\n 5.2 Additional Conditions to Obligations of Target……………………………46
\n 5.3 Additional Conditions to the Obligations of Acquiror………………………47<\/p>\nARTICLE 6 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
\n AGREEMENTS; ESCROW PROVISIONS ……………………………………………49
\n 6.1 Survival of Representations, Warranties, Covenants and Agreements…………..49
\n 6.2 Escrow Provisions……………………………………………………..49<\/p>\n
ARTICLE 7 CONDUCT PRIOR TO THE EFFECTIVE TIME……………………………………….56
\n 7.1 Conduct of Business……………………………………………………56
\n 7.2 No Solicitation–Target………………………………………………..58
\n 7.3 No Solicitation–Acquiror………………………………………………59<\/p>\n
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER…………………………………………61
\n 8.1 Termination…………………………………………………………..61
\n 8.2 Termination Fee……………………………………………………….62
\n 8.3 Effect of Termination………………………………………………….63
\n 8.4 Amendment…………………………………………………………….63
\n 8.5 Extension; Waiver……………………………………………………..63<\/p>\n
ARTICLE 9 MISCELLANEOUS PROVISIONS…………………………………………………63
\n 9.1 Notices………………………………………………………………63
\n 9.2 Entire Agreement………………………………………………………65
\n 9.3 Further Assurances; Post-Closing Cooperation……………………………..65
\n 9.4 Waiver……………………………………………………………….65
\n 9.5 Third Party Beneficiaries………………………………………………65
\n 9.6 No Assignment; Binding Effect…………………………………………..65
\n 9.7 Headings……………………………………………………………..65
\n 9.8 Invalid Provisions…………………………………………………….65
\n 9.9 Governing Law…………………………………………………………66
\n 9.10 Construction…………………………………………………………66
\n 9.11 Counterparts…………………………………………………………66
\n 9.12 Specific Performance………………………………………………….66<\/p>\n
ARTICLE 10 DEFINITIONS……………………………………………………………66
\n 10.1 Definitions………………………………………………………….66
\n<\/c><\/s><\/caption>\n<\/table>\n
iii
\n 5<\/p>\n
EXHIBITS & SCHEDULES<\/p>\n
Exhibit A – Form of Irrevocable Proxy and Voting Agreement (Acquiror
\n stockholders to sign)<\/p>\n
Exhibit B – Form of Irrevocable Proxy and Voting Agreement (Target
\n stockholders to sign)<\/p>\n
Exhibit C – Form of Amendment No. 1 to Acquiror’s Amended and
\n Restated Investors’ Rights Agreement<\/p>\n
Exhibit D – Form of Certificate of Merger<\/p>\n
Exhibit E – Form of Acquiror Officer’s Certificates<\/p>\n
Exhibit F – Matters to be Covered by Legal Opinion of Gunderson
\n Dettmer Stough Villeneuve Franklin & Hachigian, LLP<\/p>\n
Exhibit G – Form of Target Officer’s Certificates<\/p>\n
Exhibit H – Matters to be Covered by Legal Opinion of Fenwick & West, LLP<\/p>\n
i
\n 6<\/p>\n
MERGER AGREEMENT AND<\/p>\n
PLAN OF REORGANIZATION<\/p>\n
This MERGER AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”)
\nis made and entered into as of November 28, 1999, by and among REDBACK NETWORKS
\nINC., a Delaware corporation (“Acquiror”), SIARA SYSTEMS, INC., a Delaware
\ncorporation (the “Target”) and, solely for purposes of Article 6, Vivek Ragavan,
\nas Stockholder Agent. In the event the parties mutually agree in a writing
\nsigned by each of them prior to the Effective Time (as defined below) to
\nstructure this merger as a reverse triangular merger, rather than a direct
\nmerger, a wholly-owned subsidiary of Acquiror (a “Merger Sub”) shall become
\nparty to this Agreement and this Agreement shall be amended as appropriate.
\nCapitalized terms used and not otherwise defined herein have the meanings set
\nforth in Article 10.<\/p>\n
RECITALS<\/p>\n
A. The respective Boards of Directors of each of Acquiror and Target
\nbelieve it is in the best interests of Acquiror and Target and their respective
\nstockholders that Target merge with and into Acquiror (the “Merger”) and, in
\nfurtherance thereof, have approved the Merger. Upon mutual consent from the
\nrespective Boards of Directors of each of Acquiror and Target prior to the
\nEffective Time, set forth in a writing signed by each of Acquiror and Target,
\nthe Merger may be restructured as a reverse triangular merger, as contemplated
\nby the first paragraph hereof.<\/p>\n
B. The Boards of Directors of each of Acquiror and Target have
\napproved the Merger and this Agreement and the transactions contemplated hereby.<\/p>\n
C. Pursuant to the Merger, among other things, and subject to the
\nterms and conditions of this Agreement, (i) all of the shares of capital stock
\nof Target which are issued and outstanding immediately prior to the Effective
\nTime of the Merger shall be converted into the right to receive shares of
\nAcquiror’s Common Stock, par value $0.0001 (“Acquiror Common Stock”), (ii) all
\nTarget Options then outstanding (whether vested or unvested) shall be converted
\ninto options to purchase Acquiror Common Stock and (iii) all Target Warrants
\nthen outstanding shall be converted into warrants to purchase shares of Acquiror
\nCommon Stock, on the terms and subject to the conditions set forth herein<\/p>\n
D. A portion of the shares of Acquiror Common Stock otherwise
\nissuable or reserved for issuance by Acquiror in connection with the Merger
\nshall be placed in escrow by Acquiror, the release of which shares shall be
\ncontingent upon certain events and conditions, all as set forth in Article 6
\nherein.<\/p>\n
E. Concurrent with the execution of this Agreement, certain
\nstockholders of Target and Acquiror have entered into Irrevocable Proxy and
\nVoting Agreements in substantially the forms attached hereto as Exhibit A for
\nAcquiror’s stockholders to sign (“Acquiror Proxy”) and Exhibit B for Target’s
\nstockholders to sign (Target Proxy”) pursuant to which, among other <\/p>\n
7<\/p>\n
things, such stockholders have agreed to vote the shares of Target Capital Stock
\nand Acquiror Capital Stock owned by them in favor of the Merger.<\/p>\n
F. Concurrent with the execution of this Agreement, Acquiror shall
\nextend to the holders of shares of Acquiror Common Stock who acquire such shares
\nin the Merger and who hold registration rights under Target’s Investors’ Rights
\nAgreement dated December 21, 1998 (“Target’s Existing Investor Rights
\nAgreement”), certain registration rights, pursuant to the terms of Acquiror’s
\nAmended and Restated Investors’ Rights Agreement of July 2, 1998, as amended by
\nAmendment No. 1 thereto, in the form attached hereto as Exhibit C, and Target’s
\nstockholders shall agree to a lock-up following the closing of the Merger and in
\nthe event of a secondary registered offering by Acquiror.<\/p>\n
H. Concurrent with the execution of this Agreement, as an inducement
\nto Acquiror to enter into this Agreement, certain employees of Target shall have
\nentered into employment agreements, all of which will include mutually
\nacceptable non-competition terms.<\/p>\n
I. Acquiror and Target intend that the Merger shall constitute a
\nreorganization within the meaning of Section 368(a) of the Internal Revenue
\nCode, and in furtherance thereof intend that this Agreement shall be a “Plan of
\nReorganization” within the meaning of Sections 354(a) and 361(a) of the Internal
\nRevenue Code.<\/p>\n
J. Target and Acquiror desire to make certain representations,
\nwarranties, covenants and agreements in connection with the Merger.<\/p>\n
NOW, THEREFORE, in consideration of the covenants, promises,
\nrepresentations and warranties set forth herein, and for other good and valuable
\nconsideration (the receipt and sufficiency of which are hereby acknowledged by
\nthe parties), and intending to be legally bound hereby, the parties agree as
\nfollows:<\/p>\n
ARTICLE 1
\n THE MERGER<\/p>\n
1.1 THE MERGER. At the Effective Time and subject to and upon the
\nterms and conditions of this Agreement and the applicable provisions of the
\nDGCL, and, to the extent applicable, the California Code, Target shall be merged
\nwith and into Acquiror, the separate existence of Target shall cease, and
\nAcquiror shall continue as the surviving corporation of the Merger. Acquiror is
\nsometimes referred to herein as the “Surviving Corporation.”<\/p>\n
1.2 EFFECTIVE TIME. Unless this Agreement is earlier terminated
\npursuant to Section 8.1, the closing and consummation of the Merger (the
\n“Closing”) will take place as promptly as practicable, following satisfaction or
\nwaiver of the conditions set forth in Article 5, at the offices of Gunderson
\nDettmer Stough Villeneuve Franklin & Hachigian, LLP, unless another place or
\ntime is agreed to by Acquiror and Target. The date upon which the Closing
\nactually occurs is herein referred to as the “Closing Date.” On the Closing
\nDate, the parties hereto shall cause the Merger to be consummated by filing a
\ncertificate of merger in substantially the form attached hereto as Exhibit D
\n(the “Delaware Certificate of Merger”), in each case in accordance with the
\nrelevant provisions of applicable law (the time of acceptance by the Secretary
\nof State of the State of Delaware of such filing, or such later time agreed to
\nby the <\/p>\n
2
\n 8<\/p>\n
parties and set forth in the Delaware Certificate of Merger, being referred to
\nherein as the “Effective Time”).<\/p>\n
1.3 EFFECT OF THE MERGER ON CONSTITUENT CORPORATIONS. At the
\nEffective Time, the effect of the Merger shall be as provided in the applicable
\nprovisions of the DGCL. Without limiting the generality of the foregoing, and
\nsubject thereto, at the Effective Time, all the property, rights, privileges,
\npowers and franchises of Target shall vest in the Surviving Corporation, and all
\ndebts, liabilities, obligations, restrictions, disabilities and duties of Target
\nshall become the debts, liabilities, obligations, restrictions, disabilities and
\nduties of the Surviving Corporation.<\/p>\n
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS OF SURVIVING
\nCORPORATION.<\/p>\n
(a) The Certificate of Incorporation of Acquiror, as in effect
\nimmediately prior to the Effective Time, shall be the Certificate of
\nIncorporation of the Surviving Corporation from and after the Effective Time
\nuntil thereafter amended as provided by law and such Certificate of
\nIncorporation and the Bylaws of the Surviving Corporation.<\/p>\n
(b) The Bylaws of Acquiror, as in effect immediately prior to
\nthe Effective Time, shall be the Bylaws of the Surviving Corporation until
\nthereafter amended as provided by such Bylaws, the Certificate of Incorporation
\nof the Surviving Corporation and applicable Law.<\/p>\n
1.5 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. The directors
\nof Surviving Corporation at, and immediately after, the Effective Time shall be
\nPierre Lamond, Dennis Barsema, James Flach, Dan Warmenhoven, William Kurtz (the
\nExisting Directors”), and three (3) persons designated by Target who shall be
\nVinod Khosla, Vivek Ragavan and one (1) other person reasonably acceptable to a
\nmajority of the Existing Directors (the “Target Designees”), each to hold office
\nin accordance with the Certificate of Incorporation and Bylaws of the Surviving
\nCorporation. If any Target Designee cannot or will not serve as a director of
\nthe Surviving Corporation, Target may designate a replacement Target Designee,
\nprovided such replacement is reasonably acceptable to a majority of the Existing
\nDirectors. The officers of Surviving Corporation at, and immediately after, the
\nEffective Time shall be as mutually agreed to by Target and Acquiror, except
\nthat it is agreed that Dennis Barsema shall be Chief Executive Officer and Vivek
\nRagavan shall be President and Chief Operating Officer.<\/p>\n
1.6 CONSIDERATION TO BE ISSUED; EFFECT ON OUTSTANDING SECURITIES OF
\nTARGET. On the terms and subject to the conditions of this Agreement, as of the
\nEffective Time, by virtue of the Merger and without any action on the part of
\nAcquiror or Target or any holder of any Target security, all of the following
\nshall occur:<\/p>\n
(a) Conversion of Target Capital Stock. At the Effective Time,
\neach share of Target Capital Stock that is issued and outstanding immediately
\nprior to the Effective Time (other than any shares of Target Capital Stock to be
\ncanceled pursuant to Section 1.6(b) and any Dissenting Shares (as provided in
\nSection 1.7)) will be canceled and extinguished and will be converted
\nautomatically into the right to receive (in accordance with this Agreement) that
\nnumber of shares of Acquiror Common Stock that is equal to the Exchange Ratio,
\nrounded down <\/p>\n
3
\n 9<\/p>\n
to the nearest whole share of Acquiror Common Stock. The shares of Acquiror
\nCommon Stock that are issued upon the conversion of shares of Target Capital
\nStock in the Merger pursuant to this Section 1.6(a) shall, upon their issuance
\nat the Effective Time, be registered under the Securities Act pursuant to an
\neffective registration statement on Form S-4, as provided in more detail in
\nSection 4.1.<\/p>\n
(b) Cancellation of Acquiror-Owned and Target-Owned Capital
\nStock. Each share of Target Capital Stock owned by Acquiror or Target or any
\nSubsidiary of Acquiror or Target immediately prior to the Effective Time shall
\nbe automatically canceled and extinguished without any conversion thereof and
\nwithout any further action on the part of Acquiror or Target.<\/p>\n
(c) Target Options and Target Stock Plan. At the Effective Time
\nall unexpired and unexercised Target Options then outstanding, whether vested or
\nunvested, shall be assumed by Acquiror in accordance with provisions described
\nbelow.<\/p>\n
(i) At the Effective Time, each unexpired and unexercised
\nTarget Option (including without limitation each unexpired and unexercised
\nTarget Option issued pursuant to the Siara Systems, Inc. 1998 Equity Incentive
\nPlan adopted on September 1, 1998, and thereafter amended (the “Target Stock
\nPlan”)) which is then outstanding, whether or not exercisable and whether or not
\nvested, shall by virtue of the Merger, be assumed by Acquiror together with the
\nTarget Stock Plan and converted into an option to purchase Acquiror Common Stock
\n(“Acquiror Option”) as provided herein and in such manner that (i) Acquiror is
\n“assuming a stock option in a transaction to which Section 424(a) applies”
\nwithin the meaning of Section 424 of the Internal Revenue Code, or (ii) such
\ntransaction, to the extent that Section 424 of the Internal Revenue Code does
\nnot apply to any such Target Options, would be a transaction within Section 424
\nof the Internal Revenue Code. Each Target Option so assumed by Acquiror under
\nthis Agreement shall continue to have, and be subject to, the same terms and
\nconditions as were applicable to such Target Option immediately prior to the
\nEffective Time (including, without limitation, any repurchase rights (other than
\nrights of refusal) or vesting provisions), provided that (A) such Target Option
\nshall be exercisable for that number of whole shares of Acquiror Common Stock
\nequal to the product of the number of shares of Target Capital Stock that were
\nissuable upon exercise in full of such Target Option immediately prior to the
\nEffective Time (without regard to vesting) multiplied by the Exchange Ratio
\n(rounded down to the nearest whole number of shares of Acquiror Common Stock)
\nand (B) the per share exercise price for the shares of Acquiror Common Stock
\nissuable upon exercise of such assumed Target Option shall be equal to the
\nquotient determined by dividing the exercise price per share of Target Capital
\nStock at which such Target Option was exercisable immediately prior to the
\nEffective Time by the Exchange Ratio (rounded up to the nearest whole cent).
