EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of July 2, 2001, by and among HPL Technologies, Inc., a Delaware
corporation ("PARENT"), Heuristic Merger Sub, a California corporation and
wholly-owned subsidiary of Parent ("MERGER SUB"), and Heuristic Physics
Laboratories, Inc., a California corporation ("HPL"), with respect to the
following facts:
BACKGROUND
A. The respective boards of directors of Parent, Merger Sub and HPL have
approved and declared advisable the merger of Merger Sub with and into HPL (the
"MERGER"), upon the terms and subject to the conditions set forth herein, and
have determined that the Merger and the other transactions are fair to, and in
the best interests of, their respective security holders.
B. Pursuant to the Merger, among other things, the outstanding shares of
HPL Common Stock ("HPL COMMON STOCK") will be converted into common stock of
Parent ("PARENT COMMON STOCK") at the rate set forth herein.
C. For United States federal income tax purposes, it is intended that the
Merger will qualify as a tax-free reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended ("CODE").
The parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the California General Corporation Law ("CALIFORNIA
LAW"): (i) Merger Sub shall be merged with and into HPL, (ii) the separate
corporate existence of Merger Sub shall cease, and (iii) HPL shall be the
surviving corporation. HPL as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "SURVIVING CORPORATION."
1.2 CLOSING; EFFECTIVE TIME. The closing of the Merger and the other
transactions contemplated hereby (the "CLOSING") will take place at 10:00 a.m.,
local time, on a date to be specified by the parties (the "CLOSING DATE"). The
Closing shall take place at the offices of Xxxxxx Xxxxxx White & XxXxxxxxx LLP,
4250 Executive Square, 0xx Xxxxx, Xx Xxxxx, Xxxxxxxxxx 00000-0000, or at such
other location as the parties hereto shall mutually agree. At the Closing, the
parties hereto shall cause the Merger to be consummated by filing an Agreement
of Merger substantially in the form of EXHIBIT A (the "AGREEMENT OF MERGER")
with the Secretary of State of the State of California, in accordance with the
relevant provisions of the California Law (the time of such filing, or such
later time as may be agreed in writing by the parties and specified in the
Agreement of Merger, being the "EFFECTIVE TIME").
1.3 EFFECTS OF THE MERGER. The effects of the Merger shall be as provided
in this Agreement, the Agreement of Merger and the applicable provisions of the
California Law. Without limiting the foregoing, at the Effective Time all the
property, rights, privileges, powers and franchises of HPL and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of HPL
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4 CERTIFICATE OF INCORPORATION; BYLAWS.
(a) From and after the Effective Time, the Articles of Incorporation of
HPL, as in effect immediately prior to the Effective Time, shall be the Articles
of Incorporation of the Surviving Corporation.
(b) From and after the Effective Time, the Bylaws of HPL, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation.
1.5 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors and
officers of Merger Sub immediately prior to the Effective Time shall serve as
the initial directors and officers of the Surviving Corporation until their
respective successors are elected or appointed and qualified.
ARTICLE II
CONVERSION OF SHARES
2.1 CONVERSION OF STOCK. Pursuant to the Merger, and without any action on
the part of the holders of any outstanding shares of capital stock or other
securities of HPL or Merger Sub:
(a) Subject to Section 2.1(e), as of the Effective Time each share of
HPL Common Stock, issued and outstanding immediately prior to the Effective Time
(other than shares of HPL Common Stock to be canceled pursuant to Section
2.1(c)) shall be automatically converted into the right to receive 1.7 validly
issued, fully paid and nonassessable shares of Parent Common Stock (the
"EXCHANGE RATIO").
(b) As of the Effective Time, each holder of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of HPL Common Stock shall cease to have any rights with
respect thereto, except the right to receive a certificate representing the
number of whole shares of Parent Common Stock into which such shares have been
converted (the "PARENT STOCK CERTIFICATES").
(c) As of the Effective Time, each share of HPL Common Stock held of
record immediately prior to the Effective Time by HPL, Merger Sub, Parent, or
any "SUBSIDIARY" (as defined in Section 2.1(g), of HPL or of Parent shall be
canceled and extinguished without any conversion thereof.
