivered by the Shareholders' Representative to the
Escrow Agent by the Response Date, the Shareholders' Representative shall be
deemed to have agreed that Escrow Shares having a Designated Parent Stock Value
equal to the entire Claimed Amount may be released to the Indemnitee or claimant
from the Escrow Account.
(c) Fully Uncontested Claims. If the Shareholders' Representative in
the Response Notice agrees or is deemed to have agreed that Escrow Shares having
a Designated Parent Stock Value equal to the Claimed Amount may be released from
the Escrow Account to the Indemnitee, the Escrow Agent shall, no later than ten
days after receipt of the Response Notice, submit for transfer, delivery, and
assignment to such Indemnitee or claimant such number of Escrow Shares held in
the Escrow Account having a Designated Parent Stock Value equal to the Claimed
Amount (or such lesser number of Escrow Shares as is then held in the Escrow
Account).
(d) Partially Uncontested Claims. If the Shareholders' Representative
in the Response Notice agrees that Escrow Shares having a Designated Parent
Stock Value equal to part, but not all, of the Claimed Amount may be released
from the Escrow Account to such Indemnitee, the Escrow Agent shall, no later
than ten days after receipt of the Response Notice,
3.
submit for transfer, delivery, and assignment to such Indemnitee or claimant
such number of Escrow Shares held in the Escrow Account which have a Designated
Parent Stock Value equal to the Agreed Amount (or such lesser number of Escrow
Shares as is then held in the Escrow Account).
(e) Contested Claims. If the Shareholders' Representative in the
Response Notice contests the release of all or part of the Escrow Shares having
a Designated Parent Stock Value equal to all or part of the Claimed Amount (the
"Contested Amount"), the matter shall be settled by binding arbitration held in
Santa Xxxxx County, California. All claims shall be settled by three arbitrators
in accordance with the Commercial Arbitration Rules then in effect of the
American Arbitration Association (the "Rules"). The Shareholders' Representative
and Parent shall each designate one arbitrator within 15 days of the delivery of
the Response Notice contesting the Claimed Amount. Such designated arbitrators
shall mutually agree upon and shall designate a third arbitrator; provided
however, that (i) in the event the two designated arbitrators fail to reach
agreement with respect to the designation of the third arbitrator within 30 days
of delivery of the Response Notice, the third arbitrator shall be appointed in
accordance with the Rules and (ii) if either the Shareholders' Representative or
Parent fail to timely designate an arbitrator, the second two arbitrators will
be appointed in accordance with the Rules. There shall be limited discovery
prior to the arbitration hearing, subject to the discretion of the arbitrators,
as follows: (a) exchange of witness lists and copies of documentary evidence and
documents related to or arising out of the issues to be arbitrated, (b)
depositions of all party witnesses, and (c) such other depositions as may be
allowed by the arbitrators upon a showing of good cause. Depositions shall be
conducted in accordance with the California Code of Civil Procedure. Each party
shall pay its own costs and expenses (including counsel fees) of any such
arbitration. The Shareholders' Representative and Parent shall pay the fees and
expenses of their respectively designated arbitrators and shall bear equally the
fees and expenses of the third arbitrator. The arbitrators shall decide the
matter to be arbitrated pursuant hereto within 60 days after the appointment of
the last arbitrator. The arbitrators' decision shall relate solely to whether
Parent is entitled to receive the Contested Amount (or a portion thereof)
pursuant to the applicable terms of the Merger Agreement and this Agreement. The
final decision of the majority of the arbitrators shall be furnished to the
Shareholders' Representative, Parent and the Escrow Agent in writing and shall
constitute a conclusive determination of the issue in question, binding upon the
Shareholders' Representative, the Company Shareholders, the Surviving
Corporation, Parent and the Escrow Agent and shall not be contested by any of
them. Such decision may be used in a court of law only for the purpose of
seeking enforcement of the arbitrators' award. After delivery of a Response
Notice that the Claimed Amount is contested by the Shareholders' Representative,
the Escrow Agent shall continue to hold in the Escrow Account a number of Escrow
Shares having a Designated Parent Stock Value equal to one hundred thirty
percent (130%) of the Contested Amount (up to the number of Escrow Shares then
available in the Escrow Account), notwithstanding the occurrence of the
Termination Date, until (i) delivery of a copy of a settlement agreement
executed by Parent and the Shareholders' Representative setting forth
instructions to the Escrow Agent as to release of Escrow Shares from the Escrow
Account, if any, that shall be made with respect to the Contested Amount, or
(ii) delivery of a copy of the final award of the majority of the arbitrators
setting forth instructions to the Escrow Agent as to the release of Escrow
Shares from the Escrow Account, if any, that shall be made with respect to the
Contested Amount. The Escrow Agent shall thereupon release Escrow Shares from
the
4.
Escrow Account (to the extent Escrow Shares are then held in the Escrow
Account) in accordance with such agreement or instructions.
(f) In the event that any Company Shareholder exercises the Cash
Election, for purposes of subsections 2(a) through 2(d) above, all references to
"Escrow Shares having a Designated Parent Stock Value" in subsections 2(a)
through 2(d) shall be read to include, to the extent appropriate, the Escrow
Cash, and any release of Escrow Shares or Escrow Cash shall be made in
accordance with the proportional allocations set forth on Attachment B hereto,
with cash in an amount equal to the Designated Parental Stock Value being
substituted for each Escrow Share originally contributed to the Escrow Account
on behalf of each shareholder that exercises the Cash Election. Any interest
earned on the Escrow Cash will be held in escrow and shall become part of the
Escrow Account and used to satisfy claims. Any interest remaining in the Escrow
Account shall be distributed to the Company Shareholders who have made the Cash
Election at the time any remaining Escrow Cash is distributed to such Company
Shareholders and shall be allocated based on such Company Shareholders' pro rata
portion of the distributed Escrow Cash.
(g) Notwithstanding the procedures set forth in subsections 2(a)
through 2(f) above, (i) no Escrow Shares or Escrow Cash shall be released from
the Escrow Account prior to the date thirty-one (31) calendar days following the
Registration Date, and (ii) for claims by an Indemnitee for Damages, no Escrow
Shares or Escrow Cash shall be released from the Escrow Account until the
aggregate amount of such Damages exceeds $250,000, as described more fully in
Section 11.3 of the Merger Agreement. No such dollar threshold shall be required
for claims made by Parent against the Escrow Account pursuant to Section 12.3 of
the Merger Agreement.
3. Release of Escrow Shares or Escrow Cash.
(a) Within 10 days after the Termination Date, Parent shall deposit
with the Escrow Agent a certificate in the name of each Company Shareholder who
has not made the Cash Election representing the number of shares of Parent
Common Stock to which each such shareholder is then entitled and the Escrow
Agent shall distribute to the Shareholders' Representative, on behalf of the
Company Shareholders, (i) such certificates representing all of the Escrow
Shares then held in escrow and (ii) cash and accrued interest thereon received
from Company Shareholders who made the Cash Election. Notwithstanding the
foregoing, if any Indemnitee or claimant shall have asserted a claim for
indemnification or reimbursement prior to the Termination Date and such claim
has not yet been resolved, the Escrow Agent shall retain in the Escrow Account
after the Termination Date a number of Escrow Shares having a Designated Parent
Stock Value (and cash if the Cash Election has been made by any Company
Shareholder) equal to one hundred thirty percent (130%) of the Contested Amount,
(or if the Contested Amount has not yet been determined, this Claimed Amount,
(as well as any amounts the Escrow Agent reasonably determines are necessary to
satisfy the fees and expenses contemplated by Section 5(a)) which has not then
been resolved, upon the terms set forth in Section 2.
(b) Any distribution of all or a portion of the Escrow Shares to the
Shareholders' Representative, on behalf of the Company Shareholders, shall be
made in accordance with the percentages set forth opposite such holders'
respective names on Attachment B hereto; provided however, that the Escrow Agent
shall withhold the distribution of
5.
the portion of the Escrow Shares otherwise distributable to the Shareholders'
Representative, on behalf of any Company Shareholders who have not, according to
written notice provided by Parent to the Escrow Agent, prior to such
distribution, surrendered their respective Company Stock Certificates (or
affidavits of lost, stolen or destroyed Company Stock Certificates) in
accordance with Section 1.8 of the Merger Agreement. Any such withheld amounts
shall be delivered to Parent promptly after the Termination Date, and shall be
delivered by Parent to the Shareholders' Representative, on behalf of the
Company Shareholders to whom such shares would have otherwise been distributed,
upon surrender of their respective Company Stock Certificates (or affidavits of
lost, stolen or destroyed Company Stock Certificates). Distributions to the
Shareholders' Representative, on behalf of the Company Shareholders, shall be
made by mailing stock certificates in the names of such holders to the address
of the Shareholders' Representative provided in Section 8 (or such other address
as may be provided in writing to the Escrow Agent and Parent by the
Shareholders' Representative). Upon receipt of the stock certificates, the
Shareholders' Representative shall promptly mail such certificates to each
Company Shareholder at their respective addresses shown on Attachment A (or such
other address as may be provided in writing to the Shareholders'
Representative).
(c) No fractional shares of Parent Common Stock shall be distributed
to the Company Shareholders pursuant to this Agreement. In lieu of any
fractional shares to which such Company Shareholder would otherwise be entitled,
such Company Shareholder shall be paid in cash an amount equal to the dollar
amount (rounded to the nearest whole cent) determined by multiplying the
Designated Parent Stock Value by the fraction of a share of Parent Common Stock
that would otherwise be deliverable to such Company Shareholder hereunder. With
10 days after the Termination Date, Parent shall deposit cash in a sufficient
amount to pay all fractional shares in accordance with this Section 3(c).
(d) Any distribution of all or a portion of the Escrow Cash (and any
accrued interest thereon) to the Shareholders' Representative, on behalf of the
Company Shareholders, shall be made in accordance with the percentages set forth
opposite such holders' respective names on Attachment B hereto. Distributions to
the Shareholders' Representative, on behalf of the Company Shareholders, shall
be made by mailing checks in the names of such holders to the address of the
Shareholders' Representative provided in Section 8 (or such other address as may
be provided in writing to the Escrow Agent and Parent by the Shareholders'
Representative). Upon receipt of the checks, the Shareholders' Representative
shall promptly mail such checks to each Company Shareholder at their respective
addresses shown on Attachment A (or such other address as may be provided in
writing to the Shareholders' Representative).