\nAcquiror shall, at all times from and after the Effective Time, reserve, keep
\nand make available for issuance shares of Acquiror Common Stock that are
\nissuable upon the exercise in full of all Acquiror Options resulting from the
\nassumption and conversion of Target Options in accordance with this Section and
\nshall, as promptly as practicable after the Effective Time, issue to each holder
\nof a Target Option that is outstanding immediately prior to the Effective Time a
\ndocument evidencing the foregoing assumption of such Target Option by Acquiror
\nand the conversion of such Target Option into an Acquiror Option as provided
\nherein.<\/p>\n
4
\n 10<\/p>\n
(ii) It is the intention of the parties that Target Options
\nassumed by Acquiror and converted into Acquiror Options pursuant hereto shall
\nqualify following the Effective Time as incentive stock options as defined in
\nSection 422 of the Internal Revenue Code to the same extent Target Options
\nqualified as incentive stock options immediately prior to the Effective Time and
\nthe provisions of this Section 1.6(c) shall be applied consistent with this
\nintent.<\/p>\n
(iii) At the Effective Time, Acquiror shall assume Target’s
\nobligations, and shall be assigned Target’s repurchase rights and purchase
\noptions, under any Restricted Stock Purchase Agreements entered into pursuant to
\nTarget Stock Plan. Any and all restrictions on Target Restricted Stock issued
\npursuant to Target Stock Plan or such other agreements which do not lapse in
\naccordance with their terms (as such terms were in effect on the date of this
\nAgreement) and which are not rights of refusal shall continue in full force and
\neffect until such restrictions lapse pursuant to the terms of such agreements,
\nand any repurchase rights or purchase options which Target has with respect to
\nTarget Restricted Stock shall also continue in full force and effect. The
\nAcquiror Options issued in exchange for the Target Options pursuant to this
\nSection 1.6(c) shall be registered under the Securities Act pursuant to an
\neffective registration statement on Form S-8, as provided in more detail in
\nSection 4.10.<\/p>\n
(d) Target Warrants. At the Effective Time each unexpired and
\nunexercised Target Warrant that is then outstanding, whether or not exercisable
\nand whether or not vested, shall be assumed by Acquiror and converted into a
\nwarrant to purchase shares of Acquiror Common Stock (“Acquiror Warrant”) as
\nprovided herein. Each Target Warrant so assumed by Acquiror under this Agreement
\nshall continue to have, and be subject to, the same terms and conditions as were
\napplicable to such Target Warrant immediately prior to the Effective Time,
\nprovided that (A) such Target Warrant shall be exercisable for that number of
\nwhole shares of Acquiror Common Stock equal to the product of the number of
\nshares of Target Capital Stock that were issuable upon exercise in full of such
\nTarget Warrant immediately prior to the Effective Time (without regard to
\nvesting) multiplied by the Exchange Ratio (rounded down to the nearest whole
\nnumber of shares of Acquiror Common Stock) and (B) the per share exercise price
\nfor the shares of Acquiror Common Stock issuable upon exercise of such assumed
\nTarget Warrant shall be equal to the quotient determined by dividing the
\nexercise price per share of Target Capital Stock at which such Target Warrant
\nwas exercisable immediately prior to the Effective Time by the Exchange Ratio
\n(rounded up to the nearest whole cent). Acquiror shall, at all times from and
\nafter the Effective Time, reserve, keep and make available for issuance all
\nshares of Acquiror Common Stock that are issuable upon the exercise in full of
\nall Acquiror Warrants resulting from the assumption and conversion of Target
\nWarrants in accordance with this Section and shall, as promptly as practicable
\nafter the Effective Time, issue to each holder of a Target Warrant that is
\noutstanding immediately prior to the Effective Time a document evidencing the
\nforegoing assumption of such Target Warrant by Acquiror and the conversion of
\nsuch Target Warrant into an Acquiror Warrant as provided herein.<\/p>\n
(e) Exchange Ratio. The “Exchange Ratio” shall be the quotient
\nobtained by dividing (x) 31,341,986 shares of Acquiror Common Stock by (y) the
\nsum of (i) the aggregate number of shares of Target Capital Stock that are
\noutstanding <\/p>\n
5
\n 11<\/p>\n
immediately prior to the Effective Time, plus (ii) the number of shares of
\nTarget Capital Stock that are issuable upon the exercise, conversion or exchange
\n(in full) of all Target Equity Securities that are outstanding immediately prior
\nto the Effective Time (whether vested or unvested). The Exchange Ratio shall be
\nequitably adjusted to reflect fully the effect of any stock split, reverse
\nsplit, stock combination, stock dividend (including any dividend or distribution
\nof securities convertible into Acquiror Common Stock or Target Capital Stock),
\nreorganization, reclassification, recapitalization or other like change with
\nrespect to Acquiror Common Stock or Target Capital Stock occurring after the
\ndate hereof and prior to the Effective Time. No adjustment shall be made to the
\nExchange Ratio as a result of any cancellation of any Target Equity Security or
\nany consideration (in any form whatsoever) received by Target as a result of any
\nexercise, conversion or exchange of Target Equity Securities, after the
\nEffective Time.<\/p>\n
(f) Fractional Shares. No fraction of a share of Acquiror Common
\nStock will be issued in the Merger, but in lieu thereof, each holder of shares
\nof Target Capital Stock who would otherwise be entitled to a fraction of a share
\nof Acquiror Common Stock but for the rounding required under Section 1.6(a)
\n(after aggregating all fractional shares of Acquiror Common Stock to be received
\nby such holder) shall be entitled to receive from Acquiror an amount of cash
\n(rounded up to the nearest whole cent) equal to the product of (a) such
\nfraction, multiplied by (b) the average of the closing prices of Acquiror’s
\nCommon Stock for the ten (10) trading days ended on the last trading day prior
\nto the Effective Time (the “Closing Price”).<\/p>\n
(g) Market Stand-Off. During the Market Stand-Off Period (as
\ndefined below) each securityholder of Target who in the Merger receives Merger
\nShares (as defined below), or Acquiror securities that are convertible into
\nMerger Shares, will not, directly or indirectly sell, offer to sell, contract to
\nsell (including, without limitation, any short sale), grant any option to
\npurchase or otherwise transfer or dispose of (other than to donees who agree to
\nbe similarly bound) any Merger Shares held by it (the “Market Stand-Off”) unless
\nsuch Merger Shares are registered by Acquiror under the Securities Act pursuant
\nto a registration statement (other than the S-4 Registration Statement) filed by
\nAcquiror. “Merger Shares” means shares of Acquiror Common Stock issued in the
\nMerger or upon exercise of Acquiror Options or Acquiror Warrants that were
\nissued in the Merger. “Market Stand-Off Period” means the time period beginning
\non the Effective Time and ending on the earlier of (A) 180 days after the
\nEffective Time and (B) 90 days after the date on which a registration statement
\n(other than the S-4 Registration Statement) filed by Acquiror under the
\nSecurities Act is declared effective by the SEC. In order to enforce the
\nforegoing covenant, Acquiror may impose stop-transfer instructions with respect
\nto the Merger Shares until the end of such Market Stand-Off Period.<\/p>\n
1.7 DISSENTING SHARES.<\/p>\n
(a) Notwithstanding any provision of this Agreement to the
\ncontrary, any shares of Target Capital Stock held by a holder who has demanded
\nand perfected dissenters’ rights for such shares in accordance with the DGCL
\nand, if applicable, the California Code, who, as of the Effective Time, has not
\neffectively withdrawn or lost such dissenters’ rights (“Dissenting Shares”)
\nshall not be converted into or represent a right to receive Acquiror Common
\nStock pursuant to Section 1.6 (except as provided in Section 1.7(b)) but the
\nholder thereof shall only be entitled to such rights as are granted by the DGCL
\nand, if applicable, the California Code.<\/p>\n
6
\n 12<\/p>\n
(b) Notwithstanding the provisions of Section 1.7(a) above, if
\nany holder of shares of Target Capital Stock who demands purchase of such shares
\nunder the DGCL shall effectively withdraw or lose (through failure to perfect or
\notherwise) such holder’s dissenters’ rights, then, as of the later of (i) the
\nEffective Time or (ii) the occurrence of such event, such holder’s shares of
\nTarget Capital Stock shall automatically be converted into and represent only
\nthe right to receive Acquiror Common Stock as provided in Section 1.6(a),
\nwithout interest thereon, upon surrender to Target of the certificate
\nrepresenting such shares in accordance with Section 1.8 of this Agreement.<\/p>\n
(c) Target shall give Acquiror (i) prompt notice of its receipt
\nof any written demands for purchase of any shares of Target Capital Stock,
\nwithdrawals of such demands, and any other instruments relating to the Merger
\nserved pursuant to the DGCL and, if applicable, the California Code, and
\nreceived by Target and (ii) the opportunity to participate in all negotiations
\nand proceedings with respect to demands for purchase of any shares of Target
\nCapital Stock under the DGCL and, if applicable, the California Code. Target
\nshall not, except with the prior written consent of Acquiror, which shall not be
\nunreasonably withheld, or as may be required under applicable law, voluntarily
\nmake any payment with respect to any demands for purchase of Target Capital
\nStock or offer to settle or settle any such demands.<\/p>\n
1.8 EXCHANGE PROCEDURES.<\/p>\n
(a) Acquiror Common Stock. At the Effective Time, Acquiror shall
\ndeposit with the Exchange Agent for exchange in accordance with this Article 1,
\nthe aggregate number of shares of Acquiror Common Stock issuable in exchange for
\noutstanding shares of Target Capital Stock pursuant to Section 1.6 and cash in
\nan amount sufficient to permit the payment of all cash payable in lieu of
\nfractional shares pursuant to Section 1.6(f).<\/p>\n
(b) Exchange Procedures. As soon as practicable after the
\nEffective Time, but in no event later than two (2) business days after the
\nEffective Time, Acquiror shall cause to be mailed to each holder of record of a
\ncertificate or certificates which immediately prior to the Effective Time
\nrepresented outstanding shares of Target Capital Stock (the “Certificates”) and
\nwhich shares were converted into the right to receive shares of Acquiror Common
\nStock pursuant to Section 1.6, (i) a letter of transmittal in customary form
\n(which shall specify that delivery shall be effected, and risk of loss and title
\nto the Certificates shall pass, only upon delivery of the Certificates to the
\nExchange Agent and shall be in such form and have such other provisions as
\nAcquiror may reasonably specify) and (ii) instructions for use in effecting the
\nsurrender of the Certificates in exchange for certificates representing shares
\nof Acquiror Common Stock and cash in lieu of fractional shares. Upon surrender
\nof a Certificate for cancellation (or, if such Certificate is lost, of a lost
\nCertificate indemnity agreement in customary form) to the Exchange Agent or to
\nsuch other agent or agents as may be appointed by Acquiror, together with such
\nletter of transmittal, duly completed and validly executed in accordance with
\nthe instructions thereto, the holder of such Certificate shall be entitled to
\nreceive in exchange therefor a certificate representing the number of whole
\nshares of Acquiror Common Stock (less the number of shares of Acquiror Common
\nStock to be deposited in the Escrow Fund on such holder’s behalf pursuant to
\nArticle 6 hereof), to which such holder is entitled pursuant to Section 1.6 and
\ncash in lieu of fractional shares pursuant to Section 1.6(f), and the
\nCertificate so surrendered shall be canceled. As soon as practicable after the
\nEffective Time, and subject to <\/p>\n
7
\n 13<\/p>\n
and in accordance with the provisions of Article 6 hereof, Acquiror shall cause
\nto be distributed to a depositary agent mutually agreed to by Target and
\nAcquiror (the “Depositary Agent”) a certificate or certificates (in such
\ndenominations as may be requested by the Depositary Agent) representing that
\nnumber of shares of Acquiror Common Stock equal to the Escrow Amount, which
\ncertificate shall be registered in the name of the Depositary Agent. Such shares
\nshall be beneficially owned by the holders on whose behalf such shares were
\ndeposited in the Escrow Fund and shall be available to compensate Acquiror as
\nprovided in Article 6. Until surrendered, each outstanding Certificate that,
\nprior to the Effective Time, represented shares of Target Capital Stock will be
\ndeemed from and after the Effective Time, for all corporate purposes, to
\nevidence the ownership of the number of full shares of Acquiror Common Stock
\ninto which such shares of Target Capital Stock shall have been so converted and
\nthe right to receive cash in lieu of fractional shares as provided herein.<\/p>\n
(c) Distributions With Respect to Unexchanged Shares of Target
\nCapital Stock. No dividends or other distributions with respect to Acquiror
\nCommon Stock declared or made after the Effective Time and with a record date
\nafter the Effective Time will be paid to the holder of any unsurrendered
\nCertificate with respect to the shares of Acquiror Common Stock represented
\nthereby until the holder of record of such Certificate shall surrender such
\nCertificate as provided in Section 1.8 or otherwise accepted by Acquiror.
\nSubject to applicable Law, following surrender of any such Certificate, there
\nshall be paid to the record holder of the certificates representing whole shares
\nof Acquiror Common Stock issued in exchange therefor, without interest, at the
\ntime of such surrender, the amount of dividends or other distributions with a
\nrecord date after the Effective Time theretofore payable (but for the provisions
\nof this Section 1.8(c)) with respect to such whole shares of Acquiror Common
\nStock.<\/p>\n
(d) Transfers of Ownership. If any certificate for shares of
\nAcquiror Common Stock is to be issued pursuant to the Merger in a name other
\nthan that in which the Certificate surrendered in exchange therefor is
\nregistered, it will be a condition of the issuance thereof that the Certificate
\nso surrendered will be properly endorsed and otherwise in proper form for
\ntransfer and that the person requesting such exchange will have paid to Acquiror
\nor any agent designated by it any transfer or other taxes required by reason of
\nthe issuance of a certificate for shares of Acquiror Common Stock in any name
\nother than that of the registered holder of the Certificate surrendered, or
\nestablished to the satisfaction of Acquiror or any agent designated by it that
\nsuch tax has been paid or is not payable.<\/p>\n
1.9 NO FURTHER OWNERSHIP RIGHTS IN TARGET CAPITAL STOCK. All shares
\nof Acquiror Common Stock issued upon the surrender for exchange of shares of
\nTarget Capital Stock in accordance with the terms hereof (including any cash in
\nlieu of fractional shares) shall be deemed to have been issued in full
\nsatisfaction of all rights pertaining to such shares of Target Capital Stock,
\nand there shall be no further registration of transfers on the records of Target
\nof shares of Target Capital Stock which were outstanding immediately prior to
\nthe Effective Time. If, after the Effective Time, Certificates are presented to
\nthe Surviving Corporation for any reason, they shall be canceled and exchanged
\nas provided in this Article 1.<\/p>\n
1.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
\nCertificates shall have been lost, stolen or destroyed, the owner of such lost,
\nstolen or destroyed Certificates shall provide Acquiror with an affidavit of
\nthat fact.<\/p>\n
8
\n 14<\/p>\n
1.11 FURTHER ACTION. If, at any time after the Effective Time, any
\nsuch further action is necessary or desirable to carry out the purposes of this
\nAgreement or to vest the Surviving Corporation with full right, title and
\npossession to all assets, property, rights, privileges, powers and franchises of
\nTarget, the officers and directors of the Surviving Corporation are fully
\nauthorized to take, and will take, all such lawful and necessary action.<\/p>\n
ARTICLE 2
\n REPRESENTATIONS AND WARRANTIES OF TARGET<\/p>\n
Target hereby represents and warrants to Acquiror, subject to such
\nexceptions and qualifications as are specifically disclosed in the Target
\ndisclosure schedule and schedule of exceptions of Target (the “Target Disclosure
\nSchedule”) delivered herewith and dated as of the date hereof as follows:<\/p>\n
2.1 ORGANIZATION AND QUALIFICATION. Each of Target and Target
\nSubsidiary is a corporation duly organized, validly existing and in good
\nstanding under the laws of the state or province of its incorporation, and has
\nall requisite corporate power and authority to conduct its business as now
\nconducted and as currently proposed to be conducted and to own, use, license and
\nlease its Assets and Properties. Each of Target and Target Subsidiary is duly
\nqualified to do business and is in good standing as a foreign corporation in
\neach jurisdiction in which the ownership, use, licensing or leasing of its
\nAssets and Properties, or the conduct or nature of its businesses, makes such
\nqualification, licensing or admission necessary, except for such failures to be
\nso duly qualified, licensed or admitted and in good standing that could not
\nreasonably be expected to have a Material Adverse Effect on Target. Section 2.1
\nof the Target Disclosure Schedule sets forth each jurisdiction where each Target
\nand Target Subsidiary is so qualified to do business and separately lists each
\nother jurisdiction in which each Target and Target Subsidiary owns, uses,
\nlicenses or leases any material Assets or Properties, has established a local
\noffice or other permanent local presence or has employees or engages independent
\ncontractors.<\/p>\n
2.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Subject only to the
\nrequisite approval of the Merger, this Agreement and the other agreements
\nattached as exhibits hereto (the “Ancillary Agreements”) by the stockholders of
\nTarget, Target has all requisite corporate power and authority to execute and
\ndeliver this Agreement and the Ancillary Agreements to which it is a party, to
\nperform its obligations hereunder and thereunder and to consummate the
\ntransactions contemplated hereby and thereby. The execution and delivery by
\nTarget of this Agreement and the Ancillary Agreements to which Target is a party
\nand the consummation by Target of the transactions contemplated hereby and
\nthereby, and the performance by Target of its obligations hereunder and
\nthereunder, have been duly and validly authorized by all necessary action by the
\nBoard of Directors of Target, and no other action on the part of the Board of
\nDirectors of Target is required to authorize the execution, delivery and
\nperformance of this Agreement and the Ancillary Agreements to which Target is a
\nparty by Target and the consummation by Target of the transactions contemplated
\nhereby and thereby. This Agreement and the Ancillary Agreements to which Target
\nis a party have been duly and validly executed and delivered by Target and,
\nassuming the due authorization and valid execution and delivery of this
\nAgreement by Acquiror and each Ancillary Agreement by each party (other than
\nTarget) to such Ancillary Agreement, each constitutes a legal, valid and binding
\nobligation of Target enforceable against <\/p>\n
9
\n 15<\/p>\n
Target in accordance with its respective terms, except as the enforceability
\nthereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
\nreorganization, moratorium or other similar Laws relating to the enforcement of
\ncreditors’ rights generally and by general principles of equity.<\/p>\n
2.3 CAPITALIZATION. The authorized capital stock of Target consists
\nonly of 35,000,000 shares of Common Stock, $0.001 par value per share (the
\n“Target Common Stock”), of which 16,971,261 shares of Common Stock are issued
\nand outstanding, and 13,500,000 shares of Preferred Stock, $0.001 par value per
\nshare (the “Target Preferred Stock”). The designation and status of Target
\nPreferred Stock is as follows: (i) 1,500,000 shares are designated Series A
\nPreferred Stock, all of which are issued and outstanding, (ii) 6,000,000 shares
\nare designated as Series B Preferred Stock, of which 5,555,905 are issued and
\noutstanding and (iii) 6,000,000 shares are designated Series C Preferred Stock,
\nnone of which are issued or outstanding. All of the issued and outstanding
\nshares of Target Common Stock and Target Preferred Stock are validly issued,
\nfully paid and nonassessable, and have been issued in compliance with all
\napplicable federal, state and foreign securities Laws. Except as set forth in
\nSection 2.3 of the Target Disclosure Schedule, (a) no shares of Target Common
\nStock or Target Preferred Stock are held in treasury or are authorized or
\nreserved for issuance and (b) no Options are outstanding. Section 2.3 of the
\nTarget Disclosure Schedule lists the name (and, if such holder is not an
\nemployee of Target, the address) of such holder of Target Common Stock, Target
\nPreferred Stock, Target Option and Target Warrant. With respect to any Target
\nCommon Stock or Target Preferred Stock that has been issued subject to a
\nrepurchase option on the part of Target, Section 2.3 of the Target Disclosure
\nSchedule sets forth the holder thereof, the number and type of securities
\ncovered thereby, and the vesting schedule thereof (including a description of
\nthe circumstances under which such vesting schedule can or will be accelerated).