(d) As of the Effective Time, each share of Common Stock, no par
value, of Merger Sub (the "MERGER SUB COMMON STOCK") issued and outstanding
immediately prior to the
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Effective Time shall be canceled, extinguished and automatically converted into
10,492.256 validly issued, fully paid and nonassessable shares of Common
Stock, no par value, of the Surviving Corporation. Each certificate evidencing
ownership of a number of shares of Merger Sub Common Stock shall be deemed to
evidence the ownership of that number of shares of Common Stock, no par value,
of the Surviving Corporation into which such shares of Merger Sub Common Stock
have been converted.
(e) No fractional shares of Parent Common Stock shall be issued in the
Merger. In lieu thereof, the shares of Parent Common Stock otherwise issuable to
each shareholder of HPL pursuant to Section 2.1(f), shall be rounded up or down
to the nearest whole share of Parent Common Stock.
(f) The Exchange Ratio shall be adjusted, or Parent shall make
appropriate provision, to reflect appropriately the effect of any stock split,
reverse stock split, stock dividend (including any dividend or distribution of
securities convertible into Parent Common Stock or HPL Common Stock),
reorganization, recapitalization or other like change with respect to Parent
Common Stock or HPL Common Stock occurring or having a record date or an
effective date on or after the date hereof and prior to the Effective Time.
(g) For purposes of this Agreement, (i) the term "SUBSIDIARY," when
used with respect to any Person, means any corporation or other organization,
whether incorporated or unincorporated, of which (A) at least a majority of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such Person (through ownership of securities,
by contract or otherwise) or (B) such Person or any Subsidiary of such Person is
a general partner of any general partnership or a manager of any limited
liability company. For the purposes of this Agreement, the term "PERSON" means
any individual, group, organization, corporation, partnership, joint venture,
limited liability company, trust, or entity of any kind.
2.2 HPL OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES.
(a) As of the Effective Time, Parent shall issue a substitute stock
option ("SUBSTITUTE OPTION"), in exchange for each stock option of HPL
outstanding immediately prior to the Effective Time ("HPL OPTION"). Each
Substitute Option shall contain substantially the same terms and conditions as
the HPL Option exchanged therefore, including, without limitation, type of
option, term of option, exercisability and anti-dilution rights, except that
the number of shares and option price of each Substitute Option shall be
adjusted to reflect the Exchange Ratio.
(b) As of the Effective Time, Parent shall, issue a substitute
stock purchase warrant ("SUBSTITUTE WARRANT") in exchange for each stock
purchase warrant of HPL outstanding immediately prior to the Effect Time ("HPL
WARRANT"). Each Substitute Warrant shall contain substantially the same terms
and conditions as the HPL Warrant exchanged therefor, including, without
limitation, term of warrant, exercisability and anti-dilution and registration
rights, if any, except that the number of shares and warrant price of each
Substitute Warrant shall be adjusted to reflect the Exchange Ratio.
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(c) If, at any time after the Effective Time, Applied Materials, Inc.
or any successor-in-interest ("AMAT"), acting as holder of that certain Secured
Convertible Debenture issued by HPL and dated as of February 15, 2000 (the
"CONVERTIBLE DEBENTURE"), elects to convert part or all of the Convertible
Debenture into HPL Common Stock pursuant to Section 8 thereof, Parent shall
issue to AMAT that number of whole shares of Parent Common Stock, in lieu of
shares of HPL Common Stock issuable upon conversion, equal to the number of
shares of HPL Common Stock issuable under the Convertible Debenture multiplied
by the Exchange Ratio and rounded to the nearest whole number.