4. Valuation of Escrow Shares. For purposes of this Agreement, the
Designated Parent Stock Value of the Escrow Shares shall be $53.150. The
Designated Parent Stock Value shall be adjusted for any subsequent stock split,
stock dividend, stock combination or other recapitalizations involving the
common stock of Parent.
5. Fees and Expenses.
(a) An annual administrative fee of $3,000 will be payable to the
Escrow Agent. Other fees will be payable in accordance with the Escrow Agent's
fee schedules in effect
6.
from time to time. The Escrow Agent will also be entitled to reimbursement for
extraordinary expenses incurred in performance of its duties hereunder.
(b) Parent shall pay the fees and expenses of the Escrow Agent for the
services to be rendered by the Escrow Agent hereunder. If Parent fails to pay
such fees and expenses in a timely manner, U.S. Trust Company shall be entitled
to resign as Escrow Agent hereunder and transfer all cash and property in the
Escrow Account to the Shareholders' Representative to hold in trust as the
successor Escrow Agent hereunder; provided that Escrow Agent has first provided
Parent thirty (30) days written notice and a demand for payment and Parent has
failed to make such payment within such thirty (30) day period.
(c) All reasonable expenses (including attorneys' fees) incurred by
the Shareholders' Representative in connection with the performance of its
duties hereunder shall be paid by the Company Shareholders. Parent shall have no
liability whatsoever for any fees, costs, or other expenses incurred by the
Shareholders' Representative.
6. Duties of Escrow Agent.
(a) The Escrow Agent shall be entitled to rely upon any order,
judgment, certificate, demand, notice, instrument or other writing delivered to
it hereunder without being required to investigate the validity, accuracy or
content thereof nor shall the Escrow Agent be responsible for the validity or
sufficiency of this Agreement. In all questions arising under this Agreement,
the Escrow Agent may rely on the advice of counsel, and for anything done,
omitted or suffered in good faith by the Escrow Agent based on such advice, the
Escrow Agent shall not be liable to anyone. The Escrow Agent shall not be
required to take any action hereunder involving any expense unless the payment
of such expense is made or provided for in a manner reasonably satisfactory to
it.
(b) In the event conflicting demands are made or conflicting notices
are served upon the Escrow Agent with respect to the Escrow Shares or the Escrow
Cash, the Escrow Agent will have the absolute right, at the Escrow Agent's
election, to do either or both of the following: (i) resign as Escrow Agent so a
successor can be appointed pursuant to clause (d) of this Section 6, or (ii)
file a suit in interpleader and obtain an order from a court of competent
jurisdiction requiring the parties to interplead and litigate in such court
their several claims and rights among themselves. In the event such interpleader
suit is brought, the Escrow Agent will thereby be fully released and discharged
from all further obligations imposed upon it under this Agreement, and Parent on
the one hand and the Company Shareholders on the other hand will pay the Escrow
Agent all costs, expenses and reasonable attorneys' fees expended or incurred by
the Escrow Agent pursuant to the exercise of the Escrow Agent's rights under
this Section 6(b) (such costs, fees and expenses will be treated as
extraordinary fees and expenses for the purposes of Section 5 hereof).
(c) The Escrow Agent shall not be liable, except for its or its
representatives own gross negligence or willful misconduct and, with respect to
claims not based upon such gross negligence or willful misconduct that are
successfully asserted against the Escrow Agent, Parent and the Company
Shareholders shall, jointly and severally, indemnify and hold harmless the
Escrow Agent (and any successor Escrow Agent) from and against any and all
losses,
7.
liabilities, claims, actions, damages and expenses, including reasonable
attorneys' fees and disbursements, arising out of and in connection with this
Agreement.
(d) The Escrow Agent shall have no interest in the Escrow Shares or
the Escrow Cash, but is serving as escrow holder only and having only possession
thereof.
(e) The Escrow Agent may resign as Escrow Agent at any time and for
any reason whatsoever. In the event the Escrow Agent desires to resign as Escrow
Agent under this Agreement, the Escrow Agent shall deliver a notice to Parent
and the Shareholders' Representative stating the date upon which such
resignation shall be effective; provided however, that any such resignation
shall not be effective until at least the 30/th/ day after Parent and the
Shareholders' Representative receive such notice. Upon the receipt of any such
notice from the Escrow Agent, Parent may appoint a successor escrow agent
without the consent of the Shareholders' Representative so long as such
successor is a bank or trust company with assets of at least $500 million, and
may appoint any other successor escrow agent with the consent of the
Shareholders' Representative, which consent shall not be unreasonably withheld.
In the case of the appointment of any successor escrow agent requiring the
consent of the Shareholders' Representative as set forth in the preceding
sentence, Parent and the Shareholders' Representative shall deliver a written
notice to the Escrow Agent designating the successor escrow agent. Upon the
effectiveness of the resignation of the Escrow Agent, the Escrow Agent shall
deliver the Escrow Shares to any successor escrow agent properly designated
hereunder, whereupon the Escrow Agent shall be discharged from any and all
further obligations arising hereunder. If upon the effective date of resignation
of the Escrow Agent a successor escrow agent has not been duly designated, the
Escrow Agent's sole responsibility after that time shall be to retain and
safeguard the Escrow Shares until receipt of a designation of successor escrow
agent or a final nonappealable order of a court of competent jurisdiction.
(f) Escrow Agent shall have no duties or responsibilities other than
those expressly set forth herein. Escrow Agent shall have no duty to enforce any
obligation of any person, other than Escrow Agent, to make any payment or
delivery, or to direct or enforce any obligation of any person to perform any
other act. Escrow Agent shall be under no liability to anyone by reason of any
failure on the part of any other party hereto or any maker, endorser or
signatory of any document or any other person to perform such person's
obligations under any such document. Except for the Escrow Agreement and any
instructions to Escrow Agent under the Escrow Agreement, Escrow Agent shall not
be obligated to recognize any agreement between any or all of the persons
referred to herein, notwithstanding its knowledge thereof.
(g) Escrow Agent shall not be liable for any action taken or omitted
by it, or any action suffered by it to be taken or omitted, in good faith and in
the exercise of its own best judgment, and may rely conclusively and shall be
protected in acting upon any order, notice, demand, certificate, opinion or
advice of counsel (including counsel chosen by Escrow Agent), statement,
instrument, report or other paper or document (not only as to its due execution
and the validity and effectiveness of its provisions, but also as to the truth
and acceptability of any information therein contained) which is believed by
Escrow Agent to be genuine and to be signed or presented by the proper person or
persons. Escrow Agent shall not be bound by any notice or demand, or any waiver,
modification, termination or rescission of the Escrow Agreement or any of the
terms hereof, unless evidenced by a writing delivered to Escrow Agent
8.
signed by the proper party or parties and, if the duties or rights of Escrow
Agent are affected, unless it shall give its prior consent thereto.
(h) Escrow Agent shall not be responsible for the sufficiency or
accuracy of the form of, or the execution, validity, value or genuineness of,
any document or property received, held or delivered by it hereunder, or of
signature or endorsement thereon, or for any description therein, nor shall
Escrow Agent be responsible for or liable in any respect on account of the
identity, authority or rights of the persons executing or delivering or
purporting to execute or deliver any document or property pursuant to the Escrow
Agreement.
(i) In the absence of written notice to the contrary from the proper
person or persons, Escrow Agent shall have the right to assume that a fact or an
event, by reason of which an action would or might be taken by Escrow Agent,
does not exist or has not occurred without incurring liability for any action
taken or omitted, or any action suffered by it to be taken or omitted, in good
faith and in the exercise of its own best judgment, in reliance upon such
assumption.
7. Termination. This Agreement shall terminate upon the later of the
Termination Date or the release by the Escrow Agent of all of the Escrow Shares
and Escrow Cash in accordance with this Agreement.
8. Notices. All notices, instructions and other communications given
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) via a reputable
nationwide overnight courier service, in each case to the address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered three business days after it is sent prepaid, or one (1) business
day after it is sent via a reputable nationwide overnight courier service.
If to Parent: Copper Mountain Networks, Inc.
00000 Xxxxxxx Xxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxx, XX 9212
Attn: Xxxx Xxxxxxxx
Fax: (000) 000-0000
With a copy to: Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax: (000)000-0000
9.
If to the Shareholders' Xxx Xxxxxxx,
Representative: OnPREM Networks Corporation
00000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
If to the Escrow Agent: U.S. Trust Company, N.A.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
Any party may give any notice, instruction or communication in connection
with this Agreement using any other means (including personal delivery,
facsimile or ordinary mail), but no such notice, instruction or communication
shall be deemed to have been delivered unless and until it is actually received
by the party to whom it was sent. Any party may change the address to which
notices, instructions or communications are to be delivered by giving the other
parties to this Agreement notice thereof in the manner set forth in this Section
8.
9. Agent. For purposes of this Agreement, each of the Company
Shareholders hereby consents to the appointment of Xxx Xxxxxxx, as the
Shareholders' Representative and as attorney-in-fact for and on behalf of the
Company Shareholder, and the taking by the Shareholders' Representative of any
and all actions and the making of any decisions required or permitted to be
taken by him under this Agreement, including without limitation, the exercise of
the power to (i) authorize delivery to any Indemnitee or claimant of Escrow
Shares in satisfaction of any Damages or Claimed Amounts, (ii) agree to
negotiate, enter into settlements and compromises with respect to such Damages
or Claimed Amounts, (iii) resolve any claims or disputes hereunder, and (iv)
take all actions necessary in the judgment of the Shareholders' Representative
for the accomplishment of the foregoing and all of the other terms, conditions
and limitations contained in this Agreement. If the Shareholders' Representative
shall die, become disabled or otherwise be unable to fulfill his
responsibilities as agent of the Company shareholders, then Xxxxxx Xxxxx shall,
within ten days after such death or disability, appoint a successor
representative reasonably satisfactory to Parent. Any such successor shall
become the "Shareholders' Representative" for purposes of this Agreement. In the
event that Xxxxxx Xxxxx fails to appoint a successor representative within ten
days after such above-described occurrence, Xxxxxx Xxxxx shall automatically
become the Shareholders' Representative for purposes of this Agreement.