\nExcept as set forth Section 2.3 of the Target Disclosure Schedule, there are no
\nagreements, arrangements or understandings to which Target is a party (written
\nor oral) to issue any Options with respect to Target and there are no preemptive
\nrights or agreements, arrangements or understandings to issue preemptive rights
\nwith respect to the issuance or sale of Target Capital Stock created by statute,
\nthe Certificate of Incorporation or Bylaws of Target, or any agreement or other
\narrangement to which Target is a party or to which it is bound and there are no
\nagreements, arrangements or understandings to which Target is a party (written
\nor oral) pursuant to which Target has the right to elect to satisfy any
\nLiability by issuing Target Common Stock or Equity Equivalents. With respect to
\neach Target Option and each Target Warrant, Section 2.3 of the Target Disclosure
\nSchedule sets forth the holder thereof, the number and type of securities
\nissuable thereunder, and, if applicable, the exercise price therefor, the
\nexercise period and vesting schedule thereof (including a description of the
\ncircumstances under which such vesting schedule can or will be accelerated). All
\nTarget Options and Target Warrants were issued in compliance with all applicable
\nfederal, state and foreign securities Laws. Other than the Target Support
\nAgreements, Target is not a party or subject to any agreement or understanding,
\nand, to Target’s knowledge, there is no agreement, arrangement or understanding
\nbetween or among any Persons which affects, restricts or relates to voting,
\ngiving of written consents, dividend rights or transferability of shares with
\nrespect to Target Capital Stock, including any voting trust agreement or proxy.<\/p>\n
2.4 SUBSIDIARIES. Siara Research Canada, Inc., a Canadian federal
\ncorporation (“Target Subsidiary”) is a wholly-owned subsidiary of Target. Except
\nfor Target Subsidiary, Target has (and prior to the Closing will have) no
\nSubsidiaries and does not (and <\/p>\n
10
\n 16<\/p>\n
prior to the Closing will not) otherwise hold any equity, membership,
\npartnership, joint venture or other ownership interest in any Person. There are
\nno outstanding options, warrants, or other rights to acquire capital stock of
\nTarget Subsidiary or securities convertible into or exchangeable for such stock.<\/p>\n
2.5 NO CONFLICTS. The execution and delivery by Target of this
\nAgreement does not, and the performance by Target of its obligations under this
\nAgreement and the consummation of the transactions contemplated hereby do not
\nand will not:<\/p>\n
(a) conflict with or result in a violation or breach of any of
\nthe terms, conditions or provisions of the Certificate of Incorporation or
\nBylaws of Target or Target Subsidiary;<\/p>\n
(b) subject to obtaining the consents, approvals and actions,
\nmaking the filings and giving the notices disclosed in Section 2.5 of the Target
\nDisclosure Schedule, if any, conflict with or result in a violation or breach of
\nany Law or Order applicable to Target or Target Subsidiary or any of their
\nrespective Assets and Properties; or<\/p>\n
(c) except as would not have a Material Adverse Effect on Target
\n(i) conflict with or result in a violation or breach of, (ii) constitute a
\ndefault (or an event that, with or without notice or lapse of time or both,
\nwould constitute a default) under, (iii) require Target or Target Subsidiary to
\nobtain any consent, approval or action of, make any filing with or give any
\nnotice to any Person (other than the filing of the Delaware Certificate of
\nMerger together with the required officers’ certificates, any filing required
\nunder the HSR Act in connection with the Merger and such consents, approvals,
\norders, authorizations, registrations, declarations and filings as may be
\nrequired under state or federal securities Laws) as a result or under the terms
\nof, (iv) result in or give to any Person any right of termination, cancellation,
\nacceleration or modification in or with respect to, (v) result in or give to any
\nPerson any additional rights or entitlement to increased, additional,
\naccelerated or guaranteed payments or performance under, (vi) result in the
\ncreation or imposition of (or the obligation to create or impose) any material
\nLien upon Target or Target Subsidiary or any of their respective material Assets
\nor Properties under or (vii) result in the loss of a material benefit under any
\nmaterial Contract or License to which Target or Target Subsidiary is a party or
\nby which any of Target’s or Target Subsidiary’s material Assets and Properties
\nare bound.<\/p>\n
2.6 BOOKS AND RECORDS; ORGANIZATIONAL DOCUMENTS. The minute books
\nand stock record books and other similar records of Target and Target Subsidiary
\nhave been provided or made available to Acquiror or its counsel prior to the
\nexecution of this Agreement, are complete and correct in all material respects
\nand have been maintained in accordance with customary business practices. Such
\nminute books contain a true and complete record of all actions taken at all
\nmeetings and by all written consents in lieu of meetings of the directors,
\nstockholders and committees of the Board of Directors of Target and Target
\nSubsidiary from the date of Target’s and Target Subsidiary’s respective
\nincorporation through the date hereof. Target has, prior to the execution of
\nthis Agreement, delivered to Acquiror true and complete copies of its and Target
\nSubsidiary’s Certificate of Incorporation and Bylaws, as amended through the
\ndate hereof. Neither Target nor Target Subsidiary is in violation of any
\nprovisions of its Certificate of Incorporation or Bylaws as so amended.<\/p>\n
11
\n 17<\/p>\n
2.7 TARGET FINANCIAL STATEMENTS. Schedule 2.7 to the Target
\nDisclosure Schedule sets forth the Target Financials. Target Financials
\ndelivered to Acquiror are correct and complete in all material respects and have
\nbeen prepared in accordance with GAAP applied on a basis consistent throughout
\nthe periods indicated (except, with respect to any Target Financials that are
\nunaudited, for the absence of notes thereto and the effect of the absence of
\nnotes thereto and the effect of the absence of year-end audit adjustments) and
\nconsistent with each other (except as indicated in the notes thereto, as
\ndelivered to Acquiror prior to the date hereof). Target Financials present
\nfairly the financial condition and operating results of Target as of the dates
\nand during the periods indicated therein. Since the Financial Statement Date,
\nthere has been no change in any accounting policies, principles, methods or
\npractices, including any material change with respect to reserves (whether for
\nbad debts, contingent liabilities or otherwise), of Target.<\/p>\n
2.8 ABSENCE OF CHANGES. Since the Financial Statement Date, there
\nhas not been any material adverse change in the Business or Condition of Target
\nor any occurrence or event which, individually or in the aggregate, is
\nreasonably expected to have Material Adverse Effect on Target. In addition,
\nwithout limiting the generality of the foregoing, except as expressly
\ncontemplated by this Agreement, since the Financial Statement Date:<\/p>\n
(a) neither Target nor Target Subsidiary has entered into any
\nmaterial Contract or other material commitment or transaction;<\/p>\n
(b) there has not been any material amendment or other material
\nmodification (or agreement to do so), or material violation of the terms of, any
\nof the material Contracts set forth or described in Section 2.16(a)(1) of the
\nTarget Disclosure Schedule;<\/p>\n
(c) there has not been any amendment to Target’s Certificate of
\nIncorporation or Bylaws;<\/p>\n
(d) there has not been any transfer (by way of a License or
\notherwise) to any Person of rights to any material Target Intellectual Property,
\nother than licenses in the ordinary course of business consistent with past
\npractice;<\/p>\n
(e) neither Target nor Target Subsidiary has made any change in
\naccounting policies, principles, methods, practices or procedures (including for
\nbad debts, contingent liabilities or otherwise, respecting capitalization or
\nexpense of research and development expenditures, depreciation or amortization
\nrates or timing of recognition of income and expense);<\/p>\n
(f) Target has taken all commercially reasonable action required
\nto maintain, renew, extend or enforce any material Target Intellectual Property;<\/p>\n
(g) there has been no physical damage, destruction or other
\ncasualty loss (whether or not covered by insurance) affecting any of the real or
\npersonal property or equipment of Target or in an amount exceeding one hundred
\nthousand dollars ($100,000) individually or two hundred fifty thousand dollars
\n($250,000) in the aggregate; and<\/p>\n
12
\n 18<\/p>\n
(h) neither Target nor Target Subsidiary has entered into or
\napproved any contract, arrangement or understanding or acquiesced in respect of
\nany arrangement or understanding, to do, engage in or cause or having the effect
\nof any of the foregoing.<\/p>\n
2.9 NO UNDISCLOSED LIABILITIES. Except as reflected or reserved
\nagainst in Target Financials (including the notes thereto), Target has no
\nmaterial Liabilities, other than Liabilities incurred in the ordinary course of
\nbusiness consistent with past practice since the Financial Statement Date and
\nany liabilities under the Note.<\/p>\n
2.10 TAXES.<\/p>\n
(a) All Tax returns, statements, reports, declarations and other
\nforms and documents (including without limitation estimated Tax returns and
\nreports and material information statements, returns and reports) required to be
\nfiled with any Tax Authority with respect to any Taxable period ending on or
\nbefore the Effective Time, by or on behalf of Target (collectively, “Tax
\nReturns” and individually a “Tax Return”), have been or will be completed and
\nfiled when due (including any extensions of such due date) and all amounts shown
\ndue on such Tax Returns on or before the Effective Time have been or will be
\npaid on or before such date. All such Tax Returns are true, accurate and
\ncomplete as filed. The Target September 30, 1999 unaudited balance sheet
\nincluded in the Target Financial Statements (the “Target Balance Sheet”) (i)
\nfully accrues all Target’s actual and contingent liabilities for Taxes with
\nrespect to all periods through September 30, 1999 and Target has not and will
\nnot incur any Tax liability in excess of the amount reflected on such Target
\nBalance Sheet with respect to such periods (excluding any amount thereof that
\nreflects timing differences between the recognition of income for purposes of
\nGAAP and for Tax purposes), and (ii) properly accrues in accordance with GAAP
\nall material liabilities for Taxes payable after September 30, 1999 with respect
\nto all transactions and events occurring on or prior to such date. All
\ninformation set forth in the notes to the Target Financial Statements relating
\nto Tax matters is true, complete and accurate in all material respects. No
\nmaterial Tax liability since September 30, 1999 has been or will be incurred by
\nTarget other than in the ordinary course of business, and adequate provision has
\nbeen made by Target for all Taxes since that date in accordance with GAAP on at
\nleast a quarterly basis.<\/p>\n
(b) Target has previously provided or made available to Acquiror
\ntrue and correct copies of all Tax Returns. Target has withheld and paid to the
\napplicable financial institution or Tax Authority all amounts required to be
\nwithheld. Target (or any member of any affiliated or combined group of which
\nTarget has been a member) has not granted any extension or waiver of the
\nlimitation period applicable to any Tax Returns that is still in effect. There
\nis no material claim, audit, action, suit, proceeding, or (to the knowledge of
\nTarget) investigation now pending or (to the knowledge of Target) threatened
\nagainst or with respect to Target in respect of any Tax or assessment. No notice
\nof deficiency or similar document of any Tax Authority asserting the Target has
\nunpaid Tax liability has been received by Target, and there are no liabilities
\nfor Taxes (including liabilities for interest, additions to Tax and penalties
\nthereon and related expenses) with respect to the issues that have been raised
\n(and are currently pending) by any Tax Authority that could, if determined
\nadversely to Target, materially and adversely affect the liability of Target for
\nTaxes. There are no liens for Taxes (other than for current Taxes not yet due
\nand payable) upon the assets of Target. Target has never been a member of an
\naffiliated <\/p>\n
13
\n 19<\/p>\n
group of corporations, within the meaning of Section 1504 of the Code. Target is
\nin full compliance with all the terms and conditions of any Tax exemptions or
\nother Tax-sharing agreement or order of a foreign government and the
\nconsummation of the Merger will not have any adverse effect on the continued
\nvalidity and effectiveness of any such Tax exemption or other Tax-sharing
\nagreement or order. Neither Target nor any Person on behalf of Target has
\nentered into or will enter into any agreement or consent pursuant to the
\ncollapsible corporation provisions of Section 341(f) of the Code (or any
\ncorresponding provision of state, local or foreign income tax law) or agreed to
\nhave Section 341(f)(2) of the Code (or any corresponding provision of state,
\nlocal or foreign income tax law) apply to any disposition of any asset owned by
\nTarget. None of the assets of Target is property that Target is required to
\ntreat as being owned by any other Person pursuant to the so-called “safe harbor
\nlease” provisions of former Section 168(f)(8) of the Code. None of the assets of
\nTarget directly or indirectly secures any debt the interest on which is
\ntax-exempt under Section 103(a) of the Code. None of the assets of Target is
\n“tax-exempt use property” within the meaning of Section 168(h) of the Code.
\nTarget has not made and will not make a deemed dividend election under Treas.
\nReg. Section 1.1502-32(f)(2) or a consent dividend election under Section 565 of
\nthe Code. Target has never been a party (either as a distributing corporation or
\nas a corporation that has been distributed) to any transaction intended to
\nqualify under Section 355 of the Code or any corresponding provision of state
\nlaw. Neither Target nor Target Subsidiary has participated in (and will not
\nparticipate in) an international boycott within the meaning of Section 999 of
\nthe Code. Target does not have and has not had a permanent establishment in any
\nforeign country, as defined in any applicable tax treaty or convention between
\nthe United States of America and any such foreign country. Target has never
\nelected to be treated as an S-corporation under Section 1362 of the Code or any
\ncorresponding provision of federal or state law. All material elections with
\nrespect to Target’s Taxes made during the fiscal year ending, December 31, 1998
\nare reflected on the Target Tax Returns for such period, a copy of which have
\nbeen provided or made available to Acquiror. After the date of this Agreement,
\nno material election with respect to Taxes not made in the ordinary course of
\nbusiness will be made without the prior written consent of Acquiror, which
\nconsent will not be unreasonably withheld or delayed. Target is not party to any
\njoint venture, partnership, or other arrangement or contract which could be
\ntreated as a partnership for federal income tax purposes. Target is not
\ncurrently, and never has been, subject to the reporting requirements of Section
\n6038A of the Code. There is no agreement, contract or arrangement to which
\nTarget is a party that could, individually or collectively, result in the
\npayment of any amount that would not be deductible by reason of Sections 280G
\n(as determined without regard to Section 280G(b)(4) and (5)), 162(a) (by reason
\nof being unreasonable in amount), 162 (b) through (p) or 404 of the Code. Target
\nis not a party to or bound by any Tax indemnity, Tax sharing or Tax allocation
\nagreement (whether written or unwritten or arising under operation of federal
\nlaw as a result of being a member of a group filing consolidated Tax returns,
\nunder operation of certain state laws as a result of being a member of a unitary
\ngroup, or under comparable laws of other states or foreign jurisdictions) which
\nincludes a party other than Target nor does Target owe any amount under any such
\nAgreement. Target is not, and has not been, a United States real property
\nholding corporation (as defined in Section 897(c)(2) of the Code) during the
\napplicable period specified in Section 897(c)(1)(A)(ii) of the Code. Other than
\nby reason of the Merger, Target has not been and will not be required to include
\nany material adjustment in Taxable income for any Tax period (or portion
\nthereof) pursuant to Section 481 or <\/p>\n
14
\n 20<\/p>\n
263A of the Code or any comparable provision under state or foreign Tax laws as
\na result of transactions, events or accounting methods employed prior to the
\nMerger.<\/p>\n
(c) For purposes of this Agreement, the following terms have the
\nfollowing meanings: “Tax” (and, with correlative meaning, “Taxes” and “Taxable”)
\nmeans any and all taxes including, without limitation, (i) any net income,
\nalternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
\nvalorem, transfer, franchise, profits, value added, net worth, license,
\nwithholding, payroll, employment, excise, severance, stamp, occupation, premium,
\nproperty, environmental or windfall profit tax, custom, duty or other tax,
\ngovernmental fee or other like assessment or charge of any kind whatsoever,
\ntogether with any interest or any penalty, addition to tax or additional amount
\nimposed by any Governmental Entity (a “Tax Authority”) responsible for the
\nimposition of any such tax (domestic or foreign), (ii) any liability for the
\npayment of any amounts of the type described in (i) as a result of being a
\nmember of an affiliated, consolidated, combined or unitary group for any Taxable
\nperiod or as the result of being a transferee or successor thereof and (iii) any
\nliability for the payment of any amounts of the type described in (i) or (ii) as
\na result of any express or implied obligation to indemnify any other Person. As
\nused in this Section 2.10, the term “Target” means Target and any entity
\nincluded in, or required under GAAP to be included in, any of the Target
\nFinancials.<\/p>\n
2.11 LEGAL PROCEEDINGS. Except as set forth in Section 2.11 of the
\nTarget Disclosure Schedule:<\/p>\n
(i) there are no Actions or Proceedings pending or, to the
\nknowledge of Target or Target Subsidiary, threatened against, relating to or
\naffecting Target or Target Subsidiary or their respective Assets and Properties;
\nand<\/p>\n
(ii) neither Target nor Target Subsidiary has received
\nnotice, and does not otherwise have knowledge of any Orders outstanding against
\nTarget or Target Subsidiary.<\/p>\n
2.12 COMPLIANCE WITH LAWS AND ORDERS. Neither Target nor Target
\nSubsidiary has violated in any material respect, and is not currently in default
\nin any material respect under, any Law or Order applicable to Target or Target
\nSubsidiary or any of their respective Assets and Properties.<\/p>\n
2.13 EMPLOYEE BENEFIT PLANS.<\/p>\n
(a) Except for the plans and agreements listed in Section 2.13
\nof the Target Disclosure Schedule (collectively, the “Plans”), neither Target
\nnor Target Subsidiary maintains, is a party to, contributes to or is obligated
\nto contribute to, and neither Target’s nor Target Subsidiary’s employees or
\nformer employees and their dependents or survivors receive benefits under, any
\nof the following (whether or not set forth in a written document):<\/p>\n
(i) Any employee benefit plan, as defined in section 3(3) of
\nERISA;<\/p>\n
(ii) Any bonus, deferred compensation, incentive, restricted
\nstock, stock purchase, stock option, stock appreciation right, phantom stock,
\nsupplemental <\/p>\n
15
\n 21<\/p>\n
pension, executive compensation, cafeteria benefit, dependent care, director or
\nemployee loan, fringe benefit, sabbatical, severance, termination pay or similar
\nplan, program, policy, agreement or arrangement (other than any such item
\nprovided solely pursuant to the terms of a written or oral contract with any
\nindividual employee that is disclosed in Section 2.13 of the Target Disclosure
\nSchedule); or<\/p>\n
(iii) Any plan, program, agreement, policy, commitment or
\nother arrangement relating to the provision of any benefit described in section
\n3(1) of ERISA to former employees or directors or to their survivors, other than
\nprocedures intended to comply with COBRA.<\/p>\n
(b) Neither Target nor any ERISA Affiliate has, since January 1,
\n1993, terminated, suspended, discontinued contributions to or withdrawn from any
\nemployee pension benefit plan, as defined in section 3(2) of ERISA, including
\n(without limitation) any multiemployer plan, as defined in section 3(37) of
\nERISA.<\/p>\n
(c) Target has agreed to provide to Acquiror prior to Closing
\ncomplete, accurate and current copies of each of the following:<\/p>\n
(i) The text (including amendments) of each of the Plans, to
\nthe extent reduced to writing;<\/p>\n
(ii) A summary of each of the Plans, to the extent not
\npreviously reduced to writing;<\/p>\n
(iii) With respect to each Plan that is an employee benefit
\nplan (as defined in section 3(3) of ERISA), the following:<\/p>\n
A. The most recent summary plan description that has
\nbeen prepared, as described in section 102 of ERISA;<\/p>\n
B. Any summary of material modifications that has been
\ndistributed to participants or filed with the U.S. Department of Labor but that
\nhas not been incorporated in an updated summary plan description furnished under
\nSubparagraph (A) above; and<\/p>\n
C. The annual report, as described in section 103 of
\nERISA, and (where applicable) actuarial reports, for the most recent plan year
\nfor which an annual report or actuarial report has been prepared; and<\/p>\n
(iv) With respect to each Plan that is intended to qualify
\nunder section 401(a) of the Internal Revenue Code, the most recent determination
\nletter concerning the Plan’s qualification under section 401(a) of the Internal
\nRevenue Code, as issued by the Internal Revenue Service, and any subsequent
\ndetermination letter application.<\/p>\n
(d) With respect to each Plan that is an employee benefit plan
\n(as defined in section 3(3) of ERISA), the requirements of ERISA applicable to
\nsuch Plan have been <\/p>\n
16
\n 22<\/p>\n
satisfied, except to the extent that a failure to satisfy any of such
\nrequirements would not have a Material Adverse Effect.<\/p>\n
(e) With respect to each Plan that is subject to COBRA, the
\nrequirements of COBRA applicable to such Plan have been satisfied, except to the
\nextent that a failure to satisfy any of such requirements would not have a
\nMaterial Adverse Effect.<\/p>\n
(f) With respect to each Plan that is subject to the Family
\nMedical Leave Act of 1993, as amended, the requirements of such Act applicable
\nto such Plan have been satisfied, except to the extent that a failure to satisfy
\nany of such requirements would not have a Material Adverse Effect.<\/p>\n
(g) Each Plan that is intended to qualify under section 401(a)
\nof the Internal Revenue Code meets the requirements for qualification under
\nsection 401(a) of the Internal Revenue Code and the regulations thereunder,
\nexcept to the extent that such requirements may be satisfied by adopting
\nretroactive amendments under section 401(b) of the Internal Revenue Code and the
\nregulations thereunder. Each such Plan has been administered in accordance with
\nits terms (or, if applicable, such terms as will be adopted pursuant to a
\nretroactive amendment under section 401(b) of the Internal Revenue Code) and the
\napplicable provisions of ERISA and the Internal Revenue Code and the regulations
\nthereunder, except to the extent that a failure to be so administered would not
\nhave a Material Adverse Effect.<\/p>\n
(h) Neither Target nor any ERISA Affiliate has any accumulated
\nfunding deficiency under section 412 of the Internal Revenue Code or any
\ntermination or withdrawal liability under Title IV of ERISA. For purposes of
\ndetermining any accumulated funding deficiency under section 412 of the Internal
\nRevenue Code, the term “ERISA Affiliate” shall include any entity that is deemed
\nto be a member of the same “controlled group” within the meaning of section
\n414(m) or (o) of the Internal Revenue Code.<\/p>\n
(i) All contributions, premiums or other payments due from
\nTarget or Target Subsidiary to (or under) any Plan have been fully paid or
\nadequately provided for on the books and financial statements of Target or
\nTarget Subsidiary. All accruals (including, where appropriate, proportional
\naccruals for partial periods) have been made in accordance with prior practices.<\/p>\n
(j) Except as disclosed in Section 2.13 of the Target Disclosure
\nSchedule, the consummation of the transactions contemplated by this Agreement
\n(excluding any employment agreement with Acquiror entered into by any employee
\nor director of Target in connection with this Agreement) will not result in (i)
\nany amount becoming payable to any employee, director or independent contractor
\nof Target or Target Subsidiary, (ii) the acceleration of payment or vesting of
\nany benefit, option or right to which any employee, director or independent
\ncontractor of Target or Target Subsidiary may be entitled, (iii) the forgiveness
\nof any indebtedness of any employee, director or independent contractor of
\nTarget or Target Subsidiary or (iv) any cost becoming due or accruing to Target
\nor Target Subsidiary or Acquiror with respect to any employee, director or
\nindependent contractor of Target or Target Subsidiary.<\/p>\n
17
\n 23<\/p>\n
(k) Other than routine claims for benefits under the Plans,
\nthere are no pending, or, to the best knowledge of Target or Target Subsidiary,
\nthreatened, Actions or Proceedings involving the Plans, or the fiduciaries,
\nadministrators, or trustees of any of the Plans or Target or Target Subsidiary
\nor any of their ERISA Affiliates as the employer or sponsor under any Plan, with
\nany of the IRS, the Department of Labor, the PBGC, any participant in or
\nbeneficiary of any Plan or any other Person whomsoever. Target and Target
\nSubsidiary know of no reasonable basis for any such claim, lawsuit, dispute,
\naction or controversy.<\/p>\n
2.14 TITLE TO PROPERTY. Except for title to Target Intellectual
\nProperty, which is covered by Section 2.15 below, Target and Target Subsidiary
\nhave good and marketable title to all of their respective material properties,
\ninterests in properties and assets, real and personal, reflected in Target
\nFinancials or acquired after the Financial Statement Date (except properties,
\ninterests in properties and assets sold or otherwise disposed of since the
\nFinancial Statement Date in the ordinary course of business), free and clear of
\nall material mortgages, liens, pledges, charges or encumbrances of any kind or
\ncharacter, except (i) liens for current taxes not yet due and payable, (ii) such
\nimperfections of title, liens and easements as do not and will not materially
\ndetract from or interfere with the use of the properties subject thereto or
\naffected thereby, or otherwise materially impair business operations involving
\nsuch properties and (iii) liens securing debt which is reflected on Target
\nFinancials. The plants, property and equipment of Target and Target Subsidiary
\nthat are used in the operations of its businesses are in good operating
\ncondition and repair, subject to normal wear and tear. All properties used in
\nthe operations of Target and Target Subsidiary are reflected in Target
\nFinancials to the extent generally accepted accounting principles required the
\nsame to be reflected as of the dates of such Target Financials. With respect to
\nproperties and assets leased by Target and Target Subsidiary, Target or Target
\nSubsidiary, as applicable, holds valid leasehold interests in such properties
\nand assets in accordance with the terms of the agreements governing such leases.<\/p>\n
2.15 INTELLECTUAL PROPERTY.<\/p>\n
(a) Target has all requisite right, title and interest in or
\nvalid and enforceable rights under Contracts or Licenses to use all Target
\nIntellectual Property necessary to the conduct of its business as presently
\nconducted. Each item of Target Intellectual Property, either is owned
\nexclusively by Target, free and clear of any Liens, or is licensed to Target
\nunder a valid License granting sufficient rights to permit Target to conduct its
\nbusiness as presently conducted. To the best of its knowledge, Target owns or
\nhas the valid right to use all trademarks, service marks and trade names used by
\nTarget in connection with the operation or conduct of the business of Target,
\nincluding the sale of any products or technology or the provision of any
\nservices by Target. Target owns exclusively, and has good title to, all
\ncopyrighted works that are Target products or other works of authorship that
\nTarget otherwise purports to own; provided, however, that such works may
\nincorporate copyrighted works or works of authorship, trademarks or trade names
\nof third parties which are licensed to Target or are in the public domain.