2.3 EXCHANGE OF HPL STOCK CERTIFICATES.
(a) Promptly after the Effective Time, Parent shall mail or shall
cause to be mailed to each Holder instructions for surrender of the HPL
Certificates. Upon surrender to the Parent of an HPL Certificate, the Holder
shall be entitled to receive in exchange therefor: (i) Parent Stock
Certificates evidencing that number of whole shares of Parent Common Stock
issuable to such Holder in accordance with this Article II; and (ii) any
dividends or other distributions that such Holder has the right to receive
pursuant to Section 2.3(b). Such Parent Certificates, dividends and other
distributions are referred to collectively as the "EXCHANGE FUND." No Parent
Certificates will be issued to a Person who is not the registered owner of a
surrendered HPL Certificate, unless (i) the HPL Certificate so surrendered has
been properly endorsed or otherwise is in proper form for transfer and
(ii) such Person shall either (A) pay any transfer or other tax required by
reason of such issuance, or (B) establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
in accordance with the provisions of this Section 2.3, from and after the
Effective Time, each HPL Certificate shall be deemed to represent, for all
purposes other than payment of dividends, the right to receive a certificate
representing the number of whole shares of Parent Common Stock as determined in
accordance with this Article II. For purposes of this Agreement, "HPL
CERTIFICATE" means a certificate which immediately prior to the Effective Time
represented shares of HPL Common Stock and "HOLDER" means a person who holds
one or more HPL Certificates as of the Effective Time.
(b) No dividend or other distribution declared with respect to Parent
Common Stock with a record date after the Effective Time will be paid to Holders
of unsurrendered HPL Certificates until such Holders surrender their HPL
Certificates. Upon the surrender of such HPL Certificates, there shall be paid
to such Holders, promptly after such surrender, the amount of dividends or other
distributions, excluding interest, declared with a record date after the
Effective Time and not paid because of the failure to surrender HPL Certificates
for exchange.
(c) Any portion of the Exchange Fund that remains undistributed to the
former shareholders of HPL for twelve months after the Effective Time shall be
delivered to Parent, upon demand of Parent, and any such former shareholders who
have not theretofore complied with this Section 2.3 shall thereafter look only
to Parent for payment of their claims for Parent Common Stock and any dividends
or distributions with respect to Parent Common Stock.
(d) Notwithstanding anything to the contrary in this Agreement, none of
Parent, the Surviving Corporation nor any party hereto shall be liable to any
holder of shares of HPL
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Common Stock for shares of Parent Common Stock or cash in lieu of fractional
shares delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
2.4 OUTSTANDING PARENT COMMON STOCK. At the Effective time, all shares of
Parent Common Stock issued and outstanding, other than the shares to be issued
to holders of HPL Common Stock pursuant to Section 2.1, shall be redeemed by
Parent at their initial issuance price and cancelled.
2.5 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event that any HPL
Certificates shall have been lost, stolen or destroyed, Parent shall issue and
pay in respect of such lost, stolen or destroyed HPL Certificates, upon the
making of an affidavit of that fact by the holder thereof, Parent Stock
Certificates evidencing the shares of Parent Common Stock as may be required
pursuant to Section 2.1 and any dividends or distributions payable pursuant to
Section 2.3(b); provided, however, that Parent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed HPL Certificate to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against Parent
with respect to the HPL Certificates alleged to have been lost, stolen or
destroyed.
2.6 TAX CONSEQUENCES. For United States federal income tax purposes, it is
intended by the parties hereto that the Merger qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Code.
ARTICLE III
GENERAL
3.1 CONSENTS. Each of Parent, Merger Sub and HPL shall use their best
efforts to obtain the consent and approval of each person or entity whose
consent or approval shall be required in order to permit consummation of the
Merger.
3.2 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by written agreement of Parent,
Merger Sub and HPL at any time prior to the Effective Time; provided, however,
that after approval of this Agreement by the shareholders of HPL, no such
amendment or modification shall change the amount or form of the consideration
to be received by HPL's shareholders in the Merger.
3.3 WAIVER OF COMPLIANCE; CONSENTS. Any failure of Parent or Merger Sub, on
the one hand, or HPL, on the other hand, to comply with any obligation,
covenant, agreement, or condition herein may be waived by HPL or Parent or
Merger Sub, respectively, only by a written instrument signed by the party
granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement, or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth herein.