10. General.
(a) Governing Law. The validity, interpretation, construction,
performance, enforcement and remedies of or relating to this Agreement, and the
rights and obligations of the parties hereunder, shall be governed by the laws
of the State of California without regard to principles of conflicts of laws,
and any and every legal or other proceeding (including any arbitration
proceedings conducted in accordance with Section 2(e)) arising out of or in
10.
connection with this Agreement shall be brought in the appropriate courts of
Santa Xxxxx County, in the State of California, each of the parties hereby
consenting to the exclusive jurisdiction of said courts for this purpose.
(b) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(c) Entire Agreement. Except as set forth in the Merger Agreement,
this Agreement constitutes the entire understanding and agreement of the parties
with respect to the subject matter of this Agreement and supersedes all prior
agreements or understandings, written or oral, between the parties with respect
to the subject matter hereof.
(d) Waivers. No waiver by any party hereto of any condition or of any
breach of any provision of this Agreement shall be effective unless in writing.
No waiver by any party of any such condition or breach, in any one instance,
shall be deemed to be a further or continuing waiver of any such condition or
breach or a waiver of any other condition or breach of any other provision
contained herein.
(e) Amendment. This Agreement may be amended only with the written
consent of Parent, the Escrow Agent and the Shareholders' Representative (or
their duly designated successors).
11.
In Witness Whereof, the parties have duly executed this Agreement as of the
day and year first above written.
Parent: Copper Mountain Networks, Inc.
By:______________________________
Title:___________________________
The Company: OnPREM Networks Corporation
By:______________________________
Title:___________________________
Shareholders' Representative: Xxxxxx X. Xxxxxxx, XX
_________________________________
Escrow Agent: U.S. Trust Company, National Association
By:______________________________
Title:___________________________
[Signature Page of Escrow Agreement]
Attachment A
Company Shareholders Percentage Ownership
Name and Address Percentage Ownership
Attachment B
[To be completed by Escrow Agent after period for making Cash Election expires]
Shareholder Name Escrow Shares Escrow Cash
Exhibit F
PERSONS TO SIGN EMPLOYMENT AND NONCOMPETITION AGREEMENTS
Xxxxxx X. Xxxxxxx, XX
Xxxxx X. Xxx
Xxxxxx X. Xxxxxxxx
1.
Exhibit G
FORM OF EMPLOYMENT AGREEMENT
1.
Employment Agreement
By and Between
Copper Mountain Networks, Inc.
and
[Employee]
Table Of Contents
Page
1. Employment..................................................... 1
2. Loyal And Conscientious Performance............................ 2
3. Compensation Of The Employee................................... 2
4. Compensation Upon Termination.................................. 3
5. Confidential And Proprietary Information; Nonsolicitation...... 5
6. Assignment And Binding Effect.................................. 5
7. Notices........................................................ 5
8. Choice Of Law.................................................. 6
9. Integration.................................................... 6
10. Amendment...................................................... 6
11. Waiver......................................................... 6
12. Severability................................................... 6
13. Interpretation; Construction................................... 7
14. Representations And Warranties................................. 7
15. Counterparts................................................... 7
16. Arbitration.................................................... 7
17. Injunctive Relief.............................................. 8
18. Trade Secrets Of Others........................................ 8
19. Advertising Waiver............................................. 8
i
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
effective as of the date on which the Agreement and Plan of Merger and
Reorganization (the "Merger Agreement") between Copper Mountain Networks, Inc.,
a Delaware corporation (the "Company") and Onprem Networks, Inc. becomes
effective (the "Effective Date"), by and between the Company and [Employee] (the
"Employee"). The Company and the Employee are hereinafter collectively referred
to as the "Parties", and individually referred to as a "Party".
Recitals
A. The Company and Onprem Networks, Inc. have entered into an Agreement
and Plan of Merger and Reorganization (the "Merger Agreement") of even date
herewith, providing for the acquisition by the Company of Onprem Networks, Inc.
pursuant to a merger of a wholly owned subsidiary of the Company ("Merger Sub")
with and into Onprem Networks, Inc. (the "Merger"). This Agreement is
conditional upon the finalization of the Merger and will become effective on the
date the Merger becomes effective (the "Closing Date").
B. In connection with the Merger, Employee has agreed to enter into a
Noncompetition Agreement ("Noncompetition Agreement") with the Company which
will be executed concurrently herewith.
C. The Company desires assurance of the association and services of the
Employee in order to retain the Employee's experience, skills, abilities,
background and knowledge, and is willing to engage the Employee's services on
the terms and conditions set forth in this Agreement.
D. The Employee desires to be in the employ of the Company, and is
willing to accept such employment on the terms and conditions set forth in this
Agreement.
Agreement
In consideration of the foregoing Recitals and the mutual promises and
covenants herein contained, and for other good and valuable consideration, the
Parties, intending to be legally bound, agree as follows:
1. EMPLOYMENT.
1.1 Term. The Company hereby employs the Employee, and the Employee
hereby accepts employment by the Company, upon the terms and conditions set
forth in this Agreement. The term of this Agreement shall commence on the
Effective Date and shall continue for one year from the Effective Date (the
"Term") unless terminated earlier in accordance with Section 4 herein.
1
1.2 Title. The Employee shall have the title of Vice President
Marketing - MTU of the Company and shall serve in such other capacity or
capacities as the Board of Directors of the Company may from time to time
prescribe.
1.3 Duties. The Employee shall do and perform all services, acts or
things necessary or advisable to manage and conduct the business of the Company
and which are normally associated with the position of Vice President Marketing
- MTU, consistent with the bylaws of the Company and as required by the
Company's Board of Directors.
1.4 Policies and Practices. The employment relationship between the
Parties shall be governed by the policies and practices established by the
Company and its Board of Directors.
1.5 Location. Unless the Parties otherwise agree in writing, during
the term of this Agreement, the Employee shall perform the services Employee is
required to perform pursuant to this Agreement at the Company's offices or at
any other place at which the Company maintains an office; provided, however,
that the Company may from time to time require the Employee to travel
temporarily to other locations in connection with the Company's business.
2. LOYAL AND CONSCIENTIOUS PERFORMANCE.
2.1 Loyalty. During the Employee's employment by the Company, the
Employee shall devote Employee's full business energies, interest, abilities and
productive time to the proper and efficient performance of Employee's duties
under this Agreement.
3. COMPENSATION OF THE EMPLOYEE.
3.1 Base Salary. The Company shall pay the Employee a base salary of
not less than One Hundred Thirty-Five Thousand Dollars ($135,000) per year (the
"Base Salary"), less payroll deductions and all required withholdings payable in
regular periodic payments in accordance with Company policy. Such Base Salary
shall be prorated for any partial year of employment on the basis of a 365-day
fiscal year.
3.2 Bonus Plan. Employee shall be eligible for any Bonus Plan
implemented by the Company in its sole discretion.
3.3 Stock Options.
3.3.1 Initial Stock Options. Upon commencement of full-time
employment with the Company, Employee will be granted a stock option to purchase
80,000 shares of Common Stock of the Company at an exercise price equal to 100%
of the fair market value of the Company's Common Stock on the date of grant (the
"Initial Option") under the standard terms of the Company's 1998 Stock Plan or
any successor stock option plan. Pursuant to the Stock Plan, the shares subject
to the Initial Option will be subject to vesting over four (4) years so long as
Employee continues to be employed with the Company, with 25% of the shares
subject to the Initial Option vesting as of the first anniversary of Employee's
employment with
2
the Company and an additional 1/48/th/ of such shares vesting as of the end
of each monthly period thereafter.
3.3.2 Additional Stock Options. The Company, may in its sole
discretion grant to Employee additional stock options (the "Additional Options")
to purchase shares of the Common Stock of the Company.
3.4 Cash Payment. Assuming Employee's continuous employment
throughout the Term, the Company will pay Employee a cash payment of one hundred
twenty-five thousand ($125,000), minus standard deductions and withholdings, in
equal monthly installments throughout the Term.
3.5 Changes to Compensation. The Employee's compensation may be
changed from time to time by mutual agreement of the Employee and the Company.
3.6 Employment Taxes. All of the Employee's compensation shall be
subject to customary withholding taxes and any other employment taxes as are
commonly required to be collected or withheld by the Company.
3.7 Benefits. The Employee shall, in accordance with Company policy
and the terms of the applicable plan documents, be eligible to participate in
benefits under any employee benefit plan or arrangement which may be in effect
from time to time and made available to the Company's key management employees.
4. COMPENSATION UPON TERMINATION.
4.1 Termination by the Company. The Company may terminate the
Employee's employment under this Agreement upon thirty (30) days notice for any
reason by delivery of written notice of such termination to the Employee.
4.2 Termination By The Employee. The Employee may terminate the
Employee's employment with the Company upon thirty (30) days notice to the
Company.
4.3 Termination by Mutual Agreement of the Parties. The Employee's
employment pursuant to this Agreement may be terminated at any time upon a
mutual agreement in writing of the Parties. Any such termination of employment
shall have the consequences specified in such agreement.
4.4 Compensation Upon Termination.
4.4.1 Termination by the Company without Cause or Resignation
by the Employee for Good Reason. In the event Employee's employment is
terminated by the Company without Cause (as defined herein) or in the event that
Employee resigns for Good Reason (as defined herein) during the Term of this
Agreement and then upon the Employee's furnishing to the Company an effective
waiver and release of claims (a form of which is attached hereto as Exhibit A),
the Company agrees to: i) pay the Employee the balance of the one hundred
twenty-five thousand dollars ($125,000) to which Employee is entitled pursuant
to Section 3.4
3
herein, less standard deductions and withholdings; and ii) accelerate the
vesting of the shares subject to the Initial Option such that one hundred
percent (100%) of the unvested shares subject to the Initial Option will be
vested and exercisable as of the date of termination.