\nExcept pursuant to agreements in the ordinary course of business, neither Target
\nnor Target Subsidiary has transferred ownership of any Target Intellectual
\nProperty to any other Person.<\/p>\n
(b) To the extent that any Target Intellectual Property that is
\nmaterial to Target’s business has been developed or created by any Person other
\nthan Target, Target has a <\/p>\n
18
\n 24<\/p>\n
written agreement with such Person with respect thereto and Target has either
\n(i) obtained ownership of, and is the exclusive owner of, all such Intellectual
\nProperty by operation of law or by valid assignment of any such rights or (ii)
\nobtained a License under or to such Intellectual Property.<\/p>\n
(c) The operation of the business of Target as currently
\nconducted, including Target’s design, development, use, import, manufacture and
\nsale of the products, technology or services (including products, technology or
\nservices currently under development) of Target: (i) does not infringe the
\ncopyright or misappropriate the trade secrets of any Person; (ii) to the best of
\nTarget’s knowledge, does not infringe the patent rights or trademark rights of
\nany Person; (iii) does not violate in any material respect the rights of any
\nPerson (including rights to privacy or publicity other than patent rights or
\ntrademark rights described above); and, (iv) does not constitute unfair
\ncompetition or an unfair trade practice under any Law. Neither Target nor Target
\nSubsidiary has received notice from any Person claiming that such operation or
\nany act, product, technology or service (including products, technology or
\nservices currently under development) of Target or Target Subsidiary infringes
\nor misappropriates the Intellectual Property of any Person or constitutes unfair
\ncompetition or trade practices under any Law.<\/p>\n
(d) Each item of Target Registered Intellectual Property is
\nvalid and subsisting, and all necessary registration, maintenance, renewal fees,
\nannuity fees and taxes in connection with such Registered Intellectual Property
\nhave been paid and all necessary documents and certificates in connection with
\nsuch Registered Intellectual Property have been filed with the relevant patent,
\ncopyright, trademark or other authorities in the United States or foreign
\njurisdictions in which such Registered Intellectual Property is registered, as
\nthe case may be, for the purposes of maintaining such Registered Intellectual
\nProperty.<\/p>\n
(e) There are no Contracts or Licenses between Target and any
\nother Person with respect to Target Intellectual Property under which there is
\nany dispute known to Target regarding the scope of such Contract or License, or
\nperformance under such Contract or License, including any dispute with respect
\nto any payments to be made or received by Target thereunder.<\/p>\n
(f) Target has taken all requisite commercially reasonable steps
\nto maintain and preserve the confidentiality of Target’s confidential
\ninformation and trade secrets of Target or any similar information provided by
\nany other Person to Target subject to a duty of confidentiality. Without
\nlimiting the generality of the foregoing, Target has, and enforces, a policy
\nrequiring each employee, consultant and independent contractor to execute
\nproprietary information, confidentiality and invention assignment agreements.<\/p>\n
(g) Target has taken all commercially reasonable actions
\nnecessary and appropriate to assure that there shall be no material adverse
\nchange to its business or electronic systems or material interruptions in the
\ndelivery of Target’s products and services by reason of computer software errors
\nor miscalculations associated with the advent of the year 2000, including that
\nall of its products (including products currently under development) will,
\nwithout interruption or manual intervention, continue to consistently,
\npredictably and accurately record, store, process, calculate and present
\ncalendar dates falling on and after (and if applicable, spans of time including)
\nJanuary 1, 2000, and will consistently, predictably and accurately<\/p>\n
19
\n 25<\/p>\n
calculate any information dependent on or relating to such dates in
\nsubstantially the same manner, and with the same functionality, data integrity
\nand performance, as such products record, store, process, calculate and present
\ncalendar dates on or before December 31, 1999, or calculate any information
\ndependent on or relating to such dates.<\/p>\n
2.16 CONTRACTS.<\/p>\n
(a) Section 2.16(a)(1) of the Target Disclosure Schedule
\ncontains a true and complete list of each of Target’s and Target Subsidiary’s
\nContracts that are material to Target’s business, operations or financial
\ncondition (true and complete copies or, if none, reasonably complete and
\naccurate written descriptions of which, together with all amendments and
\nsupplements thereto and all waivers of any terms thereof, have been made
\navailable to Acquiror prior to the execution of this Agreement).<\/p>\n
(b) Each Contract required to be disclosed in Section 2.16(a) of
\nthe Target Disclosure Schedule is in full force and effect and constitutes a
\nlegal, valid and binding agreement of Target or Target Subsidiary, enforceable
\nagainst Target or Target Subsidiary in accordance with its terms (subject to the
\neffect of bankruptcy and other laws affecting the rights of creditors generally
\nand limitations on the enforcement of contracts under principles of equity),
\nand, to the knowledge of Target or Target Subsidiary, each other party thereto
\n(subject to the effect of bankruptcy and other laws affecting the rights of
\ncreditors generally and limitations on the enforcement of contracts under
\nprinciples of equity), and, to the knowledge of Target or Target Subsidiary, no
\nother party to such Contract is, nor has received notice that it is, in material
\nviolation or breach of or default under any such Contract (or with notice or
\nlapse of time or both, would be in material violation or breach of or default
\nunder any such Contract).<\/p>\n
(c) Neither Target nor Target Subsidiary is a party to or bound
\nby any Contract that (i) automatically terminates or allows termination by the
\nother party thereto upon consummation of the transactions contemplated by this
\nAgreement or (ii) contains any covenant or other provision which limits Target’s
\nor Target Subsidiary’s ability to compete with any Person in any line of
\nbusiness or in any area or territory.<\/p>\n
2.17 INSURANCE. Target and Target Subsidiary have policies of
\ninsurance and bonds of the type and in amounts customarily carried by companies
\nconducting businesses or owning assets similar to those of Target and Target
\nSubsidiary. There is no material claim pending under any of such policies or
\nbonds as to which coverage has been questioned, denied or disputed by the
\nunderwriters of such policies or bonds. All premiums due and payable under all
\nsuch policies and bonds have been paid and Target and Target Subsidiary are
\notherwise in compliance with the terms of such policies and bonds. Neither
\nTarget nor Target Subsidiary has knowledge of any threatened termination of, or
\nmaterial premium increase with respect to, any of such policies.<\/p>\n
2.18 AFFILIATE TRANSACTIONS. Except as disclosed in Section 2.8(f)
\nor 2.18(a) of the Target Disclosure Schedule, and except for any stock purchase
\nagreements, stock option agreements and invention assignment or confidentiality
\nagreements in favor of Target or Target Subsidiary, (i) there are no Contracts
\nor Liabilities between Target or Target Subsidiary, on the one hand, and (A) any
\ncurrent or former officer, director, stockholder, or to Target’s or Target<\/p>\n
20
\n 26<\/p>\n
Subsidiary’s knowledge, any Affiliate or Associate of Target or Target
\nSubsidiary or (B) any Person who, to Target’s or Target Subsidiary’s knowledge,
\nis an Associate of any such officer, director, stockholder or Affiliate, on the
\nother hand, (ii) neither Target nor Target Subsidiary provides or causes to be
\nprovided any assets, services or facilities to any such current or former
\nofficer, director, stockholder, Affiliate or Associate, (iii) neither Target,
\nTarget Subsidiary nor any such current or former officer, director, stockholder,
\nAffiliate or Associate provides or causes to be provided any assets, services or
\nfacilities to Target or Target Subsidiary and (iv) neither Target nor Target
\nSubsidiary beneficially owns, directly or indirectly, any Investment Assets of
\nany such current or former officer, director, stockholder, Affiliate or
\nAssociate.<\/p>\n
2.19 EMPLOYEES; LABOR RELATIONS.<\/p>\n
(a) Neither Target nor Target Subsidiary is a party to any
\ncollective bargaining agreement and there are no unfair labor practice or labor
\narbitration proceedings pending with respect to Target or Target Subsidiary, or,
\nto the knowledge of Target or Target Subsidiary, threatened, and there are no
\nfacts or circumstances known to Target or Target Subsidiary that could
\nreasonably be expected to give rise to such complaint or claim. To the knowledge
\nof Target or Target Subsidiary, there are no organizational efforts presently
\nunderway or threatened involving any employees of Target or Target Subsidiary or
\nany of the employees performing work for Target or Target Subsidiary but those
\nprovided by an outside employment agency, if any. There has been no work
\nstoppage, strike or other concerted action by employees of Target or Target
\nSubsidiary.<\/p>\n
(b) All employees of Target and Target Subsidiary are employed
\nat will. Section 2.19(b) of the Target Disclosure Schedule sets forth,
\nindividually and by category, the name of each officer, employee and consultant,
\ntogether with such person’s position or function, annual base salary or wage and
\nany incentive, severance or bonus arrangements with respect to such person. To
\nthe knowledge of Target or Target Subsidiary, no employee of Target or Target
\nSubsidiary has made any threat, or otherwise revealed an intent, to terminate
\nsuch employee’s relationship with Target or Target Subsidiary, for any reason,
\nincluding because of the consummation of the transactions contemplated by this
\nAgreement. Neither Target nor Target Subsidiary is a party to any agreement for
\nthe provision of labor from any outside agency. To the knowledge of Target or
\nTarget Subsidiary, there have been no claims by employees of such outside
\nagencies, if any, with regard to employees assigned to work for Target or Target
\nSubsidiary, and no claims by any governmental agency with regard to such
\nemployees except as set forth in Section 2.19(b) of the Target Disclosure
\nSchedule.<\/p>\n
(c) There have been no federal or state claims based on sex,
\nsexual or other harassment, age, disability, race or other discrimination or
\ncommon law claims, including claims of wrongful termination, by any employees of
\nTarget or Target Subsidiary or by any of the employees performing work for
\nTarget or Target Subsidiary but those provided by an outside employment agency,
\nand there are no facts or circumstances known to Target or Target Subsidiary
\nthat could reasonably be expected to give rise to such complaint or claim. Both
\nTarget and Target Subsidiary have complied in all material respects with all
\nlaws related to the employment of employees and, except as set forth in Section
\n2.19(c) of the Target Disclosure Schedule, neither Target nor Target Subsidiary
\nhas received any notice of any claim that it has not complied in any material
\nrespect with any Laws relating to the employment of employees, <\/p>\n
21
\n 27<\/p>\n
including any provisions thereof relating to wages, hours, collective
\nbargaining, the payment of Social Security and similar taxes, equal employment
\nopportunity, employment discrimination, the WARN Act, employee safety, or that
\nit is liable for any arrearages of wages or any taxes or penalties for failure
\nto comply with any of the foregoing.<\/p>\n
(d) Neither Target nor Target Subsidiary has written policies
\nand\/or employee handbooks or manuals except as described in Section 2.19(d) of
\nthe Target Disclosure Schedule.<\/p>\n
(e) To the knowledge of Target or Target Subsidiary, no officer,
\nemployee or consultant of Target or Target Subsidiary is obligated under any
\nContract or other agreement or subject to any Order or Law that would interfere
\nwith Target’s or Target Subsidiary’s businesses as currently conducted. To the
\nknowledge of Target or Target Subsidiary, neither the execution nor delivery of
\nthis Agreement, nor the carrying on of Target’s or Target Subsidiary’s
\nbusinesses as presently conducted nor any activity of such officers, employees
\nor consultants in connection with the carrying on of Target’s or Target
\nSubsidiary’s businesses as presently conducted, will conflict with or result in
\na breach of the terms, conditions or provisions of, constitute a default under,
\nor trigger a condition precedent to any rights under, any Contract or other
\nagreement under which any of such officers, employees or consultants is now
\nbound.<\/p>\n
(f) Target and Target Subsidiary have complied in all material
\nrespects with the verification requirements and the record-keeping requirements
\nof the Immigration Reform and Control Act of 1986 (“IRCA”); to the best
\nknowledge of Target or Target Subsidiary, the information and documents on which
\nTarget and Target Subsidiary relied to comply with IRCA are true and correct;
\nand there have not been any discrimination complaints filed against Target or
\nTarget Subsidiary pursuant to IRCA, and to the best knowledge of Target or
\nTarget Subsidiary, there is no basis for the filing of such a complaint.<\/p>\n
2.20 ENVIRONMENTAL MATTERS.<\/p>\n
(a) Target and Target Subsidiary possess all Environmental
\nPermits required for the operation of their businesses.<\/p>\n
(b) Target and Target Subsidiary are in compliance in all
\nmaterial respects with (i) all terms, conditions and provisions of its
\nEnvironmental Permits; and (ii) all Environmental Laws.<\/p>\n
(c) Neither Target nor, to the knowledge of Target, Target
\nSubsidiary or any predecessor of Target nor any entity previously owned by
\nTarget has any obligation or liability with respect to any Hazardous Material,
\nincluding any Release or threatened or suspected Release of any Hazardous
\nMaterial, and there have been no events, facts or circumstances since the date
\nof incorporation of Target and Target Subsidiary which could reasonably be
\nexpected to form the basis of any such obligation or liability.<\/p>\n
(d) There have been no environmental investigations, studies,
\naudits, tests, reviews or other analyses conducted by or for Target or Target
\nSubsidiary or, to the knowledge of Target or Target Subsidiary, by or for any
\nother Person with respect to any Site <\/p>\n
22
\n 28<\/p>\n
while Target or Target Subsidiary has occupied the Site, which have not been
\ndelivered to Acquiror prior to execution of this Agreement.<\/p>\n
2.21 OTHER NEGOTIATIONS; BROKERS; THIRD PARTY EXPENSES. Neither
\nTarget nor, to the knowledge of Target, any of its Affiliates (nor any
\ninvestment banker, financial advisor, attorney, accountant or other Person
\nretained by or acting for or on behalf of Target or at Target’s direction) (a)
\nhas entered into any Contract that conflicts with any of the transactions
\ncontemplated by this Agreement or (b) has entered into any Contract or had any
\ndiscussions with any Person regarding any transaction involving Target which
\ncould reasonably be expected to result in Acquiror, Target or any general
\npartner, limited partner, manager, officer, director, employee, agent or
\nAffiliate of any of them being subject to any claim for liability to said Person
\nas a result of entering into this Agreement or consummating the transactions
\ncontemplated hereby. Section 2.21 of the Target Disclosure Schedule sets forth
\nthe principal terms and conditions of any Contract with respect to, and a
\nreasonable estimate of, all Third Party Expenses expected to be incurred by
\nTarget in connection with the negotiation and effectuation of the terms and
\nconditions of this Agreement and the transactions contemplated hereby.<\/p>\n
2.22 FOREIGN CORRUPT PRACTICES ACT. Neither Target, Target
\nSubsidiary, nor to the knowledge of Target or Target Subsidiary, any agent,
\nemployee or other Person acting on behalf of Target or Target Subsidiary has,
\ndirectly or indirectly, used any corporate funds for unlawful contributions,
\ngifts, entertainment or other unlawful expenses relating to political activity,
\nmade any unlawful payment to foreign or domestic government officials or
\nemployees or to foreign or domestic political parties or campaigns from
\ncorporate funds, violated any provision of the Foreign Corrupt Practices Act of
\n1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback
\nor other similar unlawful payment.<\/p>\n
2.23 TAX-FREE REORGANIZATION. To the knowledge of Target, after Good
\nFaith Consultation with Target’s independent accountants, neither Target nor any
\nof its directors, officers or stockholders has taken any action which could
\nreasonably be expected to jeopardize the status of the Merger as a
\n“reorganization” within the meaning of Section 368(a) of the Internal Revenue
\nCode.<\/p>\n
2.24 APPROVALS.<\/p>\n
(a) Section 2.24(a) of the Target Disclosure Schedule contains a
\nlist of all material Approvals of Governmental or Regulatory Authorities
\nrelating to the business conducted by Target which are required to be given to
\nor obtained by Target prior to the Closing from any and all Governmental or
\nRegulatory Authorities in connection with the consummation of the transactions
\ncontemplated by this Agreement.<\/p>\n
(b) Section 2.24(b) of the Target Disclosure Schedule contains a
\nlist of all material Approvals which are required to be given to or obtained by
\nTarget prior to the Closing from any and all third parties other than
\nGovernmental or Regulatory Authorities in connection with the consummation of
\nthe transactions contemplated by this Agreement.<\/p>\n
(c) Target has obtained all material Approvals from Governmental
\nor Regulatory Authorities necessary to conduct the business conducted by Target
\nin the manner as it <\/p>\n
23
\n 29<\/p>\n
is currently being conducted and there has been no written notice received by
\nTarget of any material violation or material non-compliance with any such
\nApprovals. All material Approvals from Governmental or Regulatory Authorities
\nnecessary to conduct the business conducted by Target as it is currently being
\nconducted are set forth in Section 2.24(c) of the Target Disclosure Schedule.<\/p>\n
(d) The affirmative vote or consent of the holders of (i) the
\nshares of Target Common Stock outstanding as of the applicable record date
\nvoting separately as a class, and (ii) the shares of Target Common Stock and
\nTarget Preferred Stock outstanding as of the applicable record date, voting
\ntogether as a single class, are the only votes of the holders of any of Target
\nCapital Stock necessary to approve this Agreement and the Merger and the
\ntransactions contemplated hereby.<\/p>\n
2.25 DISCLOSURE. No representation or warranty contained in Article
\n2 of this Agreement, and no statement contained in the Target Disclosure
\nSchedule or in any certificate, list or other writing furnished to Acquiror
\npursuant to any provision of this Agreement (including Target Financials and the
\nnotes thereto) contains any untrue statement of a material fact or omits to
\nstate a material fact necessary to make the representations and warranties of
\nTarget and Target Subsidiary in Article 2 (as modified by the Target Disclosure
\nSchedule), in the light of the circumstances under which they were made, not
\nmisleading.<\/p>\n
2.26 S-4 REGISTRATION STATEMENT; PROXY STATEMENT. The information
\nsupplied in writing to Acquiror, or its counsel or auditors, by Target and
\nTarget Stockholders for inclusion in the registration statement on Form S-4 (or
\nsuch other or successor form as shall be appropriate) pursuant to which the
\nshares of Acquiror Common Stock to be issued in the Merger and Target Options to
\nbe assumed in the Merger will be registered with the SEC (the “S-4 Registration
\nStatement”) shall not, at the time the S-4 Registration Statement (including any
\namendments or supplements thereto) is declared effective by the SEC, contain any
\nuntrue statement of a material fact or omit to state any material fact required
\nto be stated therein or necessary in order to make the statements therein, in
\nlight of the circumstances under which they were made, not misleading. The
\ninformation supplied by Target and Target’s stockholders for inclusion in the
\nproxy statement\/prospectus to be sent to the stockholders of Target and Acquiror
\nin connection with the meeting of Target’s stockholders (the “Acquiror
\nStockholders Meeting”) to consider approval of the Merger (the “Target
\nStockholders Meeting”) and in connection with the meeting of Acquiror’s
\nstockholders to consider approval of the Merger and this Agreement and the
\namendment of Acquiror’s Certificate of Incorporation to increase the number of
\nauthorized shares of Acquiror Common Stock to a number sufficient to enable
\nAcquiror to comply with all its obligations under this Agreement and the Merger
\n(the “Acquiror Charter Amendment”) (such proxy statement\/prospectus as amended
\nor supplemented is referred to herein as the “Proxy Statement”) shall not, on
\nthe date the Proxy Statement is first mailed to Target’s stockholders and
\nAcquiror’s stockholders, at the time of the Target Stockholders Meeting, at the
\ntime of the Acquiror Stockholders Meeting and at the Effective Time, contain any
\nstatement which, at such time, is false or misleading with respect to any
\nmaterial fact, or omit to state any material fact necessary in order to make the
\nstatements made therein, in light of the circumstances under which they are
\nmade, not false or misleading; or omit to state any material fact necessary to
\ncorrect any statement in any earlier communication with respect to the
\nsolicitation of proxies for the Target Stockholders Meeting or the Acquiror
\nStockholders Meeting <\/p>\n
24
\n 30<\/p>\n
which has become false or misleading. Notwithstanding the foregoing, Target
\nmakes no representation, warranty or covenant with respect to any information
\nsupplied by Acquiror that is contained in the S-4 Registration Statement or the
\nProxy Statement.<\/p>\n
2.27 INVESTMENT ADVISORS. Except as set forth in Section 2.27 of the
\nTarget Disclosure Schedule, no broker, investment banker, financial advisor or
\nother Person is entitled to any broker’s, finder’s, financial advisor’s or
\nsimilar fee or commission in connection with this Agreement and the transactions
\ncontemplated hereby based on arrangements made by or on behalf of Target.<\/p>\n
ARTICLE 3
\n REPRESENTATIONS AND WARRANTIES OF ACQUIROR<\/p>\n
Acquiror hereby represents and warrants to Target, subject to such
\nexceptions and qualifications as are specifically disclosed in the Acquiror
\ndisclosure schedule and schedule of exceptions of Acquiror (the “Acquiror
\nDisclosure Schedule”) delivered herewith and dated as of the date hereof as
\nfollows:<\/p>\n
3.1 ORGANIZATION AND QUALIFICATION. Acquiror is a corporation duly
\norganized, validly existing and in good standing under the Laws of the State of
\nDelaware. Acquiror has all requisite corporate power and authority to conduct
\nits business as now conducted and as currently proposed to be conducted and to
\nown, use and lease its Assets and Properties. Acquiror is duly qualified,
\nlicensed or admitted to do business and is in good standing as a foreign
\ncorporation in each jurisdiction in which the ownership, use, licensing or
\nleasing of its Assets and Properties, or the conduct or nature of its business,
\nmakes such qualification, licensing or admission necessary, except for such
\nfailures to be so duly qualified, licensed or admitted and in good standing that
\ncould not reasonably be expected to have a Material Adverse Effect on Acquiror.