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3.4 SURVIVAL; INVESTIGATIONS. The respective representations and warranties
of Parent, Merger Sub and HPL contained herein or in any certificates or other
documents delivered prior to or at the Closing shall not be deemed waived or
otherwise affected by any investigation made by any party hereto and shall not
survive the Effective Time.
3.5 NOTICES. All notices and other communications hereunder shall be in
writing and shall be delivered personally by overnight courier or similar means
or sent by facsimile with written confirmation of receipt. Any such notice shall
be effective upon receipt, if personally delivered, or on the next business day
following transmittal, if sent by confirmed facsimile.
3.6 ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this Agreement nor any
right, interest or obligation hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement is not intended to
confer any rights or remedies upon any Person other than the parties hereto.
3.7 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California without reference to principles of conflicts of laws.
3.8 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.
3.9 SEVERABILITY. In case any one or more of the provisions contained in
this Agreement should be finally determined to be invalid, illegal, or
unenforceable in any respect against a party hereto, it shall be adjusted if
possible to effect the intent of the parties. In any event, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby, and such invalidity, illegality,
or unenforceability shall only apply as to such party in the specific
jurisdiction where such final determination shall have been made.
3.10 INTERPRETATION. The Article and Section headings contained in this
Agreement are solely for the purpose of reference and shall not in any way
affect the meaning or interpretation of this Agreement.
3.11 ENTIRE AGREEMENT. This Agreement, including the exhibits hereto and
the documents and instruments referred to herein, embody the entire agreement
and understanding of the parties hereto in respect of the subject matter hereof.
There are no representations, promises, warranties, covenants, or undertakings
by or among the parties hereto, other than those expressly set forth or referred
to herein and therein.
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IN WITNESS WHEREOF, Parent, Merger Sub and HPL have caused this Agreement
to be signed by their respective duly authorized officers as of the date first
written above.
HPL TECHNOLOGIES, INC.
a Delaware corporation
By: /s/ Y. Xxxxx Xxxxxxxx
-------------------------------------
Y. Xxxxx Xxxxxxxx
President and Chief
Executive Officer
HEURISTIC PHYSICS LABORATORIES, INC.,
a California corporation
By: /s/ Y. Xxxxx Xxxxxxxx
-------------------------------------
Y. Xxxxx Xxxxxxxx
President
HEURISTIC MERGER SUB,
a California corporation
By: /s/ Y. Xxxxx Xxxxxxxx
-------------------------------------
Y. Xxxxx Xxxxxxxx
President
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EXHIBIT A
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "Agreement of Merger") is made as of July
__, 2001, by and between Heuristic Merger Sub, a California corporation ("Merger
Sub"), and Heuristic Physics Laboratories, Inc. a California corporation (the
"Company" or the "Surviving Corporation").
RECITALS
A. Merger Sub, the Company, and HPL Technologies, Inc., a Delaware
corporation and the parent corporation of Merger Sub ("Parent"), have entered
into an Agreement and Plan of Merger, dated as of July 2, 2001, setting forth
certain representations, warranties and agreements relating to the merger (the
"Merger") of Merger Sub with and into the Company, which will be the surviving
corporation.
B. The Boards of Directors of Merger Sub and the Company deem the Merger
desirable and in the best interests of their respective corporations and
shareholders and have approved the Merger.
C. The Boards of Directors of Merger Sub and the Company have submitted the
principal terms of the Merger to their respective shareholders and received the
requisite shareholder approval.
ACCORDINGLY, in consideration of the foregoing, and intending to be legally
bound hereby, each of the parties hereby agrees as follows:
(a) THE MERGER. Upon the filing of this Agreement of Merger, together with
required officers' certificates, with the Secretary of State of the State of
California in accordance with the California General Corporation Law (the
"Effective Time"), (i) Merger Sub will be merged with and into the Company, (ii)
the separate corporate existence of Merger Sub will cease and (iii) the Company
will be the surviving corporation.