4.4.2 Resignation by the Employee Without Good Reason or
Termination by the Company for Cause. If the Employee's employment shall be
terminated by the Company for Cause or if the Employee resigns without Good
Reason, the Company shall pay the Employee's accrued Base Salary and accrued and
unused vacation benefits earned through the date of termination at the rate in
effect at the time of the notice of termination to or from Employee, and the
Company shall thereafter have no further obligations to the Employee under this
Agreement.
4.4.3 Continued Effect of Employee's Noncompetition Agreement.
Employee understands and agrees that his duties and obligations under the
Noncompetition Agreement will remain in full force and effect during the term of
the Noncompetition Agreement, regardless of whether Employee remains employed
with the Company.
4.4.4 Termination of Obligations. In the event of the
termination of the Employee's employment hereunder and pursuant to this Section
4, the Company shall have no obligation to pay Employee any Base Salary, bonus
or other compensation or benefits, except as provided in this Section 4 or for
benefits due to the Employee (and/or the Employee's dependents under the terms
of the Company's benefit plans). The Company may offset any amounts Employee
owes it or its subsidiaries against any amount it owes Employee pursuant to this
Section 4.4.
4.5 Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
4.5.1 For Cause. "Cause" for the Company to terminate
Employee's employment hereunder shall mean the occurrence of any of the
following events:
(i) the Employee's repeated failure to satisfactorily perform
the Employee's job duties under this Agreement after notice and a reasonable
opportunity to cure;
(ii) knowing failure by the Employee to comply with all material
applicable laws in performing the Employee's job duties or in directing the
conduct of the Company's business;
(iii) commission by the Employee of any felony or intentionally
fraudulent or other act against the Company, or its affiliates, employees,
agents or customers which demonstrates the Employee's untrustworthiness or lack
of integrity;
(iv) the Employee's engaging or in any manner participating in
any activity which is directly competitive with or intentionally injurious to
the Company or any of its affiliates or which violates any material provisions
of Section 7 hereof; or
4
(v) the Employee's commission of any fraud against the Company
or any of its affiliates or use or intentional appropriation for his personal
use or benefit of any funds or properties of the Company not authorized by the
Board to be so used or appropriated.
4.5.2 Good Reason. "Good Reason" for the Employee to terminate
the Employee's employment hereunder shall mean the occurrence of any of the
following events without the Employee's consent:
(i) a substantial adverse alteration in the nature, status or
prestige of the Employee's responsibilities or Base Salary as set forth in this
Agreement or a substantial adverse change in the Employee's title or reporting
level from that set forth in this Agreement;
(ii) the relocation of the Company's executive offices or
principal business location to a point more than fifty (50) miles from the
Fremont, California area.
(iii) a material breach of this Agreement by the Company.
4.6 Survival of Certain Sections. Sections 6, 7, 10, 16, 17, 18 and
19 of this Agreement will survive the termination of this Agreement.
5. CONFIDENTIAL AND PROPRIETARY INFORMATION; NONSOLICITATION.
5.1 The Employee agrees to execute and abide by the Proprietary
Information and Inventions Agreement attached hereto as Exhibit B.
6. ASSIGNMENT AND BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
Employee and the Employee's heirs, executors, personal representatives, assigns,
administrators and legal representatives. Because of the unique and personal
nature of the Employee's duties under this Agreement, neither this Agreement nor
any rights or obligations under this Agreement shall be assignable by the
Employee. This Agreement shall be binding upon and inure to the benefit of the
Company and its successors, assigns and legal representatives.
7. NOTICES.
All notices or demands of any kind required or permitted to be given
by the Company or the Employee under this Agreement shall be given in writing
and shall be personally delivered (and receipted for) faxed during normal
business hours or mailed by certified mail, return receipt requested, postage
prepaid, addressed as follows:
5
If to the Company:
Copper Mountain Networks, Inc.
____________________________
____________________________
If to the Employee:
____________________________
____________________________
Any such written notice shall be deemed received when personally delivered or
three (3) days after its deposit in the United States mail as specified above.
Either Party may change its address for notices by giving notice to the other
Party in the manner specified in this section.
8. CHOICE OF LAW.
This Agreement is made in Palo Alto, California. This Agreement shall
be construed and interpreted in accordance with the laws of the State of
California.
9. INTEGRATION.
This Agreement contains the complete, final and exclusive agreement of
the Parties relating to the terms and conditions of the Employee's employment,
and supersedes all prior and contemporaneous oral and written employment
agreements or arrangements between the Parties.
10. AMENDMENT.
This Agreement cannot be amended or modified except by a written
agreement signed by the Employee and the Company.
11. WAIVER.
No term, covenant or condition of this Agreement or any breach thereof
shall be deemed waived, except with the written consent of the Party against
whom the wavier is claimed, and any waiver or any such term, covenant, condition
or breach shall not be deemed to be a waiver of any preceding or succeeding
breach of the same or any other term, covenant, condition or breach.
12. SEVERABILITY.
The finding by a court of competent jurisdiction of the
unenforceability, invalidity or illegality of any provision of this Agreement
shall not render any other provision of this Agreement unenforceable, invalid or
illegal. Such court shall have the authority to modify or replace the invalid
or unenforceable term or provision with a valid and enforceable term or
provision which most accurately represents the Parties' intention with respect
to the invalid or unenforceable term or provision.
6
13. INTERPRETATION; CONSTRUCTION.
The headings set forth in this Agreement are for convenience of
reference only and shall not be used in interpreting this Agreement. This
Agreement has been drafted by legal counsel representing the Company, but the
Employee has been encouraged, and has consulted with, Employee's own independent
counsel and tax advisors with respect to the terms of this Agreement. The
Parties acknowledge that each Party and its counsel has reviewed and revised, or
had an opportunity to review and revise, this Agreement, and the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement.
14. REPRESENTATIONS AND WARRANTIES.
The Employee represents and warrants that Employee is not restricted
or prohibited, contractually or otherwise, from entering into and performing
each of the terms and covenants contained in this Agreement, and that Employee's
execution and performance of this Agreement will not violate or breach any other
agreements between the Employee and any other person or entity.
15. COUNTERPARTS.
This Agreement may be executed in two counterparts, each of which
shall be deemed an original, all of which together shall contribute one and the
same instrument.
16. ARBITRATION.
To ensure rapid and economical resolution of any disputes which may
arise under this Agreement, the Employee and the Company agree that any and all
disputes or controversies of any nature whatsoever, arising from or regarding
the interpretation, performance, enforcement or breach of this Agreement shall
be resolved by confidential, final and binding arbitration (rather than trial by
jury or court or resolution in some other forum) to the fullest extent permitted
by law. Any arbitration proceeding pursuant to this Agreement shall be
conducted by the American Arbitration Association ("AAA") in Palo Alto, CA under
the then existing employment-related AAA arbitration rules. If for any reason
all or part of this arbitration provision is held to be invalid, illegal, or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other portion of this arbitration provision or any other jurisdiction, but
this provision will be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable part or parts of this provision had
never been contained herein, consistent with the general intent of the Parties
insofar as possible.
I have read Section 16 and irrevocably agree to arbitrate any dispute
identified above.
______ (Employee's Initials)
7
17. INJUNCTIVE RELIEF.
The Employee is obligated under this Agreement to render services and
comply with covenants of a special, unique, unusual and extraordinary character,
thereby giving this Agreement peculiar value, so that the loss of such service
or violation by the Employee of this Agreement, including, but not limited to,
the Proprietary Information and Inventions Agreement, could not reasonably or
adequately be compensated in damages in an action at law. Therefore,
notwithstanding Section 18 herein, in addition to any other remedies or
sanctions provided by law, whether criminal or civil, and without limiting the
right of the Company and successors or assigns to pursue all other legal and
equitable rights available to them, the Company shall have the right during the
Employee's employment hereunder (or thereafter with respect to obligations
continuing after the termination of this Agreement) to compel specific
performance hereof by the Employee or to obtain temporary and permanent
injunctive relief against violations hereof by the Employee, including, but not
limited to violations of the Proprietary Information and Inventions Agreement,
and, in furtherance thereof, to apply to any court with jurisdiction over the
Parties to enforce the provisions hereof.
18. TRADE SECRETS OF OTHERS.
It is the understanding of both the Company and the Employee that the
Employee shall not divulge to the Company and/or its subsidiaries any
confidential information or trade secrets belonging to others, with the
exception of Onprem Networks, Inc., nor shall the Company and/or its affiliates
seek to elicit from the Employee any such information. Consistent with the
foregoing, with the exception of Onprem Networks, Inc., the Employee shall not
provide to the Company and/or its affiliates, and the Company and/or its
affiliates shall not request, any documents or copies of documents containing
such information.
19. ADVERTISING WAIVER.
The Employee agrees to permit the Company and/or its affiliates, and
persons or other organizations authorized by the Company and/or its affiliates,
to use, publish and distribute advertising or sales promotional literature
concerning the products and/or services of the Company and/or its affiliates, or
the machinery and equipment used in the provision thereof, in which the
Employee's name and/or pictures of the Employee taken in the course of the
Employee's provision of services to the Company and/or its affiliates, appear.
The Employee hereby waives and releases any claim or right the Employee may
otherwise have arising out of such use, publication or distribution.
8
In Witness Whereof, the Parties have executed this Agreement as of the date
first above written.
Copper Mountain Networks, Inc.
By:__________________________
Its:_________________________
Dated:_______________________
Employee:
_____________________________
[Employee]
Dated:_______________________
9
EXHIBIT A
RELEASE AND WAIVER OF CLAIMS
In consideration of the payments and other benefits set forth in Section __
of the Employment Agreement dated ___________, to which this form is attached,
I, [Employee], hereby furnish Copper Mountain, Inc. (the "Company"), with the
following release and waiver ("Release and Waiver").