\nSection 3.1 of the Acquiror Disclosure Schedule sets forth each jurisdiction
\nwhere Acquiror is so qualified to do business and separately lists each other
\njurisdiction in which Acquiror owns, uses, licenses or leases any material
\nAssets or Properties, has established a local office or other permanent local
\npresence or has employees or engages independent contractors.<\/p>\n
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Acquiror has full
\ncorporate power and authority to execute and deliver this Agreement and the
\nAncillary Agreements to which it is a party, to perform its respective
\nobligations hereunder and thereunder and to consummate the transactions
\ncontemplated hereby and thereby. The execution and delivery by Acquiror of this
\nAgreement and the Ancillary Agreements to which Target is a party and the
\nconsummation by Acquiror of the transactions contemplated hereby and thereby
\nhave been duly and validly authorized by all necessary corporate action of
\nAcquiror, and no other corporate action on the part of Acquiror is required to
\nauthorize the execution, delivery and performance of this Agreement and the
\nAncillary Agreements to which Target is a party by Acquiror and the consummation
\nby Acquiror of the transactions contemplated hereby and thereby. This Agreement
\nand the Ancillary Agreements to which Acquiror is a party have each been duly
\nand validly executed and delivered by Acquiror and, assuming the due
\nauthorization and the valid execution and delivery of this Agreement by Target
\nand each Ancillary Agreement by each other party (other than Acquiror) to such
\nAncillary Agreement, each constitutes a legal, valid and <\/p>\n
25
\n 31<\/p>\n
binding obligation of Acquiror enforceable against Acquiror in accordance with
\nits respective terms, except as the enforceability thereof may be limited by
\nbankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
\nother similar Laws relating to the enforcement of creditors’ rights generally
\nand by general principles of equity. The shares of Acquiror Common Stock to be
\nissued in the Merger pursuant to Section 1.6(a) shall, when issued in compliance
\nwith this Agreement, be duly and validly issued, fully paid and non-assessable,
\nand the shares of Acquiror Common Stock that will be issuable upon the exercise
\nof Acquiror Options and Acquiror Warrants that are issued in the Merger pursuant
\nto Section 1.6(c) and (d), respectively, when issued upon the exercise of and in
\ncompliance with such Acquiror Options and Acquiror Warrants, will be duly and
\nvalidly issued, fully paid and non-assessable.<\/p>\n
3.3 CAPITALIZATION. The authorized capital stock of Acquiror
\nconsists only of 80,000,000 shares of Common Stock, $0.0001 par value per share,
\n10,000,000 shares of Preferred Stock, $0.0001 par value per share. As of the
\nclose of business on November 27, 1999, 43,602,432 shares of Common Stock, no
\nshares of Preferred Stock, options to purchase 8,047,963 shares of Common Stock
\nand warrants to purchase 60,000 shares of Common Stock were issued and
\noutstanding.<\/p>\n
3.4 SUBSIDIARIES. Acquiror has one subsidiary, Redback Networks
\nInternational Inc., which is not a material subsidiary. Acquiror has no other
\nSubsidiaries and does not (and prior to the Closing will not) otherwise hold any
\nequity, membership, partnership, joint venture or other ownership interest in
\nany Person.<\/p>\n
3.5 NO CONFLICTS. The execution and delivery by Acquiror of this
\nAgreement does not, and the performance by Acquiror of its obligations under
\nthis Agreement and the consummation of the transactions contemplated hereby do
\nnot and will not:<\/p>\n
(a) conflict with or result in a violation or breach of any of
\nthe terms, conditions or provisions of the Certificate of Incorporation or
\nBylaws of Acquiror;<\/p>\n
(b) subject to obtaining the consents, approvals and actions,
\nmaking the filings and giving the notices disclosed in Section 3.5 of the
\nAcquiror Disclosure Schedule, if any, conflict with or result in a violation or
\nbreach of any Law or Order applicable to Acquiror or its Assets or Properties;<\/p>\n
(c) except as would not have a Material Adverse Effect on
\nAcquiror, (i) conflict with or result in a violation or breach of, (ii)
\nconstitute a default (or an event that, with or without notice or lapse of time
\nor both, would constitute a default) under, (iii) require Acquiror to obtain any
\nconsent, approval or action of, make any filing with or give any notice to any
\nPerson (other than the filing of the Delaware Certificate of Merger together
\nwith the required officers’ certificates, any filing required under the HSR Act
\nin connection with the Merger and such consents, approvals, orders,
\nauthorizations, registrations, declarations and filings as may be required under
\nstate or federal securities Laws) as a result of the terms of, (iv) result in or
\ngive to any Person any right of termination, cancellation, acceleration or
\nmodification in or with respect to, (v) result in or give to any person any
\nadditional rights or entitlement to increased, additional, accelerated or
\nguaranteed payments or performance under, (vi) result in the creation or
\nimposition of (or the obligation to create or impose) any material Lien upon
\nAcquiror, any of its <\/p>\n
26
\n 32<\/p>\n
subsidiaries, or any of its material Assets or Properties, or (vii) result in
\nthe loss of a material benefit under any material Contract or License to which
\nAcquiror is a party or by which any of Acquiror’s material Assets and Properties
\nare bound.<\/p>\n
3.6 SEC DOCUMENTS; ACQUIROR FINANCIAL STATEMENTS. Acquiror has
\nfurnished or made available to Target or its counsel true and complete copies of
\nall SEC Documents filed by it with the SEC since May 17, 1999, all in the form
\nso filed. As of their respective filing dates, such SEC Documents filed by
\nAcquiror and all SEC Documents filed after the date hereof but before the
\nClosing complied or will comply in all material respects with the requirements
\nof the Securities Act and the Exchange Act and the rules and regulations of the
\nSEC thereunder, as the case may be, and none of the SEC Documents contained or
\nwill contain any untrue statement of a material fact or omitted to state a
\nmaterial fact required to be stated therein or necessary to make the statements
\nmade therein, in light of the circumstances in which they were made, not
\nmisleading, except to the extent such SEC Documents have been corrected, updated
\nor superseded by a document subsequently filed with the SEC. The financial
\nstatements of Acquiror, including the notes thereto, included in the SEC
\nDocuments (the “Acquiror Financial Statements”) comply as to form in all
\nmaterial respects with the published rules and regulations of the SEC with
\nrespect thereto, have been prepared in accordance with GAAP consistently applied
\n(except as may be indicated in the notes thereto or, in the case of unaudited
\nstatements, as permitted by Form 10-Q under the Exchange Act) and present fairly
\nthe consolidated financial position of Acquiror at the dates thereof and the
\nconsolidated results of its operations and cash flows for the periods then ended
\n(subject, in the case of unaudited financial statements, to normal year-end
\nadjustments). There has been no change in Acquiror’s accounting policies except
\nas described in the notes to the Acquiror Financial Statements.<\/p>\n
3.7 ABSENCE OF CHANGES. Since September 30, 1999, there has not been
\nany material adverse change in the Business or Condition of Acquiror or any
\noccurrence or event which, individually or in the aggregate is reasonably
\nexpected to have Material Adverse Effect on Acquiror. In addition, without
\nlimiting the generality of the foregoing, except as expressly contemplated by
\nthis Agreement, since September 30, 1999:<\/p>\n
(a) Acquiror has not entered into any material Contract or other
\nmaterial commitment or transaction;<\/p>\n
(b) there has not been any material amendment or other material
\nmodification (or agreement to do so), or material violation of the terms of, any
\nof the material Contracts set forth or described in the Acquiror Disclosure
\nSchedule;<\/p>\n
(c) there has not been any amendment to Acquiror’s Certificate
\nof Incorporation or Bylaws;<\/p>\n
(d) there has not been any transfer (by way of a License or
\notherwise) to any Person of rights to any material Acquiror Intellectual
\nProperty, other than licenses in the ordinary course of business consistent with
\npast practice;<\/p>\n
(e) Acquiror has not made any change in accounting policies,
\nprinciples, methods, practices or procedures (including for bad debts,
\ncontingent liabilities or <\/p>\n
27
\n 33<\/p>\n
otherwise, respecting capitalization or expense of research and development
\nexpenditures, depreciation or amortization rates or timing of recognition of
\nincome and expense);<\/p>\n
(f) Acquiror has taken all commercially reasonable action
\nrequired to maintain, renew, extend or enforce any material Acquiror
\nIntellectual Property;<\/p>\n
(g) there has been no physical damage, destruction or other
\ncasualty loss (whether or not covered by insurance) affecting any of the real or
\npersonal property or equipment of Acquiror or in an amount exceeding one hundred
\nthousand dollars ($100,000) individually or two hundred fifty thousand dollars
\n($250,000) in the aggregate; and<\/p>\n
(h) Acquiror has not entered into or approved any contract,
\narrangement or understanding or acquiesced in respect of any arrangement or
\nunderstanding, to do, engage in or cause or having the effect of any of the
\nforegoing.<\/p>\n
3.8 NO UNDISCLOSED LIABILITIES. Except as reflected or reserved
\nagainst in Acquiror’s Form 10-Q for the quarter ending September 30, 1999
\n(Acquiror’s “September 10-Q”) (including the notes thereto), Acquiror has no
\nmaterial Liabilities, other than Liabilities incurred in the ordinary course of
\nbusiness consistent with past practice since September 30, 1999.<\/p>\n
3.9 TAXES.<\/p>\n
(a) All Tax returns, statements, reports, declarations and other
\nforms and documents (including without limitation estimated Tax returns and
\nreports and material information statements, returns and reports) required to be
\nfiled with any Tax Authority with respect to any Taxable period ending on or
\nbefore the Effective Time, by or on behalf of Acquiror (collectively, “Tax
\nReturns” and individually a “Tax Return”), have been or will be completed and
\nfiled when due (including any extensions of such due date) and all amounts shown
\ndue on such Tax Returns on or before the Effective Time have been or will be
\npaid on or before such date. All such Tax Returns are true, accurate and
\ncomplete as filed. The Acquiror’s September 30, 1999 unaudited balance sheet
\nincluded in Acquiror’s September 10-Q (the “Acquiror Balance Sheet”) (i) fully
\naccrues all Acquiror’s actual and contingent liabilities for Taxes with respect
\nto all periods through September 30, 1999 and Acquiror has not and will not
\nincur any Tax liability in excess of the amount reflected on such Acquiror
\nBalance Sheet with respect to such periods (excluding any amount thereof that
\nreflects timing differences between the recognition of income for purposes of
\nGAAP and for Tax purposes), and (ii) properly accrues in accordance with GAAP
\nall material liabilities for Taxes payable after September 30, 1999 with respect
\nto all transactions and events occurring on or prior to such date. All
\ninformation set forth Acquiror’s September 10-Q relating to Tax matters is true,
\ncomplete and accurate in all material respects. No material Tax liability since
\nSeptember 30, 1999 has been or will be incurred by Acquiror other than in the
\nordinary course of business, and adequate provision has been made by Acquiror
\nfor all Taxes since that date in accordance with GAAP on at least a quarterly
\nbasis.<\/p>\n
(b) Acquiror has withheld and paid to the applicable financial
\ninstitution or Tax Authority all amounts required to be withheld. Acquiror (or
\nany member of <\/p>\n
28
\n 34<\/p>\n
any affiliated or combined group of which Acquiror has been a member) has not
\ngranted any extension or waiver of the limitation period applicable to any Tax
\nReturns that is still in effect. There is no material claim, audit, action,
\nsuit, proceeding, or (to the knowledge of Acquiror) investigation now pending or
\n(to the knowledge of Acquiror) threatened against or with respect to Acquiror in
\nrespect of any Tax or assessment. No notice of deficiency or similar document of
\nany Tax Authority asserting that Acquiror has unpaid Tax liability has been
\nreceived by Acquiror, and there are no liabilities for Taxes (including
\nliabilities for interest, additions to Tax and penalties thereon and related
\nexpenses) with respect to the issues that have been raised (and are currently
\npending) by any Tax Authority that could, if determined adversely to Acquiror,
\nmaterially and adversely affect the liability of Acquiror for Taxes. There are
\nno liens for Taxes (other than for current Taxes not yet due and payable) upon
\nthe assets of Acquiror. Acquiror has never been a member of an affiliated group
\nof corporations, within the meaning of Section 1504 of the Code. Acquiror is in
\nfull compliance with all the terms and conditions of any Tax exemptions or other
\nTax-sharing agreement or order of a foreign government and the consummation of
\nthe Merger will not have any adverse effect on the continued validity and
\neffectiveness of any such Tax exemption or other Tax-sharing agreement or order.
\nNeither Acquiror nor any Person on behalf of Acquiror has entered into or will
\nenter into any agreement or consent pursuant to the collapsible corporation
\nprovisions of Section 341(f) of the Code (or any corresponding provision of
\nstate, local or foreign income tax law) or agreed to have Section 341(f)(2) of
\nthe Code (or any corresponding provision of state, local or foreign income tax
\nlaw) apply to any disposition of any asset owned by Acquiror. None of the assets
\nof Acquiror is property that Acquiror is required to treat as being owned by any
\nother person pursuant to the so-called “safe harbor lease” provisions of former
\nSection 168(f)(8) of the Code. None of the assets of Acquiror directly or
\nindirectly secures any debt the interest on which is tax-exempt under Section
\n103(a) of the Code. None of the assets of Acquiror is “tax-exempt use property”
\nwithin the meaning of Section 168(h) of the Code. Acquiror has not made and will
\nnot make a deemed dividend election under Treas. Reg. Section 1.1502-32(f)(2) or
\na consent dividend election under Section 565 of the Code. Acquiror has never
\nbeen a party (either as a distributing corporation or as a corporation that has
\nbeen distributed) to any transaction intended to qualify under Section 355 of
\nthe Code or any corresponding provision of state law. Acquiror has not
\nparticipated in (and will not participate in) an international boycott within
\nthe meaning of Section 999 of the Code. Acquiror does not have and has not had a
\npermanent establishment in any foreign country, as defined in any applicable tax
\ntreaty or convention between the United States of America and such foreign
\ncountry. Acquiror has never elected to be treated as an S-corporation under
\nSection 1362 of the Code or any corresponding provision of federal or state law.