(b) EFFECT ON STOCK. At the Effective Time, by virtue of the Merger and
without any action on the part of the Company, Merger Sub, or the holders of any
securities of the Company or Merger Sub, the following will occur:
(i) CONVERSION OF COMPANY STOCK. Each share of the Company's common
stock ("Company Common Stock") issued and outstanding immediately prior to
the Effective Time (other than any shares to be cancelled pursuant to Section
b(iii) below) will, subject to Section b(ii) below, be automatically
converted into the right to receive 1.7 validly issued, fully paid and
non-assumable shares ("Exchange Ratio") of Parent common stock, par value
$0.001 per share (the "Parent Common Stock").
(ii) FRACTIONAL SHARES. No fractional shares of Parent Common Stock
shall be issued in the Merger. In lieu thereof, the shares of Parent Common
Stock otherwise
issuable to each shareholder of HPL pursuant to Section b(i) shall be rounded
up or down to the nearest whole share of Parent Common Stock.
(iii) CANCELLATION. Each share of Company Common Stock held by the
Company or owned by Parent, or any subsidiary of the Company or Parent,
immediately prior to the Effective Time will be automatically cancelled and
retired and will cease to exist, without payment of any consideration therefor.
(iv) CONVERSION OF MERGER SUB STOCK. Each share of common stock of
Merger Sub issued and outstanding immediately prior to the Effective Time will
be converted into and exchanged for 10,492.256 validly issued, fully paid and
nonassessable shares of common stock of the Surviving Corporation.
(v) COMPANY STOCK OPTIONS. As of the Effective Time, Parent shall
issue a substitute stock option ("Substitute Option"), in exchange for each
stock optionof HPL outstanding immediately prior to the Effective Time ("HPL
Option"). Each Substitute Option shall contain substantially the same terms and
conditions as the HPL Option exchanged therefore, including, without
limitation, type of option, term of option, exercisability and anti-dilution
rights, except that the number of shares and option price of each Substitute
Option shall be adjusted to reflect the Exchange Ratio.
(vi) COMPANY WARRANTS. As of the Effective Time, Parent shall, issue a
substitute stock purchase warrant ("Substitute Warrant") in exchange for each
stock purchase warrant of HPL outstanding immediately prior to the Effect Time
("HPL Warrant"). Each Substitute Warrant shall contain substantially the same
terms and conditions as the HPL Warrant exchanged therefor, including, without
limitation, term of warrant, exercisability and anti-dilution and registration
rights, if any, except that the number of shares and warrant price of each
Substitute Warrant shall be adjusted to reflect the Exchange Ratio.
(vii) SECURED CONVERTIBLE DEBENTURE. If, at any time after the
Effective Time, Applied Materials, Inc. or any successor-in-interest ("AMAT"),
acting as holder of that certain Secured Convertible Debenture issued by the
Company and dated as of February 15, 2000 (the "Convertible Debenture"), elects
to convert part or all of the Convertible Debenture into Company Common Stock
pursuant to Section 8 thereof, Parent shall issue to AMAT that number of shares
of Parent Common Stock, in lieu of shares of Company Common Stock issuable upon
conversion, equal to the number of shares of Company Common Stock issuable under
the Convertible Debenture multiplied by the Exchange Ratio and rounded to the
nearest whole share.
(c) ARTICLES OF INCORPORATION OF THE SURVIVING CORPORATION. At the
Effective Time the Articles of Incorporation of the Company will be the Articles
of Incorporation of the Surviving Corporation.
(d) COUNTERPARTS. This Agreement of Merger may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(e) HEADINGS. The section and subsection headings contained in this
Agreement of Merger are for reference purposes only and will not affect in any
way the meaning or interpretation of this Agreement of Merger.
IN WITNESS WHEREOF, Merger Sub and the Company have executed this Agreement
of Merger as of the date first written above.
Heuristic Merger Sub,
a California corporation
By: ______________________________
Y. Xxxxx Xxxxxxxx
President
By: ______________________________
Xxxx Xxxxxxxxxx
Secretary
HEURISTIC PHYSICS LABORATORIES, INC.,
a California corporation
By: ______________________________
Y. Xxxxx Xxxxxxxx
President
By: ______________________________
Xxxx Xxxxxxxxxx
Secretary