I hereby release, and forever discharge the Company, its officers,
directors, agents, employees, stockholders, successors, assigns, affiliates,
parent, subsidiaries, and Benefit Plans, of and from any and all claims,
liabilities, demands, causes of action, costs, expenses, attorneys' fees,
damages, indemnities and obligations of every kind and nature, in law, equity,
or otherwise, known and unknown, suspected and unsuspected, disclosed and
undisclosed, arising at any time prior to and including my employment
Termination Date with respect to any claims relating to my employment and the
termination of my employment, including but not limited to, claims pursuant to
any federal, state or local law relating to employment, including, but not
limited to, discrimination claims, claims under the California Fair Employment
and Housing Act, and the Federal Age Discrimination in Employment Act of 1967,
as amended ("ADEA"), or claims for wrongful termination, breach of the covenant
of good faith, contract claims, tort claims, and wage or benefit claims,
including but not limited to, claims for salary, bonuses, commissions, stock,
stock options, vacation pay, fringe benefits, severance pay or any form of
compensation.
I also acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A general release does not
extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor." I hereby expressly waive
and relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to any claims I may have against the
Company.
I acknowledge that, among other rights, I am waiving and releasing any
rights I may have under ADEA, that this Release and Waiver is knowing and
voluntary, and that the consideration given for this Release and Waiver is in
addition to anything of value to which I was already entitled as an Employee of
the Company. I further acknowledge that I have been advised, as required by the
Older Workers Benefit Protection Act, that: (a) the Release and Waiver granted
herein does not relate to claims which may arise after this Release and Waiver
is executed; (b) I have the right to consult with an attorney prior to executing
this Release and Waiver (although I may choose voluntarily not to do so); and if
I am over 40 years of age upon execution of this Release and Waiver: (c) I have
twenty-one (21) days from the date of termination of my employment with the
Company in which to consider this Release and Waiver (although I may choose
voluntarily to execute this Release and Waiver earlier); (d) I have seven (7)
days following the execution of this Release and Waiver to revoke my consent to
this Release and Waiver; and (e) this Release and Waiver shall not be effective
until the seven (7) day revocation period has expired.
Date: __________________ By:________________________
[Employee]
EXHIBIT B
Copper Mountain Networks, Inc.
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
In consideration of my employment or continued employment by Copper
Mountain Networks, Inc. (the "Company"), and the compensation now and hereafter
paid to me, I, [Employee], hereby agree as follows:
1. Nondisclosure
1.1 Recognition of Company's Rights; Nondisclosure. At all times during
my employment and thereafter, I will hold in strictest confidence and will not
disclose, use, lecture upon or publish any of the Company's Proprietary
Information (defined below), except as such disclosure, use or publication may
be required in connection with my work for the Company, or unless an officer of
the Company expressly authorizes such in writing. I will obtain Company's
written approval before publishing or submitting for publication any material
(written, verbal, or otherwise) that relates to my work at Company and/or
incorporates any Proprietary Information. I hereby assign to the Company any
rights I may have or acquire in such Proprietary Information and recognize that
all Proprietary Information shall be the sole property of the Company and its
assigns.
1.2 Proprietary Information. The term "Proprietary Information" shall
mean any and all confidential and/or proprietary knowledge, data or information
of the Company. By way of illustration but not limitation, "Proprietary
Information" includes (a) trade secrets, inventions, mask works, ideas,
processes, formulas, source and object codes, data, programs, other works of
authorship, know-how, improvements, discoveries, developments, designs and
techniques (hereinafter collectively referred to as "Inventions"); and (b)
information regarding plans for research, development, new products, marketing
and selling, business plans, budgets and unpublished financial statements,
licenses, prices and costs, suppliers and customers; and (c) information
regarding the skills and compensation of other employees of the Company.
Notwithstanding the foregoing, it is understood that, at all such times, I am
free to use information which is generally known in the trade or industry, which
is not gained as result of a breach of this Agreement, and my own, skill,
knowledge, know-how and experience to whatever extent and in whichever way I
wish.
1.3 Third Party Information. I understand, in addition, that the Company
has received and in the future will receive from third parties confidential or
proprietary information ("Third Party Information") subject to a duty on the
Company's part to maintain the confidentiality of such information and to use it
only for certain limited purposes. During the term of my employment and
thereafter, I will hold Third Party Information in the strictest confidence and
will not disclose to anyone (other than Company personnel who need to know such
information in connection with their work for the Company) or use, except in
connection with my work for the Company, Third Party Information unless
expressly authorized by an officer of the Company in writing.
1.4 No Improper Use of Information of Prior Employers and Others. During
my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or any
other person to whom I have an obligation of confidentiality, and I will not
bring onto the premises of the Company any unpublished documents or any property
belonging to any former employer or any other person to whom I have an
obligation of confidentiality unless consented to in writing by that former
employer or person. I will use in the performance of my duties only information
which is generally known and used by persons with training and experience
comparable to my own, which is common knowledge in the industry or otherwise
legally in the public domain, or which is otherwise provided or developed by the
Company.
2. Assignment of Inventions.
2.1 Proprietary Rights. The term "Proprietary Rights" shall mean all
trade secret, patent, copyright, mask work and other intellectual property
rights throughout the world.
2.2 Prior Inventions. Inventions, if any, patented or unpatented, which I
made prior to the
1.
commencement of my employment with the Company are excluded from the scope of
this Agreement. To preclude any possible uncertainty, I have set forth on
Exhibit B-2 (Previous Inventions) attached hereto a complete list of all
Inventions that I have, alone or jointly with others, conceived, developed or
reduced to practice or caused to be conceived, developed or reduced to practice
prior to the commencement of my employment with the Company, that I consider to
be my property or the property of third parties and that I wish to have excluded
from the scope of this Agreement (collectively referred to as "Prior
Inventions"). If disclosure of any such Prior Invention would cause me to
violate any prior confidentiality agreement, I understand that I am not to list
such Prior Inventions in Exhibit B-2 but am only to disclose a cursory name for
each such invention, a listing of the party(ies) to whom it belongs and the fact
that full disclosure as to such inventions has not been made for that reason. A
space is provided on Exhibit B-2 for such purpose. If no such disclosure is
attached, I represent that there are no Prior Inventions. If, in the course of
my employment with the Company, I incorporate a Prior Invention into a Company
product, process or machine, the Company is hereby granted and shall have a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with
rights to sublicense through multiple tiers of sublicensees) to make, have made,
modify, use and sell such Prior Invention. Notwithstanding the foregoing, I
agree that I will not incorporate, or permit to be incorporated, Prior
Inventions in any Company Inventions without the Company's prior written
consent.
2.3 Assignment of Inventions. Subject to Sections 2.4 and 2.6, I hereby
assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and to
any and all Inventions (and all Proprietary Rights with respect thereto) whether
or not patentable or registrable under copyright or similar statutes, made or
conceived or reduced to practice or learned by me, either alone or jointly with
others, during the period of my employment with the Company. Inventions assigned
to the Company, or to a third party as directed by the Company pursuant to this
Section 2, are hereinafter referred to as "Company Inventions".
2.4 Nonassignable Inventions. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section 2870
of the California Labor Code (hereinafter "Section 2870"). I have reviewed the
notification on Exhibit B-1 (Limited Exclusion Notification) and agree that my
signature acknowledges receipt of the notification.
2.5 Obligation to Keep Company Informed. During the period of my
employment and for six (6) months after termination of my employment with the
Company, I will promptly disclose to the Company fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others. In addition, I will promptly disclose to the Company all
patent applications filed by me or on my behalf within a year after termination
of employment. At the time of each such disclosure, I will advise the Company in
writing of any Inventions that I believe fully qualify for protection under
Section 2870; and I will at that time provide to the Company in writing all
evidence necessary to substantiate that belief. The Company will keep in
confidence and will not use for any purpose or disclose to third parties without
my consent any confidential information disclosed in writing to the Company
pursuant to this Agreement relating to Inventions that qualify fully for
protection under the provisions of Section 2870. I will preserve the
confidentiality of any Invention that does not fully qualify for protection
under Section 2870.
2.6 Government or Third Party. I also agree to assign all my right, title
and interest in and to any particular Company Invention to a third party,
including without limitation the United States, as directed by the Company.
2.7 Works for Hire. I acknowledge that all original works of authorship
which are made by me (solely or jointly with others) within the scope of my
employment and which are protectable by copyright are "works made for hire",
pursuant to United States Copyright Act (17 U.S.C., Section 101).
2.8 Enforcement of Proprietary Rights. I will assist the Company in every
proper way to obtain, and from time to time enforce, United States and foreign
Proprietary Rights relating to Company Inventions in any and all countries. To
that end I will execute, verify and deliver such documents and perform such
other acts (including appearances as a witness) as the Company may reasonably
request for use in applying for, obtaining, perfecting, evidencing, sustaining
and enforcing such Proprietary Rights and the assignment thereof. In addition, I
will execute, verify and deliver assignments of such Proprietary
2.
Rights to the Company or its designee. My obligation to assist the Company with
respect to Proprietary Rights relating to such Company Inventions in any and all
countries shall continue beyond the termination of my employment, but the
Company shall compensate me at a reasonable rate after my termination for the
time actually spent by me at the Company's request on such assistance.
In the event the Company is unable for any reason, after reasonable effort, to
secure my signature on any document needed in connection with the actions
specified in the preceding paragraph, I hereby irrevocably designate and appoint
the Company and its duly authorized officers and agents as my agent and attorney
in fact, which appointment is coupled with an interest, to act for and in my
behalf to execute, verify and file any such documents and to do all other
lawfully permitted acts to further the purposes of the preceding paragraph with
the same legal force and effect as if executed by me. I hereby waive and
quitclaim to the Company any and all claims, of any nature whatsoever, which I
now or may hereafter have for infringement of any Proprietary Rights assigned
hereunder to the Company.
3. Records. I agree to keep and maintain adequate and current records
(in the form of notes, sketches, drawings and in any other form that may be
required by the Company) of all Proprietary Information developed by me and all
Inventions made by me during the period of my employment at the Company, which
records shall be available to and remain the sole property of the Company at all
times.
4. Additional Activities. I agree that during the period of my
employment by the Company I will not, without the Company's express written
consent, engage in any employment or business activity which is competitive
with, or would otherwise conflict with, my employment by the Company. I agree
further that for the period of my employment by the Company and for one (l) year
after the date of termination of my employment by the Company I will not induce
any employee of the Company to leave the employ of the Company.