\nAll material elections with respect to Acquiror’s Taxes made during the fiscal
\nyears ending, December 31, 1996, 1997 and 1998 are reflected on the Acquiror Tax
\nReturns for such periods. After the date of this Agreement, no material election
\nwith respect to Taxes not made in the ordinary course of business will be made
\nwithout the prior written consent of Target, which consent will not be
\nunreasonably withheld or delayed. Acquiror is not party to any joint venture,
\npartnership, or other arrangement or contract which could be treated as a
\npartnership for federal income tax purposes. Acquiror is not currently, and
\nnever has been, subject to the reporting requirements of Section 6038A of the
\nCode. There is no agreement, contract or arrangement to which Acquiror is a
\nparty that could, individually or collectively, result in the payment of any
\namount that would not be deductible by reason of Sections 280G (as determined
\nwithout regard to Section 280G(b)(4) and (5)), 162(a) (by reason of being
\nunreasonable in amount), 162 (b) <\/p>\n
29
\n 35<\/p>\n
through (p) or 404 of the Code. Acquiror is not a party to or bound by any Tax
\nindemnity, Tax sharing or Tax allocation agreement (whether written or unwritten
\nor arising under operation of federal law as a result of being a member of a
\ngroup filing consolidated Tax returns, under operation of certain state laws as
\na result of being a member of a unitary group, or under comparable laws of other
\nstates or foreign jurisdictions) which includes a party other than Acquiror nor
\ndoes Acquiror owe any amount under any such Agreement. Acquiror is not, and has
\nnot been, a United States real property holding corporation (as defined in
\nSection 897(c)(2) of the Code) during the applicable period specified in Section
\n897(c)(1)(A)(ii) of the Code. Other than by reason of the Merger, Acquiror has
\nnot been and will not be required to include any material adjustment in Taxable
\nincome for any Tax period (or portion thereof) pursuant to Section 481 or 263A
\nof the Code or any comparable provision under state or foreign Tax laws as a
\nresult of transactions, events or accounting methods employed prior to the
\nMerger.<\/p>\n
(c) For purposes of this Agreement, the following terms have the
\nfollowing meanings: “Tax” (and, with correlative meaning, “Taxes” and “Taxable”)
\nmeans any and all taxes including, without limitation, (i) any net income,
\nalternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
\nvalorem, transfer, franchise, profits, value added, net worth, license,
\nwithholding, payroll, employment, excise, severance, stamp, occupation, premium,
\nproperty, environmental or windfall profit tax, custom, duty or other tax,
\ngovernmental fee or other like assessment or charge of any kind whatsoever,
\ntogether with any interest or any penalty, addition to tax or additional amount
\nimposed by any Tax Authority responsible for the imposition of any such tax
\n(domestic or foreign), (ii) any liability for the payment of any amounts of the
\ntype described in (i) as a result of being a member of an affiliated,
\nconsolidated, combined or unitary group for any Taxable period or as the result
\nof being a transferee or successor thereof and (iii) any liability for the
\npayment of any amounts of the type described in (i) or (ii) as a result of any
\nexpress or implied obligation to indemnify any other Person. As used in this
\nSection 3.9, the term “Acquiror” means Acquiror and any entity included in, or
\nrequired under GAAP to be included in, any of the Acquiror Financial Statements.<\/p>\n
3.10 LEGAL PROCEEDINGS. Except as set forth in Section 3.10 of the
\nAcquiror Disclosure Schedule:<\/p>\n
(i) there are no Actions or Proceedings pending or, to the
\nknowledge of Acquiror, threatened against, relating to or affecting Acquiror or
\nits Assets and Properties; and<\/p>\n
(ii) Acquiror has not received notice, and does not
\notherwise have knowledge of any Orders outstanding against Acquiror or any of
\nits subsidiaries.<\/p>\n
3.11 COMPLIANCE WITH LAWS AND ORDERS. Acquiror has not violated in
\nany material respect, and is not currently in default in any material respect
\nunder, any Law or Order applicable to Acquiror or any of its Assets and
\nProperties.<\/p>\n
3.12 EMPLOYEE BENEFIT PLANS.<\/p>\n
(a) Except for the plans and agreements listed in Section 3.12
\nof the Acquiror Disclosure Schedule (collectively, the “Plans”), Acquiror does
\nnot maintain, is not a <\/p>\n
30
\n 36<\/p>\n
party to, does not contribute to and is not obligated to contribute to, and
\nAcquiror’s employees or former employees and their dependents or survivors do
\nnot receive benefits under, any of the following (whether or not set forth in a
\nwritten document):<\/p>\n
(i) Any employee benefit plan, as defined in section 3(3) of
\nERISA;<\/p>\n
(ii) Any bonus, deferred compensation, incentive, restricted
\nstock, stock purchase, stock option, stock appreciation right, phantom stock,
\nsupplemental pension, executive compensation, cafeteria benefit, dependent care,
\ndirector or employee loan, fringe benefit, sabbatical, severance, termination
\npay or similar plan, program, policy, agreement or arrangement (other than any
\nsuch item provided solely pursuant to the terms of a written or oral contract
\nwith any individual employee that is disclosed in Section 3.12 of the Acquiror
\nDisclosure Schedule); or<\/p>\n
(iii) Any plan, program, agreement, policy, commitment or
\nother arrangement relating to the provision of any benefit described in section
\n3(1) of ERISA to former employees or directors or to their survivors, other than
\nprocedures intended to comply with COBRA.<\/p>\n
(b) Neither Acquiror nor any ERISA Affiliate has, since January
\n1, 1993, terminated, suspended, discontinued contributions to or withdrawn from
\nany employee pension benefit plan, as defined in section 3(2) of ERISA,
\nincluding (without limitation) any multiemployer plan, as defined in section
\n3(37) of ERISA.<\/p>\n
(c) Acquiror has agreed to provide to Target prior to the
\nEffective Time complete, accurate and current copies of each of the following:<\/p>\n
(i) The text (including amendments) of each of the Plans, to
\nthe extent reduced to writing;<\/p>\n
(ii) A summary of each of the Plans, to the extent not
\npreviously reduced to writing;<\/p>\n
(iii) With respect to each Plan that is an employee benefit
\nplan (as defined in section 3(3) of ERISA), the following:<\/p>\n
A. The most recent summary plan description that has
\nbeen prepared, as described in section 102 of ERISA;<\/p>\n
B. Any summary of material modifications that has been
\ndistributed to participants or filed with the U.S. Department of Labor but that
\nhas not been incorporated in an updated summary plan description furnished under
\nSubparagraph (A) above; and<\/p>\n
C. The annual report, as described in section 103 of
\nERISA, and (where applicable) actuarial reports, for the three most recent plan
\nyears for which an annual report or actuarial report has been prepared; and<\/p>\n
31
\n 37<\/p>\n
(iv) With respect to each Plan that is intended to qualify
\nunder section 401(a) of the Internal Revenue Code, the most recent determination
\nletter concerning the Plan’s qualification under section 401(a) of the Internal
\nRevenue Code, as issued by the Internal Revenue Service, and any subsequent
\ndetermination letter application.<\/p>\n
(d) With respect to each Plan that is an employee benefit plan
\n(as defined in section 3(3) of ERISA), the requirements of ERISA applicable to
\nsuch Plan have been satisfied, except to the extent that a failure to satisfy
\nany of such requirements would not have a Material Adverse Effect.<\/p>\n
(e) With respect to each Plan that is subject to COBRA, the
\nrequirements of COBRA applicable to such Plan have been satisfied, except to the
\nextent that a failure to satisfy any of such requirements would not have a
\nMaterial Adverse Effect.<\/p>\n
(f) With respect to each Plan that is subject to the Family
\nMedical Leave Act of 1993, as amended, the requirements of such Act applicable
\nto such Plan have been satisfied, except to the extent that a failure to satisfy
\nany of such requirements would not have a Material Adverse Effect.<\/p>\n
(g) Each Plan that is intended to qualify under section 401(a)
\nof the Internal Revenue Code meets the requirements for qualification under
\nsection 401(a) of the Internal Revenue Code and the regulations thereunder,
\nexcept to the extent that such requirements may be satisfied by adopting
\nretroactive amendments under section 401(b) of the Internal Revenue Code and the
\nregulations thereunder. Each such Plan has been administered in accordance with
\nits terms (or, if applicable, such terms as will be adopted pursuant to a
\nretroactive amendment under section 401(b) of the Internal Revenue Code) and the
\napplicable provisions of ERISA and the Internal Revenue Code and the regulations
\nthereunder, except to the extent that a failure to be so administered would not
\nhave a Material Adverse Effect.<\/p>\n
(h) Neither Acquiror nor any ERISA Affiliate has any accumulated
\nfunding deficiency under section 412 of the Internal Revenue Code or any
\ntermination or withdrawal liability under Title IV of ERISA. For purposes of
\ndetermining any accumulated funding deficiency under section 412 of the Internal
\nRevenue Code, the term “ERISA Affiliate” shall include any entity that is deemed
\nto be a member of the same “controlled group” within the meaning of section
\n414(m) or (o) of the Internal Revenue Code.<\/p>\n
(i) All contributions, premiums or other payments due from
\nAcquiror to (or under) any Plan have been fully paid or adequately provided for
\non the books and financial statements of Acquiror. All accruals (including,
\nwhere appropriate, proportional accruals for partial periods) have been made in
\naccordance with prior practices.<\/p>\n
(j) Except as disclosed in Section 3.12 of the Acquiror
\nDisclosure Schedule, the consummation of the transactions contemplated herein
\nwill not result in (i) any amount becoming payable to any employee, director or
\nindependent contractor of Acquiror, (ii) the acceleration of payment or vesting
\nof any benefit, option or right to which any employee, director or independent
\ncontractor of Acquiror may be entitled, (iii) the forgiveness of any
\nindebtedness of any employee, director or independent contractor of Acquiror or
\n(iv) any cost <\/p>\n
32
\n 38
\nbecoming due or accruing to Acquiror with respect to any employee, director or
\nindependent contractor of Acquiror.<\/p>\n
(k) Other than routine claims for benefits under the Plans,
\nthere are no pending, or, to the best knowledge of Acquiror, threatened, Actions
\nor Proceedings involving the Plans, or the fiduciaries, administrators, or
\ntrustees of any of the Plans or Acquiror or any of its ERISA Affiliates as the
\nemployer or sponsor under any Plan, with any of the IRS, the Department of
\nLabor, the PBGC, any participant in or beneficiary of any Plan or any other
\nPerson whomsoever. Acquiror knows of no reasonable basis for any such claim,
\nlawsuit, dispute, action or controversy.<\/p>\n
3.13 TITLE TO PROPERTY. Except for title to Acquiror Intellectual
\nProperty, which is covered by Section 3.14 below, Acquiror has good and
\nmarketable title to all of its material properties, interests in properties and
\nassets, real and personal, reflected in Acquiror’s September 10-Q or acquired
\nafter the date of Acquiror’s September 10-Q (except properties, interests in
\nproperties and assets sold or otherwise disposed of since the date of Acquiror’s
\nSeptember 10-Q in the ordinary course of business), free and clear of all
\nmaterial mortgages, liens, pledges, charges or encumbrances of any kind or
\ncharacter, except (i) liens for current taxes not yet due and payable, (ii) such
\nimperfections of title, liens and easements as do not and will not materially
\ndetract from or interfere with the use of the properties subject thereto or
\naffected thereby, or otherwise materially impair business operations involving
\nsuch properties and (iii) liens securing debt which is reflected in Acquiror’s
\nSeptember 10-Q. The plants, property and equipment of Acquiror that are used in
\nthe operations of its business are in good operating condition and repair,
\nsubject to normal wear and tear. All properties used in the operations of
\nAcquiror are reflected in Acquiror’s September 10-Q to the extent generally
\naccepted accounting principles required the same to be reflected as of the dates
\nof the financial statements included in Acquiror’s September 10-Q. Acquiror,
\nwith respect to properties and assets leased by Acquiror, holds valid leasehold
\ninterests in such properties and assets in accordance with the terms of the
\nagreements governing such leases.<\/p>\n
3.14 INTELLECTUAL PROPERTY.<\/p>\n
(a) Acquiror has all requisite right, title and interest in or
\nvalid and enforceable rights under Contracts or Licenses to use all Acquiror
\nIntellectual Property necessary to the conduct of its business as presently
\nconducted. Each item of Acquiror Intellectual Property, either is owned
\nexclusively by Acquiror, free and clear of any Liens, or is licensed to Acquiror
\nunder a valid License granting sufficient rights to permit Acquiror to conduct
\nits business as presently conducted. To the best of its knowledge, Acquiror owns
\nor has the valid right to use all trademarks, service marks and trade names used
\nby Acquiror in connection with the operation or conduct of the business of
\nAcquiror, including the sale of any products or technology or the provision of
\nany services by Acquiror. Acquiror owns exclusively, and has good title to, all
\ncopyrighted works that are Acquiror products or other works of authorship that
\nAcquiror otherwise purports to own; provided, however, that such works may
\nincorporate copyrighted works or works of authorship, trademarks or trade names
\nof third parties which are licensed to Acquiror or are in the public domain.
\nExcept pursuant to agreements in the ordinary course of business, Acquiror has
\nnot transferred ownership of any Acquiror Intellectual Property to any other
\nPerson.<\/p>\n
33
\n 39<\/p>\n
(b) To the extent that any Acquiror Intellectual Property that
\nis material to Acquiror’s business has been developed or created by any Person
\nother than Acquiror, Acquiror has a written agreement with such Person with
\nrespect thereto and Acquiror has either (i) obtained ownership of, and is the
\nexclusive owner of, all such Intellectual Property by operation of law or by
\nvalid assignment of any such rights or (ii) obtained a License under or to such
\nIntellectual Property.<\/p>\n
(c) The operation of the business of Acquiror as currently
\nconducted, including Acquiror’s design, development, use, import, manufacture
\nand sale of the products, technology or services (including products, technology
\nor services currently under development) of Acquiror: (i) does not infringe the
\ncopyright or misappropriate the trade secrets of any Person; (ii) to the best of
\nAcquiror’s knowledge, does not infringe the patent rights or trademark rights of
\nany Person; (iii) does not violate in any material respect the rights of any
\nPerson (including rights to privacy or publicity other than patent rights or
\ntrademark rights described above); and, (iv) does not constitute unfair
\ncompetition or an unfair trade practice under any Law. Acquiror has not received
\nnotice from any Person claiming that such operation or any act, product,
\ntechnology or service (including products, technology or services currently
\nunder development) of Acquiror infringes or misappropriates the Intellectual
\nProperty of any Person or constitutes unfair competition or trade practices
\nunder any Law.<\/p>\n
(d) Each item of Acquiror Registered Intellectual Property is
\nvalid and subsisting, and all necessary registration, maintenance, renewal fees,
\nannuity fees and taxes in connection with such Registered Intellectual Property
\nhave been paid and all necessary documents and certificates in connection with
\nsuch Registered Intellectual Property have been filed with the relevant patent,
\ncopyright, trademark or other authorities in the United States or foreign
\njurisdictions in which such Registered Intellectual Property is registered, as
\nthe case may be, for the purposes of maintaining such Registered Intellectual
\nProperty.<\/p>\n
(e) There are no Contracts or Licenses between Acquiror and any
\nother Person with respect to Acquiror Intellectual Property under which there is
\nany dispute known to Acquiror regarding the scope of such Contract or License,
\nor performance under such Contract or License, including any dispute with
\nrespect to any payments to be made or received by Acquiror thereunder.<\/p>\n
(f) Acquiror has taken all requisite commercially reasonable
\nsteps to maintain and preserve the confidentiality of Acquiror’s confidential
\ninformation and trade secrets of Acquiror or any similar information provided by
\nany other Person to Acquiror subject to a duty of confidentiality. Without
\nlimiting the generality of the foregoing, Acquiror has, and enforces, a policy
\nrequiring each employee, consultant and independent contractor to execute
\nproprietary information, confidentiality and invention assignment agreements.<\/p>\n
(g) Acquiror has taken all commercially reasonable actions
\nnecessary and appropriate to assure that there shall be no material adverse
\nchange to its business or electronic systems or material interruptions in the
\ndelivery of Acquiror’s products and services by reason of computer software
\nerrors or miscalculations associated with the advent of the year 2000, including
\nthat all of its products (including products currently under development) will,
\nwithout interruption or manual intervention, continue to consistently,
\npredictably and accurately <\/p>\n
34
\n 40<\/p>\n
record, store, process, calculate and present calendar dates falling on and
\nafter (and if applicable, spans of time including) January 1, 2000, and will
\nconsistently, predictably and accurately calculate any information dependent on
\nor relating to such dates in substantially the same manner, and with the same
\nfunctionality, data integrity and performance, as such products record, store,
\nprocess, calculate and present calendar dates on or before December 31, 1999, or
\ncalculate any information dependent on or relating to such dates.<\/p>\n
3.15 CONTRACTS.<\/p>\n
(a) Section 3.15(a)(1) of the Acquiror Disclosure Schedule
\ncontains a true and complete list of Acquiror’s Contracts that are material to
\nAcquiror’s business, operations or financial condition (true and complete copies
\nor, if none, reasonably complete and accurate written descriptions of which,
\ntogether with all amendments and supplements thereto and all waivers of any
\nterms thereof, have been made available to Target prior to the execution of this
\nAgreement).<\/p>\n
(b) Each Contract required to be disclosed in Section 3.15(a) of
\nthe Acquiror Disclosure Schedule is in full force and effect and constitutes a
\nlegal, valid and binding agreement of Acquiror, enforceable against Acquiror in
\naccordance with its terms (subject to the effect of bankruptcy and other laws
\naffecting the rights of creditors generally and limitations on the enforcement
\nof contracts under principles of equity), and, to the knowledge of Acquiror and
\nits subsidiaries, each other party thereto (subject to the effect of bankruptcy
\nand other laws affecting the rights of creditors generally and limitations on
\nthe enforcement of contracts under principles of equity), and, to the knowledge
\nof Acquiror and its subsidiaries, no other party to such Contract is, nor has
\nreceived notice that it is, in material violation or breach of or default under
\nany such Contract (or with notice or lapse of time or both, would be in material
\nviolation or breach of or default under any such Contract).<\/p>\n
(c) Acquiror is not a party to or bound by any Contract that (i)
\nautomatically terminates or allows termination by the other party thereto upon
\nconsummation of the transactions contemplated by this Agreement or (ii) contains
\nany covenant or other provision which limits Acquiror’s ability to compete with
\nany Person in any line of business or in any area or territory.<\/p>\n
3.16 INSURANCE. Acquiror has policies of insurance and bonds of the
\ntype and in amounts customarily carried by companies conducting businesses or
\nowning assets similar to those of Acquiror. There is no material claim pending
\nunder any of such policies or bonds as to which coverage has been questioned,
\ndenied or disputed by the underwriters of such policies or bonds. All premiums
\ndue and payable under all such policies and bonds have been paid and Acquiror is
\notherwise in compliance with the terms of such policies and bonds. Acquiror has
\nno knowledge of any threatened termination of, or material premium increase with
\nrespect to, any of such policies.<\/p>\n
3.17 AFFILIATE TRANSACTIONS. Except as disclosed in Section 3.17 of
\nthe Acquiror Disclosure Schedule, and except for any stock purchase agreements,
\nstock option agreements and invention assignment or confidentiality agreements
\nin favor of Acquiror, (i) there are no Contracts or Liabilities between
\nAcquiror, on the one hand, and (A) any current <\/p>\n
35
\n 41<\/p>\n
or former officer, director, stockholder, or to Acquiror’s knowledge, any
\nAffiliate or Associate of Acquiror or (B) any Person who, to Acquiror’s
\nknowledge, is an Associate of any such officer, director, stockholder or
\nAffiliate, on the other hand, (ii) Acquiror does not provide or cause to be
\nprovided any assets, services or facilities to any such current or former
\nofficer, director, stockholder, Affiliate or Associate, (iii) neither Acquiror
\nnor any such current or former officer, director, stockholder, Affiliate or
\nAssociate provides or causes to be provided any assets, services or facilities
\nto Acquiror and (iv) Acquiror does not beneficially own, directly or indirectly,
\nany Investment Assets of any such current or former officer, director,
\nstockholder, Affiliate or Associate.<\/p>\n
3.18 EMPLOYEES; LABOR RELATIONS.<\/p>\n
(a) Acquiror is not a party to any collective bargaining
\nagreement and there are no unfair labor practice or labor arbitration
\nproceedings pending with respect to Acquiror, or, to the knowledge of Acquiror,
\nthreatened, and there are no facts or circumstances known to Acquiror that could
\nreasonably be expected to give rise to such complaint or claim. To the knowledge
\nof Acquiror, there are no organizational efforts presently underway or
\nthreatened involving any employees of Acquiror or any of the employees
\nperforming work for Acquiror but those provided by an outside employment agency,
\nif any. There has been no work stoppage, strike or other concerted action by
\nemployees of Acquiror.<\/p>\n
(b) All employees of Acquiror are employed at will. Acquiror has
\nprovided to Target a list that sets forth the name of each officer, employee and
\nconsultant, together with such person’s position or function, annual base salary
\nor wage and any incentive, severance or bonus arrangements with respect to such
\nperson. To the knowledge of Acquiror, no employee of Acquiror has made any
\nthreat, or otherwise revealed an intent, to terminate such employee’s
\nrelationship with Acquiror, for any reason, including because of the
\nconsummation of the transactions contemplated by this Agreement. Acquiror is not
\na party to any agreement for the provision of labor from any outside agency. To
\nthe knowledge of Acquiror, there have been no claims by employees of such
\noutside agencies, if any, with regard to employees assigned to work for
\nAcquiror, and no claims by any governmental agency with regard to such
\nemployees.<\/p>\n
(c) There have been no federal or state claims based on sex,
\nsexual or other harassment, age, disability, race or other discrimination or
\ncommon law claims, including claims of wrongful termination, by any employees of
\nAcquiror or by any of the employees performing work for Acquiror but those
\nprovided by an outside employment agency, and there are no facts or
\ncircumstances known to Acquiror that could reasonably be expected to give rise
\nto such complaint or claim. Acquiror has complied in all material respects with
\nall laws related to the employment of employees and, except as set forth in
\nSection 3.18(c) of the Acquiror Disclosure Schedule, Acquiror has not received
\nany notice of any claim that it has not complied in any material respect with
\nany Laws relating to the employment of employees, including any provisions
\nthereof relating to wages, hours, collective bargaining, the payment of Social
\nSecurity and similar taxes, equal employment opportunity, employment
\ndiscrimination, the WARN Act, employee safety, or that it is liable for any
\narrearages of wages or any taxes or penalties for failure to comply with any of
\nthe foregoing.<\/p>\n
36
\n 42<\/p>\n
(d) Acquiror has no written policies and\/or employee handbooks
\nor manuals except as described in Section 3.18(d) of the Acquiror Disclosure
\nSchedule.<\/p>\n
(e) To the knowledge of Acquiror and its subsidiaries, no
\nofficer, employee or consultant of Acquiror is obligated under any Contract or
\nother agreement or subject to any Order or Law that would interfere with
\nAcquiror’s business as currently conducted. To Acquiror’s and its subsidiaries’