5. No Conflicting Obligation. I represent that my performance of all the
terms of this Agreement and as an Employee of the Company does not and will not
breach any agreement to keep in confidence information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any agreement either written or oral in
conflict herewith.
6. Return of Company Documents. When I leave the employ of the Company,
I will deliver to the Company any and all drawings, notes, memoranda,
specifications, devices, formulas, and documents, together with all copies
thereof, and any other material containing or disclosing any Company Inventions,
Third Party Information or Proprietary Information of the Company. I further
agree that any property situated on the Company's premises and owned by the
Company, including disks and other storage media, filing cabinets or other work
areas, is subject to inspection by Company personnel at any time with or without
notice. Prior to leaving, I will cooperate with the Company in completing and
signing the Company's termination statement.
7. Legal and Equitable Remedies. Because my services are personal and
unique and because I may have access to and become acquainted with the
Proprietary Information of the Company, the Company shall have the right to
enforce this Agreement and any of its provisions by injunction, specific
performance or other equitable relief, without bond and without prejudice to any
other rights and remedies that the Company may have for a breach of this
Agreement.
8. Notices. Any notices required or permitted hereunder shall be given
to the appropriate party at the address specified below or at such other address
as the Party shall specify in writing. Such notice shall be deemed given upon
personal delivery to the appropriate address or if sent by certified or
registered mail, three (3) days after the date of mailing.
9. Notification of New Employer. In the event that I leave the employ of
the Company, I hereby consent to the notification of my new employer of my
rights and obligations under this Agreement.
10. General Provisions.
10.1 Governing Law; Consent to Personal Jurisdiction. This Agreement will
be governed by and construed according to the laws of the State of California,
as such laws are applied to agreements entered into and to be performed entirely
within California between California residents. I
3.
hereby expressly consent to the personal jurisdiction of the state and federal
courts located in San Diego County, California for any lawsuit filed there
against me by Company arising from or related to this Agreement.
10.2 Severability. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If moreover, any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, it shall be construed
by limiting and reducing it, so as to be enforceable to the extent compatible
with the applicable law as it shall then appear.
10.3 Successors and Assigns. This Agreement will be binding upon my heirs,
executors, administrators and other legal representatives and will be for the
benefit of the Company, its successors, and its assigns.
10.4 Survival. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the Company
to any successor in interest or other assignee.
10.5 Employment. I agree and understand that nothing in this Agreement
shall confer any right with respect to continuation of employment by the
Company, nor shall it interfere in any way with my right or the Company's right
to terminate my employment at any time, with or without Cause.
10.6 Waiver. No waiver by the Company of any breach of this Agreement
shall be a waiver of any preceding or succeeding breach. No waiver by the
Company of any right under this Agreement shall be construed as a waiver of any
other right. The Company shall not be required to give notice to enforce strict
adherence to all terms of this Agreement.
10.7 Entire Agreement. The obligations pursuant to Sections 1 and 2 of
this Agreement shall apply to any time during which I was previously employed,
or am in the future employed, by the Company as a consultant if no other
agreement governs nondisclosure and assignment of inventions during such period.
This Agreement is the final, complete and exclusive agreement of the Parties
with respect to the subject matter hereof and supersedes and merges all prior
discussions between us. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, will be effective unless in
writing and signed by the Party to be charged. Any subsequent change or changes
in my duties, salary or compensation will not affect the validity or scope of
this Agreement.
This Agreement shall be effective as of the first day of my employment with
the Company, namely: _______________, 20__.
I have read this Agreement carefully and understand its terms. I have
completely filled out Exhibit B-1 to this Agreement.
Dated: ______________________________________
______________________________________________
(Signature)
______________________________________________
(Employee's Printed Name)
Accepted and Agreed To:
Copper Mountain Networks, Inc.
____________________________
____________________________
By:______________________________
Title:___________________________
Dated:___________________________
4.
Exhibit B-1
LIMITED EXCLUSION NOTIFICATION
This is to notify The Employee in accordance with Section 2872 of the
California Labor Code that the foregoing Agreement between the Employee and the
Company does not require the Employee to assign or offer to assign to the
Company any invention that the Employee developed entirely on your own time
without using the Company's equipment, supplies, facilities or trade secret
information except for those inventions that either:
1. Relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably
anticipated research or development of the Company;
2. Result from any work performed by The Employee for the Company.
To the extent a provision in the foregoing Agreement purports to require
the Employee to assign an invention otherwise excluded from the preceding
paragraph, the provision is against the public policy of this state and is
unenforceable.
This limited exclusion does not apply to any patent or invention covered by
a contract between the Company and the United States or any of its agencies
requiring full title to such patent or invention to be in the United States.
I acknowledge receipt of a copy of this notification.
_________________________________
[Employee]
Date:____________________________
Witnessed by:
________________________________________
(Printed Name of Representative)
Exhibit B-2
TO: Copper Mountain Networks, Inc.
FROM: [Employee]
DATE: ________________, 2000
SUBJECT: Previous Inventions
1. Except as listed in Section 2 below, the following is a complete list of
all inventions or improvements relevant to the subject matter of my employment
by Copper Mountain Networks, Inc. (the "Company") that have been made or
conceived or first reduced to practice by me alone or jointly with others prior
to my engagement by the Company:
[_] No inventions or improvements.
[_] See below:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
[_] Additional sheets attached.
2. Due to a prior confidentiality agreement, I cannot complete the
disclosure under Section 1 above with respect to inventions or improvements
generally listed below, the proprietary rights and duty of confidentiality with
respect to which I owe to the following party(ies):
Invention or Improvement Party(ies) Relationship
1. _______________________ ____________ ________________________
2. _______________________ ____________ ________________________
3. _______________________ ____________ ________________________
[_] Additional sheets attached.
Exhibit B-2
TO: Copper Mountain Networks, Inc.
FROM: [Employee]
DATE: ________________, 2000
SUBJECT: Previous Inventions
1. Except as listed in Section 2 below, the following is a complete list of
all inventions or improvements relevant to the subject matter of my employment
by Copper Mountain Networks, Inc. (the "Company") that have been made or
conceived or first reduced to practice by me alone or jointly with others prior
to my engagement by the Company:
[ ] No inventions or improvements.
[ ] See below:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
[ ] Additional sheets attached.
2. Due to a prior confidentiality agreement, I cannot complete the
disclosure under Section 1 above with respect to inventions or improvements
generally listed below, the proprietary rights and duty of confidentiality with
respect to which I owe to the following party(ies):
Invention or Improvement Party(ies) Relationship
1. _______________________ ____________ ________________________
2. _______________________ ____________ ________________________
3. _______________________ ____________ ________________________
[ ] Additional sheets attached.
Exhibit H
FORM OF NONCOMPETITION AGREEMENT
1.
NONCOMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (the "AGREEMENT") is made and entered into
as of _______ __, 2000 (the "AGREEMENT DATE"), by and between COPPER MOUNTAIN
NETWORKS, INC., a Delaware corporation (the "PARENT"), ONPREM NETWORKS, INC., a
California corporation ("COMPANY"), and _______________ ("Employee").
Capitalized terms used herein and not otherwise defined shall have the meanings
given to them in the Merger Agreement.
RECITALS
A. As a key employee, substantial stockholder and optionholder of the
Company, Employee has obtained extensive and valuable knowledge and confidential
information concerning the business of the Company.
B. Parent and the Company have entered into an Agreement and Plan of Merger
and Reorganization (the "MERGER AGREEMENT") of even date herewith, providing for
the acquisition by Parent of the Company pursuant to a merger of a wholly owned
subsidiary of Parent ("MERGER SUB") with and into the Company (the "MERGER").
This Agreement will become effective on the date the Merger becomes effective
(the "Closing Date").
C. In connection with the Merger, Employee (i) will receive substantial
benefits as a result of the Merger; (ii) has been offered employment with Parent
contingent upon the occurrence of and following the Closing Date; and (iii) will
be paid four hundred thousand dollars ($400,000) during the term of this
Agreement, contingent upon Employee's continued compliance with the terms of
this Agreement. Employee will be paid one hundred twenty-five thousand dollars
($125,000) in each of the first and second years of this Agreement, in equal
monthly installments. Employee will be paid one hundred fifty thousand dollars
($150,000) during the third year of this Agreement in equal monthly
installments. The Employee's right to receive the payments provided for herein
shall cease and be rendered a nullity immediately should the Employee violate
any provision of this Agreement. Employee's right to receive the payments
provided for herein are not contingent on Employee's employment with the
Company. As an inducement to Parent and Merger Sub to consummate the Merger and
enable Parent and Merger Sub to secure more fully the benefits of the Merger and
for the additional consideration provided herein, Employee has agreed not to
compete in the manner and to the extent herein set forth in this Agreement.
D. Employee's obligations under this Agreement are separate and independent
from Employee's obligations under the Employment Agreement which Employee will
simultaneously enter into with the Company. Employee's obligations under this
Agreement will remain in full force and effect during the term of the
Noncompetition Agreement, regardless of whether Employee remains employed with
the Company.
E. Parent has requested, as a condition precedent to executing the Merger
Agreement and consummating the transactions contemplated by the Merger
Agreement, that Employee execute and deliver this Agreement, and Employee
desires to enter into this Agreement.
1.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein
contemplated and intending to be legally bound hereby, the parties hereto agree
as follows:
1. RESTRICTION ON COMPETITION. In order to induce the Company to consummate
the Merger and for other good and valuable consideration as provided herein,
Employee agrees that, during the Noncompetition Period, Employee shall not:
(a) engage directly or indirectly in Competition in any Restricted
Territory; or
(b) directly or indirectly be or become an officer, director,
stockholder, owner, co-owner, Affiliate, partner, promoter, employee, agent,
representative, designer, consultant, advisor, manager, licensor, sublicensor,
licensee or sublicensee of, for or to, or otherwise be or become associated with
or acquire or hold (of record, beneficially or otherwise) any direct or indirect
interest in, any Person that engages directly or indirectly in Competition in
any Restricted Territory;
provided, however, that Employee may, without violating this Section 1,
own, as a passive investment, shares of capital stock of a publicly-held
corporation that engages in Competition if (i) such shares are actively traded
on an established national securities market in the United States, (ii) the
number of shares of such corporation's capital stock that are owned beneficially
(directly or indirectly) by Employee and the number of shares of such
corporation's capital stock that are owned beneficially (directly or indirectly)
by Employee's Affiliates collectively represent less than one percent of the
total number of shares of such corporation's capital stock outstanding, and
(iii) neither Employee nor any Affiliate of Employee is otherwise associated
directly or indirectly with such corporation or with any Affiliate of such
corporation.
2. NO HIRING OR SOLICITATION OF EMPLOYEES. Employee agrees that, during the
Noncompetition Period, Employee shall not, and shall not permit any of his
Affiliates to: (a) hire any Specified Employee, or (b) directly or indirectly,
personally or through others, encourage, induce, attempt to induce, solicit or
attempt to solicit (on Employee's own behalf or on behalf of any other Person)
any Specified Employee or any other employee to leave his or her employment with
Parent, the Company or any of Parent's other subsidiaries. (For purposes of this
Section 2, "Specified Employee" shall mean any individual who (i) is or was an
employee of Parent, the Company or any of the Company's other subsidiaries on
the date of this Agreement or during the 180-day period ending on the date of
this Agreement, and (ii) remains or becomes an employee of Parent, the Company
or any of the Company's other subsidiaries on the date of this Agreement or at
any time during the Noncompetition Period.
3. ACKNOWLEDGEMENTS BY EMPLOYEE. Employee acknowledges that by virtue of
his position with the Company he or she has developed considerable expertise in
the business operations of the Company and has had extensive access to trade
secrets and other confidential information of the Company. Employee recognizes
that Parent would be irreparably damaged, and its substantial investment in the
Company materially impaired, if Employee were to enter into an activity
competing with the business of Parent, the Company (or any subsidiary, successor
or acquiror of Parent or the
2.
Company) in violation of the terms of this Agreement or if Employee were to
disclose or make unauthorized use of any confidential information concerning the
business of Parent, the Company (or any subsidiary, successor or acquiror of
Parent or the Company). Accordingly, Employee expressly acknowledges that he or
she is voluntarily entering into this Agreement and that the terms and
conditions of this Agreement are fair and reasonable to Employee in all
respects.
4. CONFIDENTIALITY. Employee agrees that he shall hold all Confidential
Information in strict confidence and shall not at any time (whether during or
after the Noncompetition Period): (a) reveal, report, publish, disclose or
transfer any Confidential Information to any Person (other than Parent or the
Company), except in the performance of his obligations as an employee of Parent;
(b) use any Confidential Information for any purpose, except in the performance
of his obligations as an employee of Parent; or (c) use any Confidential
Information for the benefit of any Person (other than Parent or the Company.)
Employee agrees that as a condition of his employment with Parent, he will
execute the Proprietary Information & Inventions Agreement, attached to the
Employment Agreement he will enter into with Parent effective the Closing Date.
5. REPRESENTATIONS AND WARRANTIES. Employee represents and warrants, to and
for the benefit of the Indemnitees, that: (a) he has full power and capacity to
execute and deliver, and to perform all of his obligations under, this
Agreement; and (b) neither the execution and delivery of this Agreement nor the
performance of this Agreement will result directly or indirectly in a violation
or breach of (i) any agreement or obligation by which Employee or any of his
Affiliates is or may be bound, or (ii) any law, rule or regulation. Employee's
representations and warranties shall survive the expiration of the
Noncompetition Period for an unlimited period of time.
6. INJUNCTIVE RELIEF. Employee agrees that he is obligated under this
Agreement to render services and comply with covenants of a special, unique,
unusual and extraordinary character, thereby giving this Agreement peculiar
value so that the loss of such service or violation by Employee of this
Agreement, including but not limited to, Sections 1, 3 and 4 herein could not
reasonably or adequately be compensated in damages at law. Therefore,
notwithstanding Section 15 herein, Employee agrees that, in the event of any
breach or threatened breach by Employee of any covenant or obligation contained
in this Agreement, each of Parent, the Company and any of Parent's or the
Company's other subsidiaries and the other Indemnitees shall be entitled (in
addition to any other remedy that may be available to it, including monetary
damages) to seek and obtain (a) a decree or order of specific performance to
enforce the observance and performance of such covenant or obligation, and (b)
an injunction restraining such breach or threatened breach. Employee further
agrees that no Indemnitee shall be required to obtain, furnish or post any bond
or similar instrument in connection with or as a condition to obtaining any
remedy referred to in this Section 6, and Employee irrevocably waives any right
he may have to require any Indemnitee to obtain, furnish or post any such bond
or similarly instrument.
7. INDEMNIFICATION. Without in any way limiting any of the rights or
remedies otherwise available to any of the Indemnitees, Employee shall indemnify
and hold harmless each Indemnitee against and from any loss, damage, injury,
harm, detriment, lost opportunity, liability, exposure, claim, demand,
settlement, judgment, award, fine, penalty, tax, fee (including attorneys'
fees), charge or expense (whether or not relating to any third-party claim) that
is directly or indirectly suffered or incurred at any time (whether during or
after the Noncompetition Period) by such Indemnitee, or to which such Indemnitee
otherwise becomes
3.
subject at any time (whether during or after the Noncompetition Period), and
that arises directly or indirectly out of or by virtue of, or relates directly
or indirectly to, (a) any inaccuracy in or breach of any representation or
warranty contained in this Agreement, or (b) any failure on the part of Employee
to observe, perform or abide by, or any other breach of, any restriction,
covenant, obligation or other provision contained in this Agreement.
8. NON-EXCLUSIVITY. The rights and remedies of Parent, the Company, and the
other Indemnitees under this Agreement are not exclusive of or limited by any
other rights or remedies which they may have, whether at law, in equity, by
contract or otherwise, all of which shall be cumulative (and not alternative).
Without limiting the generality of the foregoing, the rights and remedies of
Parent, the Company, and the other Indemnitees under this Agreement, and the
obligations and liabilities of Employee under this Agreement, are in addition to
their respective rights, remedies, obligations and liabilities under the law of
unfair competition, under laws relating to misappropriation of trade secrets,
under other laws and common law requirements and under all applicable rules and
regulations. Nothing in this Agreement shall limit any of Employee's
obligations, or the rights or remedies of Parent, the Company or any of the
other Indemnitees, under the Merger Agreement; and nothing in the Merger
Agreement shall limit any of Employee's obligations, or any of the rights or
remedies of Parent, the Company or any of the other Indemnitees, under this
Agreement. No breach on the part of Parent, the Company or any other party of
any covenant or obligation contained in the Merger Agreement, or any other
agreement shall limit or otherwise affect any right or remedy of Parent, the
Company or any of the other Indemnitees under this Agreement.
9. SEVERABILITY. If any provision of this Agreement or any part of any such
provision is held under any circumstances to be invalid or unenforceable in any
jurisdiction, then (a) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circumstances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Agreement. Each provision of this
Agreement is separable from every other provision of this Agreement, and each
part of each provision of this Agreement is separable from every other part of
such provision.
10. GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed in all respects by, the laws of the State of California (without
giving effect to principles of conflicts of laws).
11. WAIVER. No failure on the part of Parent, the Company or any other
Indemnitee to exercise any power, right, privilege or remedy under this
Agreement, and no delay on the part of Parent, the Company or any other
Indemnitee in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. No Indemnitee shall be deemed to have waived any
claim of such Indemnitee arising out of this Agreement, or any power, right,
privilege or remedy of such Indemnitee under this Agreement,
4.
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
Indemnitee; and any such waiver shall not be applicable or have any effect
except in the specific instance in which it is given.
12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of Employee and his heirs, executors, estate, personal
representatives and legal representatives. This Agreement shall be binding upon
and shall inure to the benefit of Parent, the Company, and the other
Indemnitees. Each of Parent, the Company, and the other Indemnitees may freely
assign any or all of its rights under this Agreement, at any time, in whole or
in part, to any Person without obtaining the consent or approval of Employee or
of any other Person. Because of the unique and personal nature of Employee's
duties under this Agreement, neither this Agreement nor any rights or
obligations under this Agreement shall be assignable by Employee.
13. INTEGRATION. This Agreement forms the complete and exclusive statement
of the terms of Employee's agreement with Parent and the Company regarding the
subject matter herein.
14. FURTHER ASSURANCES. Employee shall (at Employee's sole expense) execute
and/or cause to be delivered to each Indemnitee such instruments and other
documents, and shall (at Employee's sole expense) take such other actions, as
such Indemnitee may reasonably request at any time (whether during or after the
Noncompetition Period) for the purpose of carrying out or evidencing any of the
provisions of this Agreement.
15. ARBITRATION. To ensure rapid and economical resolution of any disputes
which may arise under this Agreement, Employee and the Company agree that any
and all disputes or controversies of any nature whatsoever, arising from or
regarding the interpretation, performance, enforcement or breach of this
Agreement shall be resolved by confidential, final and binding arbitration
(rather than trial by jury or court or resolution in some other forum) to the
fullest extent permitted by law. Any arbitration proceeding pursuant to this
Agreement shall be conducted by the American Arbitration Association ("AAA") in
Palo Alto, California under the then existing employment-related AAA arbitration
rules. If for any reason all or part of this arbitration provision is held to be
invalid, illegal, or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other portion of this arbitration provision or any other
jurisdiction, but this provision will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable part or parts of
this provision had never been contained herein, consistent with the general
intent of the parties insofar as possible.
EMPLOYEE HAS READ Section 15 AND IRREVOCABLY AGREES TO ARBITRATE ANY DISPUTE
IDENTIFIED ABOVE. ______ (Employee's Initials)
16. CAPTIONS. The captions contained in this Agreement are for convenience
of reference only, shall not be deemed to be a part of this Agreement and shall
not be referred to in connection with the construction or interpretation of this
Agreement.