\nknowledge, neither the execution nor delivery of this Agreement, nor the
\ncarrying on of Acquiror’s business as presently conducted nor any activity of
\nsuch officers, employees or consultants in connection with the carrying on of
\nAcquiror’s business as presently conducted, will conflict with or result in a
\nbreach of the terms, conditions or provisions of, constitute a default under, or
\ntrigger a condition precedent to any rights under, any Contract or other
\nagreement under which any of such officers, employees or consultants is now
\nbound.<\/p>\n
(f) Acquiror has complied in all material respects with the
\nverification requirements and the record-keeping requirements of the Immigration
\nReform and Control Act of 1986 (“IRCA”); to the best knowledge of Acquiror, the
\ninformation and documents on which Acquiror relied to comply with IRCA are true
\nand correct; and there have not been any discrimination complaints filed against
\nAcquiror pursuant to IRCA, and to the best knowledge of Acquiror, there is no
\nbasis for the filing of such a complaint.<\/p>\n
3.19 ENVIRONMENTAL MATTERS.<\/p>\n
(a) Acquiror possesses all Environmental Permits required for
\nthe operation of its business.<\/p>\n
(b) Acquiror is in compliance in all material respects with (i)
\nall terms, conditions and provisions of its Environmental Permits; and (ii) all
\nEnvironmental Laws.<\/p>\n
(c) Acquiror, to the knowledge of Acquiror or any predecessor of
\nAcquiror nor any entity previously owned by Acquiror has any obligation or
\nliability with respect to any Hazardous Material, including any Release or
\nthreatened or suspected Release of any Hazardous Material, and there have been
\nno events, facts or circumstances since the date of incorporation of Acquiror
\nwhich could reasonably be expected to form the basis of any such obligation or
\nliability.<\/p>\n
(d) There have been no environmental investigations, studies,
\naudits, tests, reviews or other analyses conducted by or for Acquiror or, to the
\nknowledge of Acquiror, by or for any Other Person with respect to any Site while
\nAcquiror has occupied the Site, which have not been delivered to Acquiror prior
\nto execution of this Agreement.<\/p>\n
3.20 OTHER NEGOTIATIONS; BROKERS; THIRD PARTY EXPENSES. Neither
\nAcquiror nor, to the knowledge of Acquiror, any of its Affiliates (nor any
\ninvestment banker, financial advisor, attorney, accountant or other Person
\nretained by or acting for or on behalf of Acquiror or at Acquiror’s direction)
\n(a) has entered into any Contract that conflicts with any of the transactions
\ncontemplated by this Agreement or (b) has entered into any Contract or had any
\ndiscussions with any Person regarding any transaction involving Acquiror which
\ncould reasonably be expected to result in Acquiror, or any general partner,
\nlimited partner, manager, <\/p>\n
37
\n 43<\/p>\n
officer, director, employee, agent or Affiliate of any of them being subject to
\nany claim for liability to said Person as a result of entering into this
\nAgreement or consummating the transactions contemplated hereby. Section 3.20 of
\nthe Acquiror Disclosure Schedule sets forth the principal terms and conditions
\nof any Contract with respect to, and a reasonable estimate of, all Third Party
\nExpenses expected to be incurred by Acquiror in connection with the negotiation
\nand effectuation of the terms and conditions of this Agreement and the
\ntransactions contemplated hereby.<\/p>\n
3.21 FOREIGN CORRUPT PRACTICES ACT. Neither Acquiror, nor to the
\nknowledge of Acquiror, any agent, employee or other Person acting on behalf of
\nAcquiror has, directly or indirectly, used any corporate funds for unlawful
\ncontributions, gifts, entertainment or other unlawful expenses relating to
\npolitical activity, made any unlawful payment to foreign or domestic government
\nofficials or employees or to foreign or domestic political parties or campaigns
\nfrom corporate funds, violated any provision of the Foreign Corrupt Practices
\nAct of 1977, as amended, or made any bribe, rebate, payoff, influence payment,
\nkickback or other similar unlawful payment.<\/p>\n
3.22 TAX-FREE REORGANIZATION. To the knowledge of Acquiror, after
\nGood Faith Consultation with Acquiror’s independent accountants, neither
\nAcquiror nor any of its directors, officers or stockholders has taken any action
\nwhich could reasonably be expected to jeopardize the status of the Merger as a
\n“reorganization” within the meaning of Section 368(a) of the Internal Revenue
\nCode.<\/p>\n
3.23 APPROVALS.<\/p>\n
(a) Section 3.23(a) of the Acquiror Disclosure Schedule contains
\na list of all material Approvals of Governmental or Regulatory Authorities
\nrelating to the business conducted by Acquiror which are required to be given to
\nor obtained by Acquiror prior to the Closing from any and all Governmental or
\nRegulatory Authorities in connection with the consummation of the transactions
\ncontemplated by this Agreement.<\/p>\n
(b) Section 3.23(b) of the Acquiror Disclosure Schedule contains
\na list of all material Approvals which are required to be given to or obtained
\nby Acquiror prior to the Closing from any and all third parties other than
\nGovernmental or Regulatory Authorities in connection with the consummation of
\nthe transactions contemplated by this Agreement.<\/p>\n
(c) Acquiror has obtained all material Approvals from
\nGovernmental or Regulatory Authorities necessary to conduct the business
\nconducted by Acquiror in the manner as it is currently being conducted and there
\nhas been no written notice received by Acquiror of any material violation or
\nmaterial non-compliance with any such Approvals. All material Approvals from
\nGovernmental or Regulatory Authorities necessary to conduct the business
\nconducted by Acquiror as it is currently being conducted are set forth in
\nSection 3.23(c) of the Acquiror Disclosure Schedule.<\/p>\n
(d) The affirmative vote or consent of the holders of the shares
\nof Acquiror Common Stock outstanding as of the applicable record date is the
\nonly vote of the <\/p>\n
38
\n 44<\/p>\n
holders of any of Acquiror Capital Stock necessary to approve this Agreement and
\nthe Merger and the transactions contemplated hereby.<\/p>\n
3.24 DISCLOSURE. No representation or warranty contained in Article
\n3 of this Agreement, and no statement contained in the Acquiror Disclosure
\nSchedule or in any certificate, list or other writing furnished to Acquiror
\npursuant to any provision of this Agreement (including Acquiror’s September
\n10-Q) contains any untrue statement of a material fact or omits to state a
\nmaterial fact necessary to make the representations and warranties of Acquiror
\nin Article 3 (as modified by the Acquiror Disclosure Schedule), in the light of
\nthe circumstances under which they were made, not misleading.<\/p>\n
3.25 S-4 REGISTRATION STATEMENT; PROXY STATEMENT. The information
\nsupplied in writing to Target, or its counsel or auditors, by Acquiror and
\nAcquiror Stockholders for inclusion in the S-4 Registration Statement shall not,
\nat the time the S-4 Registration Statement (including any amendments or
\nsupplements thereto) is declared effective by the SEC, contain any untrue
\nstatement of a material fact or omit to state any material fact required to be
\nstated therein or necessary in order to make the statements therein, in light of
\nthe circumstances under which they were made, not misleading. The information
\nsupplied by Acquiror and Acquiror’s stockholders for inclusion in the Proxy
\nStatement shall not, on the date the Proxy Statement is first mailed to
\nAcquiror’s stockholders and Target’s stockholders, at the time of the Acquiror
\nStockholders Meeting, at the time of the Target’s Stockholders Meeting and at
\nthe Effective Time, contain any statement which, at such time, is false or
\nmisleading with respect to any material fact, or omit to state any material fact
\nnecessary in order to make the statements made therein, in light of the
\ncircumstances under which they are made, not false or misleading; or omit to
\nstate any material fact necessary to correct any statement in any earlier
\ncommunication with respect to the solicitation of proxies for the Acquiror
\nStockholders Meeting or the Target Stockholders Meeting which has become false
\nor misleading. Notwithstanding the foregoing, Acquiror makes no representation,
\nwarranty or covenant with respect to any information supplied by Target that is
\ncontained in the S-4 Registration Statement or the Proxy Statement.<\/p>\n
3.26 INVESTMENT ADVISORS. Except as set forth in Section 3.26 of the
\nAcquiror Disclosure Schedule, no broker, investment banker, financial advisor or
\nother Person is entitled to any broker’s, finder’s, financial advisor’s or
\nsimilar fee or commission in connection with this Agreement and the transactions
\ncontemplated hereby based on arrangements made by or on behalf of Acquiror.<\/p>\n
ARTICLE 4
\n ADDITIONAL AGREEMENTS<\/p>\n
4.1 PROXY STATEMENT; S-4 REGISTRATION STATEMENT.<\/p>\n
(a) As soon as practicable after the execution of this
\nAgreement, Target and Acquiror shall prepare, and Acquiror shall file with the
\nSEC, preliminary proxy materials relating to the approval of the Merger and the
\ntransactions contemplated hereby by the stockholders of Acquiror and, as
\npromptly as practicable following receipt of SEC comments thereon, Acquiror
\nshall file with the SEC a Registration Statement on Form S-4 (or such other or
\nsuccessor form as shall be appropriate) (the “S-4 Registration Statement”) to
\nregister the <\/p>\n
39
\n 45<\/p>\n
issuance in the Merger of all shares of Acquiror Common Stock, which complies in
\nform with applicable SEC requirements and shall use all reasonable efforts to
\ncause the S-4 Registration Statement to become effective as soon thereafter as
\npracticable. The Acquiror will update and amend the S-4 Registration Statement
\nto the extent necessary prior to the Closing.<\/p>\n
(b) As soon as practicable after the execution of this
\nAgreement, and subject to Section 4.1(a), Acquiror shall use all commercially
\nreasonable efforts to prepare and file as soon as practicable, with the
\ncooperation of Target, the S-4 Registration Statement. Acquiror shall use
\ncommercially reasonable efforts to cause the S-4 Registration Statement to
\ncomply with the requirements of applicable Laws. Each of Acquiror and Target
\nagrees to provide promptly to the other such information concerning its business
\nand financial statements and affairs as, in the reasonable judgment of the
\nproviding party or its counsel, may be required or appropriate for inclusion in
\nthe S-4 Registration Statement, or in any amendments or supplements thereto, and
\nto cause its counsel and auditors to cooperate with the other’s counsel and
\nauditors in the preparation of the S-4 Registration Statement. Target will
\npromptly advise Acquiror, and Acquiror will promptly advise Target, in writing
\nif at any time prior to the Effective Time either Target or Acquiror shall
\nobtain knowledge of any facts that might make it necessary or appropriate to
\namend or supplement the S-4 Registration Statement in order to make the
\nstatements contained or incorporated by reference therein not misleading or to
\ncomply with applicable law. Anything to the contrary contained herein
\nnotwithstanding, Acquiror shall not include in the S-4 Registration Statement
\nany information with respect to Target or its Affiliates or Associates, the form
\nand content of which information shall not have been approved by Target prior to
\nsuch inclusion.<\/p>\n
4.2 STOCKHOLDER APPROVAL. Target shall promptly after the date
\nhereof take all action necessary in accordance with the DGCL (and, if
\napplicable, the California Code) and its Certificate of Incorporation and Bylaws
\nto convene the Target Stockholders Meeting within 45 days of the S-4
\nRegistration Statement being declared effective by the SEC. Target shall consult
\nwith Acquiror and use all commercially reasonable efforts to hold the Target
\nStockholders Meeting on the same day as the Acquiror Stockholders Meeting and
\nshall not postpone or adjourn (other than for the absence of a quorum) the
\nTarget Stockholders Meeting without the consent of Acquiror, which consent shall
\nnot be unreasonably withheld. Subject to Section 4.1, Target shall use all
\ncommercially reasonable efforts to solicit from stockholders of Target proxies
\nin favor of the Merger and shall take all other lawful action necessary or
\nadvisable to secure the vote or consent of stockholders required to effect the
\nMerger. Acquiror shall promptly after the date hereof take all action necessary
\nin accordance with the DGCL (and, if applicable, the California Code) and its
\nCertificate of Incorporation and Bylaws to convene the Acquiror Stockholders
\nMeeting within 45 days of the S-4 Registration Statement being declared
\neffective by the SEC. Acquiror shall consult with Target and use all
\ncommercially reasonable efforts to hold the Acquiror Stockholders Meeting on the
\nsame day as the Target Stockholders Meeting and shall not postpone or adjourn
\n(other than for the absence of a quorum) the Acquiror Stockholders Meeting
\nwithout the consent of Target, which consent shall not be unreasonably withheld.
\nSubject to Section 4.1, Acquiror shall use all commercially reasonable efforts
\nto solicit from stockholders of Acquiror proxies in favor of this Agreement, the
\nMerger and the Acquiror Charter Amendment and shall take all other lawful action
\nnecessary or advisable to secure the vote or consent of stockholders required to
\neffect the Merger and the Acquiror Charter Amendment. Each of Target and
\nAcquiror must hold its respective Stockholders Meeting and<\/p>\n
40
\n 46<\/p>\n
take the vote of its stockholders on the proposal to approve this Agreement and
\nthe Merger at its respective Stockholders Meeting unless this Agreement has been
\nterminated in accordance with its terms. Target and Acquiror will take all
\ncommercially reasonable efforts to limit the applicability of stockholders
\ndissenters rights to this transaction, and, to the extent that such are
\napplicable, will take all commercially reasonable efforts to minimize the
\nexercise of any such rights and will not take any action to induce stockholders
\nto exercise any such rights.<\/p>\n
4.3 ACCESS TO INFORMATION. Between the date of this Agreement and
\nthe earlier of the Effective Time or the termination of this Agreement, upon
\nreasonable notice Target and Acquiror shall each (i) give the other party, and
\ntheir respective officers, employees, accountants and counsel full access to all
\nbuildings, offices, and other facilities and to all its Books and Records,
\nwhether located on its premises or at another location; (ii) permit the other
\nparty to make such inspections as it may reasonably require; (iii) cause its
\nofficers to furnish the other party such financial, operating, technical and
\nproduct data and other information with respect to its business and Assets and
\nProperties as the other party from time to time may request, including financial
\nstatements and schedules; (iv) allow the other party the opportunity to
\ninterview such employees and other personnel and Affiliates of the other party
\nwith such other party’s prior written consent, which consent shall not be
\nunreasonably withheld or delayed; and (v) assist and cooperate with the other
\nparty in the development of integration plans for implementation following the
\nEffective Time; provided, however, that no investigation pursuant to this
\nSection 4.3 shall affect or be deemed to modify any representation or warranty
\nmade by such party herein.<\/p>\n
4.4 CONFIDENTIALITY. The parties acknowledge that Acquiror and
\nTarget have previously executed an Exclusivity and Confidentiality Agreement
\ndated November 8, 1999 (the “Confidentiality Agreement”), which Confidentiality
\nAgreement shall continue in full force and effect in accordance with its terms.
\nWithout limiting the foregoing, all information furnished to Acquiror and its
\nofficers, employees, accountants and counsel by Target, and all information
\nfurnished to Target by Acquiror and its respective officers, employees,
\naccountants and counsel, shall be covered by the Confidentiality Agreement.<\/p>\n
4.5 EXPENSES. Whether or not the Merger is consummated, all fees and
\nexpenses incurred in connection with the Merger, including all legal,
\naccounting, financial advisory, consulting and all other fees and expenses of
\nthird parties (“Third Party Expenses”) incurred by a party in connection with
\nthe negotiation and effectuation of the terms and conditions of this Agreement
\nand the transactions contemplated hereby, shall be the obligation of the
\nrespective party incurring such Third Party Expenses, provided, however, that if
\nthe Merger is consummated, Acquiror shall pay all Third Party Expenses incurred
\nby itself and by Target.<\/p>\n
4.6 PUBLIC DISCLOSURE. Unless otherwise required by Law (including
\nfederal and state securities Laws) or, as to Acquiror, by the rules and
\nregulations of the NASD, prior to the Effective Time, no public disclosure
\n(whether or not in response to any inquiry) of the existence of any subject
\nmatter of, or the terms and conditions of, this Agreement shall be made by any
\nparty hereto unless approved by Acquiror and Target prior to release; provided,
\nhowever, that such approval shall not be unreasonably withheld or delayed; and
\nprovided further, that if any such public disclosure is required by Law or, as
\nto Acquiror, by the rules and regulations of the NASD, the disclosing party will
\ngive the other party reasonable advance notice of such <\/p>\n
41
\n 47<\/p>\n
disclosure and, if such disclosure is pursuant to a court order or subpoena or
\nsimilar process, the disclosing party will cooperate with the other party’s
\nefforts to seek injunctive or other relief preventing or limiting such
\ndisclosure.<\/p>\n
4.7 APPROVALS. Acquiror and Target shall use all commercially
\nreasonable efforts required to obtain all Approvals from Governmental or
\nRegulatory Authorities or under any of the Contracts or other agreements as may
\nbe required in connection with the Merger (all of which Approvals are set forth
\nin either the Target Disclosure Schedule or the Acquiror Disclosure Schedule) so
\nas to preserve all material rights of and benefits to Target thereunder and
\nAcquiror and Target shall provide each other with such assistance and
\ninformation as is reasonably required to obtain such Approvals.<\/p>\n
4.8 NOTIFICATION OF CERTAIN MATTERS. Target shall give prompt notice
\nto Acquiror, and Acquiror shall give prompt notice to Target, of (i) the
\noccurrence or non-occurrence of any event that is likely to cause any
\nrepresentation or warranty of Target or Acquiror, respectively, contained in
\nthis Agreement to be untrue or inaccurate in any material respect at or prior to
\nthe Closing Date and (ii) any failure of Target or Acquiror, as the case may be,
\nto comply with or satisfy any covenant, condition or agreement to be complied
\nwith or satisfied by it hereunder; provided, however, that the delivery of any
\nnotice pursuant to this Section 4.8 shall not limit or otherwise affect any
\nremedies available to the party receiving such notice.<\/p>\n
4.9 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. Each party hereto,
\nat the request of the other party hereto, shall use all requisite commercially
\nreasonable efforts to execute and deliver such other instruments (including the
\nexecution by Target of the resolution and amendment to terminate Target’s 401(k)
\nPlan prior to Closing) and do and perform such other acts and things (including
\nall action reasonably necessary to seek and obtain any and all consents and
\napprovals of any Government or Regulatory Authority or Person required in
\nconnection with the Merger; provided, however, that neither party shall be
\nobligated to consent to any material divestitures or operational limitations or
\nactivities in connection therewith and no party shall be obligated to make a
\npayment of money as a condition to obtaining any such condition or approval) as
\nmay be necessary or desirable for effecting completely the consummation of the
\nMerger and the other transactions contemplated hereby.<\/p>\n
4.10 FORM S-8. Acquiror will file, and will use its reasonable
\ncommercial efforts to cause the shares of Acquiror Common Stock that are subject
\nto issuance upon exercise of the Acquiror Options that result from the
\nconversion of Target Options under Section 1.6(c) to be registered on a
\nregistration statement on Form S-8 or successor form promulgated by the SEC
\nunder the Securities Act, as soon as commercially reasonable after the Effective
\nTime. In any event, Acquiror will file such Form S-8 Registration Statement with
\nfive (5) business days after the Effective Time, and will maintain the
\neffectiveness of such Form S-8 for so long as such Acquiror Options remain
\noutstanding.<\/p>\n
4.11 NNM LISTING OF ADDITIONAL SHARES APPLICATION. Acquiror shall
\ncause to be authorized for listing on the NNM, effective as of the Effective
\nTime, all shares of Acquiror Common Stock to be issued to Target’s stockholders
\nin the Merger pursuant to Section 1.6(a) hereof and all shares of Acquiror
\nCommon Stock required to be reserved for issuance, in <\/p>\n
42
\n 48<\/p>\n
connection with the Merger (including without limitation all such shares to be
\nreserved for issuance upon all Acquiror Options and Warrants issued in or
\nresulting from the Merger, or upon the expiration or forfeiture of dissenters’
\nrights as contemplated by Section 1.7), upon official notice of issuance.<\/p>\n
4.12 AUDITORS. Each party will use commercially reasonable efforts
\nto cause its respective management and independent auditors to facilitate on a
\ntimely basis (i) the preparation of financial statements (including pro forma
\nfinancial statements if required) to comply with applicable SEC regulations,
\n(ii) the review of any audit or review work papers including the examination of
\nselected audited financial statements and data, and (iii) the delivery of such
\nrepresentations from each party’s independent accountants as may be reasonably
\nrequested by the other party or its accountants.<\/p>\n
4.13 DIRECTORS’ AND OFFICERS’ INDEMNIFICATION.<\/p>\n
(a) From and after the Effective Time, Acquiror will fulfill,
\nhonor and perform all of the Indemnification Obligations (as defined below) of
\nTarget arising under Target’s Certificate of Incorporation or Bylaws, each as
\namended or of Target Subsidiary arising under Target Subsidiary’s charter
\ndocuments, or under any indemnification or similar agreement between Target or
\nTarget Subsidiary on the one hand, and any Target Covered Person (as defined
\nbelow) on the other hand that existed prior to and remains in effect on the date
\nhereof (copies of which agreements have been provided to Acquiror). In addition,
\nto the extent that any Target Covered Person would, with respect to any action
\nor event relating to Target or Target Subsidiary that occurs on or prior to the
\nEffective Time, be entitled under Acquiror’s Certificate of Incorporation or
\nBylaws or Target Subsidiary charter documents, each as in effect upon the
\nEffective Time, to any indemnification, defense of claims or advancement of
\nexpenses by or from Acquiror, Acquiror shall provide such indemnification,
\ndefense and advancement of expenses to such Target Covered Person. A “Target
\nCovered Person” means any individual who, at any time prior to the Effective
\nTime, was a director or officer of Target or Target Subsidiary or was a trustee
\nor other fiduciary of a plan administered for the benefit of employees of Target
\nand\/or Target Subsidiary. “Indemnification Obligations” means an obligation of
\nTarget or Target Subsidiary to provide indemnification, defense of claims or
\nadvancement of expenses to a person.<\/p>\n
(b) This Section 4.13 shall survive the consummation of the
\nMerger, is intended to benefit Target and each indemnified party, shall be
\nbinding, jointly and severally, on all successors and assigns of the Surviving
\nCorporation and Acquiror, and shall be enforceable by the indemnified persons.<\/p>\n
(c) Target hereby represents and warrants to Acquiror that no
\nclaim for indemnification by Target or Target Subsidiary has been made by any
\ndirector or officer of Target prior to the date of this Agreement except for any
\nof such claims as have been paid in full and, to the knowledge of Target, no
\nbasis exists for any such claim for indemnification.<\/p>\n
4.14 BENEFIT ARRANGEMENTS. Acquiror and Target agree that, following
\nthe Effective Time, Acquiror will provide (or will cause Target to provide)
\nbenefits to Target’s employees as of the Effective Time (other than with respect
\nto contributions by Target to the <\/p>\n
43
\n 49<\/p>\n
Target 401(k) Plan, as to which no comparable contributions are made by
\nAcquiror) that are at least as favorable, taken as a whole, as the benefits
\ncurrently provided to employees of Acquiror performing functions similar to
\nthose to be performed by such Target employees after the Effective Time. As soon
\nas practicable after the execution of this Agreement, Target and Acquiror shall
\nconfer and work together in good faith to agree upon mutually acceptable
\nemployee benefit and compensation arrangements (and amend or terminate Target
\nemployee plans immediately prior to the Effective Time, if appropriate).