17. CONSTRUCTION. Whenever required by the context, the singular number
shall include the plural, and vice versa; the masculine gender shall include the
feminine and neuter
5.
genders; and the neuter gender shall include the masculine and feminine genders.
Any rule of construction to the effect that ambiguities are to be resolved
against the drafting party shall not be applied in the construction or
interpretation of this Agreement. Neither the drafting history nor the
negotiating history of this Agreement shall be used or referred to in connection
with the construction or interpretation of this Agreement. As used in this
Agreement, the words "include" and "including," and variations thereof, shall
not be deemed to be terms of limitation, and shall be deemed to be followed by
the words "without limitation." Except as otherwise indicated in this Agreement,
all references in this Agreement to "Sections" are intended to refer to Sections
of this Agreement.
18. SURVIVAL OF OBLIGATIONS. Except as specifically provided herein, the
obligations of Employee under this Agreement (including the obligations under
Sections 3, 4, 6 and 12) shall survive the expiration of the Noncompetition
Period. The expiration of the Noncompetition Period shall not operate to relieve
Employee of any obligation or liability arising from any prior breach by
Employee of any provision of this Agreement.
19. OBLIGATIONS ABSOLUTE. Employee's obligations under this Agreement are
absolute and shall not be terminated or otherwise limited by virtue of any
breach (on the part of Parent, the Company, any other Indemnitee or any other
Person) of any provision of the Merger Agreement or any other agreement, or by
virtue of any failure to perform or other breach of any obligation of Parent,
the Company, any other Indemnitee or any other Person.
20. AMENDMENT. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of Employee, and Parent (or any successor to Parent, the
Company (or any successor to Parent or the Company).
21. DEFINED TERMS. For purposes of this Agreement:
(a) "Affiliate" means, with respect to any specified Person, any other
Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with such specified
Person.
(b) A Person shall be deemed to be engaged in "Competition" if: such
Person or any of such Person's subsidiaries or other Affiliates is engaged
directly or indirectly in any manner or capacity, as adviser, principal, agent,
affiliate, promoter, partner, officer, director, employee, stockholder, owner,
co-owner, consultant, or member of any association or otherwise, in any phase of
the business of designing, developing, manufacturing, assembling, promoting,
selling, supplying, distributing, reselling, installing, supporting,
maintaining, repairing, refurbishing, licensing, sublicensing, financing,
leasing or subleasing any products or services which relate to Digital
Subscriber Line (DSL) solutions and/or related network management tools.
Pursuant to this Section, if, subsequent to his employment with the Company,
Employee undertakes employment with an entity whose business includes activities
relating to DSL solutions and/or related network management tools, but
Employee's activities for the entity do not include participating in or
responsibility for such DSL solutions or related management tool aspects of the
entity's business, Employee shall not be in violation of this Section.
(c) "Confidential Information" means any non-public information
(whether or not in written form and whether or not expressly designated as
confidential) relating directly or
6.
indirectly to the business, operations, financial affairs, performance, assets,
technology, processes, products, contracts, customers, licensees, sublicensees,
suppliers, personnel, consultants or plans of Parent, the Company or any of
Parent or the Company's other subsidiaries (including any such information
consisting of or otherwise relating to trade secrets, know-how, technology,
inventions, prototypes, designs, drawings, sketches, processes, license or
sublicense arrangements, formulae, proposals, research and development
activities, customer lists or preferences, pricing lists, referral sources,
marketing or sales techniques or plans, operations manuals, service manuals,
financial information, projections, lists of consultants, lists of suppliers or
lists of distributors); provided, however, that "Confidential Information" shall
not be deemed to include information of Parent, or the Company that is already
publicly known and in the public domain through no direct or indirect action of
Employee.
(d) "Indemnitees" shall include: (i) Parent; (ii) the Company; (iii)
each Person (other than Employee) who is or becomes an Affiliate of Parent or
the Company; and (iv) the successors and assigns of each of the Persons referred
to in clauses "(i)", "(ii)" and "(iii)" of this sentence.
(e) "Noncompetition Period" shall mean the term of this Agreement and
shall be the period commencing on the date of this Agreement and ending on the
third anniversary of the effective date of this Agreement.
(f) "Person" means any: (i) individual; (ii) corporation, general
partnership, limited partnership, limited liability partnership, trust, company
(including any limited liability company or joint stock company) or other
organization or entity; or (iii) governmental body or authority.
(g) "Restricted Territory" means the entire world.
IN WITNESS WHEREOF, Employee has duly executed and delivered this Agreement
as of the date first above written.
[EMPLOYEE]
Address: ____________________________________
Telephone No.:( )_________ Facsimile:( )_________
7.
Exhibit I
COMPANY SHAREHOLDERS
Xxxxxx Xxxxxxxx
Xxxxx Xxx
Xxx Xxxxxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxxx
Tredegar Investments
Xxxxxxx Xxxxxxx & Xxxxx
Xxxxxxx Xxxx
Xxxx Xxx
1.
Exhibit J
EMPLOYEES
Xxx Xxxxxxx
Xxxxxx Xxxxxxxx
Xxxxx Xxx
Xxxxxxxx Xxxxxxxxxx
Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxxxxxxxx Xxxxxxxx
1.
Exhibit K
FORM OF LEGAL OPINION OF XXXXXX XXXXXXX XXXXXXXX & XXXXXX PC
1.
FORM OF OPINION OF XXXXXX XXXXXXX XXXXXXXX & XXXXXX
[Customary qualifications to be added]
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. The Company has all
requisite corporate power to own, lease and operate its properties and to carry
on its business as currently being conducted.
2. The Company has all requisite corporate power and authority to enter
into the Agreement and Plan of Merger and Reorganization (the "Agreement") and
to consummate the transactions contemplated thereby. The execution and delivery
of the Agreement and the consummation of the transactions contemplated thereby
have been duly authorized by all necessary corporate and shareholder action on
the part of the Company. The Agreement has been duly executed and delivered by
the Company and constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
3. Subject to the filing of the Certificate of Merger as required by the
California Corporations Code with the Secretary of State of California, the
execution and delivery by the Company of the Agreement and the consummation by
the Company of the transactions contemplated thereby will not, other than as
expressly contemplated by the Agreement, (a) conflict with or violate any
provision of the Articles of Incorporation or Bylaws of the Company as currently
in effect, or (b) to our knowledge, conflict with or violate any judgment, order
or decree, or any statute, law, ordinance, rule or regulation applicable to the
Company.
4. No consent, approval, permit, order or authorization of, or
registration, declaration of filing with, any Governmental Entity is required by
or with respect to the Company in connection with the execution and delivery by
the Company of the Agreement or the consummation by the Company of the
transactions contemplated thereby, except for (i) the filing of the Certificate
of Merger, together with the required State of California Franchise Tax Board
Tax Clearance Certificate, with the Secretary of State of the State of
California, (ii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities laws and the securities laws of any foreign country, and (iii)
such other consents, authorizations, filings, approvals and registrations which,
if not obtained or made, would not have any Material Adverse Effect on the
Company and would not prevent, or materially alter or delay, the consummation by
the Company of transactions contemplated by the Agreement.
Exhibit L
FORM OF LEGAL OPINION OF COOLEY GODWARD LLP
1.
FORM OF OPINION OF XXXXXX GODWARD LLP
[Customary qualifications to be added]
As used herein, "Company" refers to Copper Mountain Networks, Inc., a
Delaware corporation, "Acquisition Corp." refers to Copper Mountain Acquisition
Corp., a Delaware corporation, and "Merger Shares" refers to the shares of the
Company issued in the Merger. All other capitalized terms used but not defined
herein have the respective meanings given to them in the Merger Agreement.
1. Each of the Company and Acquisition Corp. has been duly incorporated
and is a validly existing corporation in good standing under the laws of the
State of Delaware.
2. Each of the Company and Acquisition Corp. has the requisite corporate
power to own or lease its property and assets and to conduct its business as it
is currently being conducted and, to the best of our knowledge, each of the
Company and Acquisition Corp. is qualified as a foreign corporation to do
business and is in good standing in each jurisdiction in the United States in
which the ownership of its property or the conduct of its business requires such
qualification and where any statutory fines or penalties or any corporate
disability imposed for the failure to so qualify would materially and adversely
affect the Company, its assets, financial condition or operations.
3. The Merger Agreement has been duly and validly authorized, executed
and delivered by each of the Company and Acquisition Corp. and constitutes a
valid and binding agreement of the Company and Acquisition Corp., enforceable
against each of the Company and Acquisition Corp. in accordance with its terms,
except as rights to indemnity under Section 11 of the Merger Agreement may be
limited by applicable laws and except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors' rights, and subject to general equity
principles and to limitations on availability of equitable relief, including
specific performance.
4. The execution and delivery of the Merger Agreement by the Company and
the issuance of the Merger Shares pursuant thereto do not violate any provision
of the Company's Amended and Restated Certificate of Incorporation or bylaws, as
amended, and, to our knowledge, do not violate or contravene (a) any
governmental statute, rule or regulation applicable to the Company or (b) any
order, writ, judgment, injunction, decree, determination or award which has been
entered against the Company and of which we are aware, the violation or
contravention of which would materially and adversely affect the Company, its
assets, financial condition or operations.
5. The Merger Shares have been duly authorized, and upon issuance and
delivery in accordance with the terms of the Merger Agreement, the Merger Shares
will be validly issued, outstanding, fully paid and nonassessable.
6. All consents, approvals, authorizations or orders of, or filings,
registrations and qualifications with any regulatory authority or governmental
body in the United States required for
1.
the consummation by the Company of the transactions contemplated by the
Merger Agreement have been made or obtained, except (a) the filing of the
California Agreement of Merger with the Secretary of State of the State of
California as contemplated by Section 1.3 of the Merger Agreement, (b) the
filing of the Delaware Certificate of Merger with the Secretary of State of the
State of Delaware as contemplated by Section 1.3 of the Merger Agreement, (c)
any filings which may be required to be made in connection with the Merger and
the transactions contemplated thereby under applicable state securities laws,
and (d) the filing of a Form D pursuant to Securities and Exchange Commission
Regulation D.
2.