\nAcquiror shall use commercially reasonable efforts to ensure that continuous
\nemployment with Target shall be credited to employees of Target or Target
\nSubsidiary who become employees of Target or any of its subsidiaries on or after
\nthe Effective Time for all purposes of eligibility and vesting of benefits but
\nnot for purposes of accrual of benefits. Acquiror shall take commercially
\nreasonable steps to (a) cause to be waived all limitations as to preexisting
\ncondition limitations, exclusions and waiting periods with respect to
\nparticipation and coverage requirements applicable to the employees of Target or
\nTarget Subsidiary under any welfare benefit plan that such employees are
\neligible to participate in after the Effective Time, other than limitations,
\nexclusions or waiting periods that are already in effect with respect to such
\nemployees and that have not been satisfied as of the Effective Time under any
\nwelfare benefit plan maintained for such employees immediately prior to the
\nEffective Time and (b) provide each employee of Target and Target Subsidiary
\nwith credit for any co-payments and deductibles paid during the plan year
\ncommencing immediately prior to the Effective Time in satisfying any applicable
\ndeductible or out-or-pocket requirements under any welfare plans that such
\nemployees are eligible to participate in after the Effective Time for such plan
\nyear.<\/p>\n
4.15 TREATMENT AS REORGANIZATION. Neither Acquiror nor Target shall
\ntake any action prior to or following the Closing that would reasonably be
\nexpected to cause the Merger to fail to qualify as a “reorganization” within the
\nmeaning of Section 368(a) of the Internal Revenue Code.<\/p>\n
ARTICLE 5
\n CONDITIONS TO THE MERGER<\/p>\n
5.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
\nThe respective obligations of each party to this Agreement to effect the Merger
\nshall be subject to the satisfaction or waiver by such party, at or prior to the
\nClosing, of all the following conditions:<\/p>\n
(a) S-4 Registration Statement Effective. The SEC shall have
\ndeclared the S-4 Registration Statement effective. No stop order suspending the
\neffectiveness of the S-4 Registration Statement or any part thereof shall have
\nbeen issued and no proceeding for that purpose, and no similar proceeding in
\nrespect of the Proxy Statement, shall have been initiated or threatened by the
\nSEC and all requests for additional information on the part of the SEC shall
\nhave been complied with to the reasonable satisfaction of the parties thereto.<\/p>\n
(b) Governmental and Regulatory Approvals. Approvals from any
\nother Governmental or Regulatory Authority (if any) necessary for consummation
\nof the transactions contemplated by this Agreement shall have been obtained, and
\nany waiting period applicable to the consummation of the Merger under the HSR
\nAct shall have expired or been terminated.<\/p>\n
44
\n 50<\/p>\n
(c) No Injunctions or Regulatory Restraints; Illegality. No
\ntemporary restraining order, preliminary or permanent injunction or other Order
\nissued by any court of competent jurisdiction or Governmental or Regulatory
\nAuthority or other legal or regulatory restraint or prohibition preventing the
\nconsummation of the Merger shall be in effect; nor shall there be any action
\ntaken, or any Law or Order enacted, entered, enforced or deemed applicable to
\nthe Merger or the other transactions contemplated by the terms of this Agreement
\nthat would prohibit the consummation of the Merger or which would permit
\nconsummation of the Merger only if certain material divestitures were made or if
\nAcquiror were to agree to material limitations on its business activities or
\noperations.<\/p>\n
(d) Tax Opinions. Acquiror and Target shall each have received
\nwritten opinions from their counsel, in form and substance reasonably
\nsatisfactory to each of them, to the effect that the Merger will constitute a
\nreorganization within the meaning of Section 368(a) of the Internal Revenue
\nCode. The parties to this Agreement agree to make such reasonable
\nrepresentations as requested by such counsel for the purpose of rendering such
\nopinions. In the event that either Target’s or Acquiror’s counsel shall not
\nrender such opinion, then the other party’s counsel may render such opinion in
\nsatisfaction of the condition set forth in this Section 5.1(d).<\/p>\n
(e) Stockholder Approval. The Merger (and any increase in
\nAcquiror’s authorized capital stock necessary to enable Acquiror to perform its
\nobligations hereunder and to carry out the Merger) shall have been approved by
\nthe requisite votes of the stockholders of Acquiror and Target in accordance
\nwith the DGCL and, if applicable, the California Code.<\/p>\n
(f) NNM Listing. Acquiror shall cause to be authorized for
\nlisting on the NNM, effective as of the Effective Time, all shares of Acquiror
\nCommon Stock to be issued to Target’s stockholders in the Merger pursuant to
\nSection 1.6(a) hereof and all shares of Acquiror Common Stock required to be
\nreserved for issuance, in connection with the Merger (including without
\nlimitation all such shares to be reserved for issuance upon all Acquiror Options
\nand Acquiror Warrants issued in or resulting from the Merger, or upon the
\nexpiration or forfeiture of dissenters’ rights as contemplated by Section 1.7),
\nupon official notice of issuance.<\/p>\n
(g) Registration Rights Agreement. The Amended and Restated
\nInvestors’ Rights Agreement of Acquiror dated as of July 2, 1998, shall have
\nbeen duly amended by the Amendment No. 1, attached hereto as Exhibit C, and
\nTarget’s Existing Investors’ Rights Agreement shall have been terminated.<\/p>\n
(h) Legal Proceedings. No Governmental or Regulatory Authority
\nshall have notified either party to this Agreement in writing that such
\nGovernmental or Regulatory Authority intends to commence proceedings to restrain
\nor prohibit the transactions contemplated hereby or force rescission, unless
\nsuch Governmental or Regulatory Authority shall have withdrawn such notice and
\nabandoned any such proceedings prior to the time which otherwise would have been
\nthe Closing Date.<\/p>\n
(i) Limitation on Dissenters; Required Stockholder Vote. Holders
\nof no more than five percent (5%) of the outstanding shares of Target Capital
\nStock shall have <\/p>\n
45
\n 51<\/p>\n
exercised, nor shall they have any right to exercise, appraisal, dissenters’ or
\nsimilar rights under applicable law with respect to their shares by virtue of
\nthe Merger.<\/p>\n
5.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF TARGET. The obligations
\nof Target to consummate the Merger and the other transactions contemplated by
\nthis Agreement shall be subject to the satisfaction, or waiver by Target, at or
\nprior to the Closing, of each of the following conditions, any of which may be
\nwaived, in writing, exclusively by Target:<\/p>\n
(a) Representations and Warranties. Each of the representations
\nand warranties made by Acquiror in Article 3 of this Agreement (as qualified by
\nthe Acquiror Disclosure Schedule) shall be true and correct in all material
\nrespects on the date of this Agreement and such representations and warranties
\n(as qualified by the Acquiror Disclosure Schedule, as such may be updated at the
\nClosing Date and prior to the Effective Time, as provided below) shall be true
\nand correct in all material respects on and as of the Closing Date (except, in
\neach case, for any such representations or warranties that, by their express
\nterms, speak only as of a specific date or dates, in which case such
\nrepresentations and warranties need only be true and correct in all material
\nrespects on and as of such specified date or dates); provided, that Acquiror
\nshall have the opportunity to update the Acquiror Disclosure Schedule as of the
\nClosing Date; and provided further, that notwithstanding any failure of one or
\nmore of the representations or warranties of Acquiror (as qualified as permitted
\nabove) to be true and correct in all material respects as of the date of this
\nAgreement or as of the Closing Date, the condition set forth in this Section
\n5.2(a) shall nevertheless be satisfied so long as such representations and
\nwarranties of Acquiror (as qualified as permitted above), do not contain any
\nmisstatement or omission of any fact or matter that would have a Material
\nAdverse Effect on the Business or Condition of Acquiror (it being agreed that in
\nany controversy concerning the applicability of this Section 5.2(a), the party
\nclaiming the misstatement or omission of any fact or matter shall have the
\nburden of proving that such fact or matter would have a Material Adverse Effect
\non the Business or Condition of Acquiror).<\/p>\n
(b) Performance. Acquiror shall have performed and complied in
\nall material respects with each agreement, covenant and obligation required by
\nthis Agreement to be so performed or complied with by Acquiror at or before the
\nClosing.<\/p>\n
(c) No Material Adverse Change. There shall have occurred no
\nmaterial adverse change in the Business or Condition of Acquiror since the date
\nhereof; provided that for purposes of this Section 5.2(c), Section 3.7 and\/or
\nSection 5.2(a), a change to the Business or Condition of Acquiror which is
\nattributable to or results from (i) the public announcement or pendency of the
\ntransactions contemplated hereby on current or prospective customers of
\nAcquiror, (ii) changes in general economic conditions or changes affecting the
\nindustry generally in which Acquiror operates, and\/or (iii) changes resulting
\nfrom the acts or omissions of Target shall not be deemed to be a material
\nadverse change in the Business or Condition of Acquiror; provided further, that
\na reduction in the market price of Acquiror’s capital stock shall not, in and of
\nitself, constitute a material adverse change in the Business or Condition of
\nAcquiror (it being agreed that in any controversy concerning the applicability
\nof this Section 5.2(c), Section 3.7 and\/or Section 5.2(a), the party claiming
\nthat there has occurred a material adverse change in the Business or Condition
\nof Acquiror since the date hereof shall have the burden of proving the
\noccurrence of such material adverse change).<\/p>\n
46
\n 52<\/p>\n
(d) Officers’ Certificates. Acquiror shall have delivered to
\nTarget (A) a certificate, dated the Closing Date and executed by its President
\nand Chief Executive Officer of Acquiror and (B) a certificate, dated the Closing
\nDate and executed by the Secretary of Acquiror, both substantially in the forms
\nset forth in Exhibit E hereto.<\/p>\n
(e) Legal Opinion. Target shall have received a legal opinion
\nfrom Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, counsel to
\nAcquiror, as to the matters set forth on Exhibit F hereto.<\/p>\n
(f) Directors and Officers. Each of the Target Designees shall
\nhave been duly and validly elected to Acquiror’s board of directors. The three
\n(3) persons designated by Target shall be Vinod Khosla, Vivek Ragavan and one
\n(1) other person reasonably acceptable to a majority of the Existing Directors,
\neach to hold office in accordance with the Certificate of Incorporation and
\nBylaws of the Surviving Corporation. If any Target Designee cannot or will not
\nserve as a director of the Surviving Corporation, Target may designate a
\nreplacement Designee, provided such replacement is reasonably acceptable to a
\nmajority of the Existing Directors. The officers of Surviving Corporation at,
\nand immediately after, the Effective Time shall be as mutually agreed to by
\nTarget and Acquiror, except that it is agreed that Dennis Barsema shall be Chief
\nExecutive Officer and Vivek Ragavan shall be President and Chief Operating
\nOfficer.<\/p>\n
5.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF ACQUIROR. The
\nobligations of Acquiror to consummate the Merger and the other transactions
\ncontemplated by this Agreement shall be subject to the satisfaction, or waiver
\nby Acquiror, at or prior to the Closing, of each of the following conditions,
\nany of which may be waived, in writing, exclusively by Acquiror:<\/p>\n
(a) Representations and Warranties. Each of the representations
\nand warranties made by Target in Article 2 of this Agreement (as qualified by
\nthe Target Disclosure Schedule) shall be true and correct in all material
\nrespects on the date of this Agreement and such representations and warranties
\n(as qualified by the Target Disclosure Schedule, as such may be updated at the
\nClosing Date and prior to the Effective Time, as provided below) shall be true
\nand correct in all material respects on and as of the Closing Date (except, in
\neach case, for any such representations or warranties that, by their express
\nterms, speak only as of a specific date or dates, in which case such
\nrepresentations and warranties need only be true and correct in all material
\nrespects on and as of such specified date or dates); provided, that Target shall
\nhave the opportunity to update the Target Disclosure Schedule as of the Closing
\nDate; and provided further, that notwithstanding any failure of one or more of
\nthe representations or warranties of Target (as qualified as permitted above) to
\nbe true and correct in all material respects as of the date of this Agreement or
\nas of the Closing Date, the condition set forth in this Section 5.3(a) shall
\nnevertheless be satisfied so long as such representations and warranties of
\nTarget (as qualified as permitted above), do not contain any misstatement or
\nomission of any fact or matter that could reasonably be anticipated to have a
\nMaterial Adverse Effect on the Business or Condition of Target (it being agreed
\nthat in any controversy concerning the applicability of this Section 5.3(a), the
\nparty claiming the misstatement or omission of any fact or matter shall have the
\nburden of proving that such fact or matter would have a Material Adverse Effect
\non the Business or Condition of Target).<\/p>\n
47
\n 53<\/p>\n
(b) Performance. Target shall have performed and complied in all
\nmaterial respects with each agreement, covenant and obligation required by this
\nAgreement to be so performed or complied with by Target on or before the Closing
\nDate.<\/p>\n
(c) No Material Adverse Change. There shall have occurred no
\nmaterial adverse change in the Business or Condition of Target since the date
\nhereof; provided that for purposes of this Section 5.3(c), Section 2.8 and\/or
\nSection 5.3(a), a change to the Business or Condition of Target which is
\nattributable to or results from (i) the public announcement or pendency of the
\ntransactions contemplated hereby on current or prospective customers of Target,
\n(ii) changes in general economic conditions or changes affecting the industry
\ngenerally in which Target operates and\/or (iii) changes resulting from the acts
\nor omissions of Acquiror shall not be deemed to be a material adverse change in
\nthe Business or Condition of Target; provided further, that a reduction in the
\nmarket value of Target’s capital stock shall not, in and of itself, constitute a
\nmaterial adverse change in the Business or Condition of Target; (it being agreed
\nthat in any controversy concerning the applicability of this Section 5.3(c),
\nSection 2.8 and\/or Section 5.3(a), the party claiming that there has occurred a
\nmaterial adverse change in the Business or Condition of Target since the date
\nhereof shall have the burden of proving the occurrence of such material adverse
\nchange).<\/p>\n
(d) Officers’ Certificates. Target shall have delivered to
\nAcquiror (i) a certificate, dated the Closing Date and executed by its President
\nand Chief Executive Officer of Target and (ii) a certificate, dated the Closing
\nDate and executed by the Secretary of Target, both substantially in the forms
\nset forth in Exhibit G hereto.<\/p>\n
(e) Third Party Consents. Acquiror shall have been furnished
\nwith evidence satisfactory to it that Target has obtained the consents,
\napprovals and waivers listed in Section 2.5 of the Target Disclosure Schedule
\n(except for such consents, approvals and waivers the failure of which to receive
\nwould have a Material Adverse Effect on the Surviving Corporation).<\/p>\n
(f) Legal Opinion. Acquiror shall have received a legal opinion
\nfrom Fenwick & West, LLP, legal counsel to Target, as to the matters set forth
\non Exhibit H hereto.<\/p>\n
(g) Termination of 40l(k) Plan. If required by Acquiror in
\nwriting at least twenty (20) business days prior to Closing, Target shall,
\nimmediately prior to the Closing Date, have terminated the Target 401(k) Plan
\nand no further contributions shall have been made to the Target 401(k) Plan
\nafter such date of termination. Target shall have provided to Acquiror (i)
\nexecuted resolutions by the Board of Directors of Target authorizing such
\ntermination and (ii) an executed amendment to the Target 401(k) Plan containing
\nproposed amendments prepared by Acquiror, if any, sufficient to ensure
\ncompliance with all applicable requirements of the Internal Revenue Code and
\nregulations thereunder so that the tax-qualified status of the Target 401(k)
\nPlan will be maintained at the time of termination.<\/p>\n
48
\n 54<\/p>\n
ARTICLE 6
\n SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS
\n AND AGREEMENTS; ESCROW PROVISIONS<\/p>\n
6.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
\nAGREEMENTS. Notwithstanding any right of Acquiror or Target (whether or not
\nexercised) to investigate the affairs of Acquiror or Target or a waiver by
\nAcquiror or Target of any condition to Closing set forth in Article 5, each
\nparty shall have the right to rely fully upon the representations, warranties,
\ncovenants and agreements of the other party contained in this Agreement or in
\nany instrument delivered pursuant to this Agreement. Other than Target’s
\ncapitalization representation set forth in Section 2.3, which shall only survive
\nuntil the Expiration Date, none of the representations and warranties of Target
\nor Acquiror, and none of the other covenants and agreements of Target and
\nAcquiror, which by their terms are to be performed on or prior to the Closing
\nDate, shall survive after the Merger.<\/p>\n
6.2 ESCROW PROVISIONS.<\/p>\n
(a) Establishment of the Escrow Fund. As soon as practicable
\nafter the Effective Time, the Escrow Amount, without any act of any Target
\nstockholder, will be deposited in escrow with a depositary agent mutually
\nacceptable to Target and Acquiror (the “Depositary Agent”) (plus a proportionate
\nshare of any additional shares of Acquiror Common Stock as may be issued with
\nrespect to the Escrow Amount upon any stock splits, stock dividends or
\nrecapitalizations effected by Acquiror following the Effective Time), such
\ndeposit to constitute the “Escrow Fund” to be governed by the terms set forth
\nherein. The portion of the Escrow Amount contributed on behalf of each
\nstockholder of Target shall be in proportion to the aggregate number of shares
\nof Acquiror Common Stock which such holder would otherwise be entitled under
\nSection 1.6.<\/p>\n
(b) Recourse to the Escrow Fund. The Escrow Amount shall be
\navailable to compensate Acquiror and its officers, directors, employees or
\nagents, for any and all payments and disbursements made by Acquiror, its
\nofficers, directors, employees or agents (including attorneys’ fees and other
\nexpenses of litigation, and amounts paid in settlement), directly or indirectly,
\nas a result of all Section 2.3 Losses (whether or not involving a Third Party
\nClaim) incurred or sustained by Acquiror, its officers, directors, employees or
\nagents, directly or indirectly. Other than for fraud, the provisions of this
\nArticle 6 shall be the sole and exclusive remedy available to Acquiror and to
\nits officers, directors, employees and agents to obtain monetary recovery from
\nTarget’s stockholders with respect to any Section 2.3 Losses and there shall not
\nbe recourse for any other Losses. Except for liability for fraud and the
\nliability of a Target stockholder for the loss of such stockholder’s pro rata
\nshare of the Acquiror Common Stock and other property included in the Escrow
\nFund in satisfaction of Section 2.3 Losses in accordance with this Article 6, no
\nTarget stockholders or any other Target securityholder or officer or director of
\nTarget shall have any liability to Acquiror or to any of Acquiror’s officers,
\ndirectors, stockholders, employees or agents for or in respect of any Losses or
\nother liability arising out of this Agreement.<\/p>\n
(c) Escrow Period; Distribution of Escrow Fund upon Termination
\nof Escrow Period. Subject to the following requirements, the Escrow Fund shall
\nbe in existence <\/p>\n
49
\n 55<\/p>\n
immediately following the Effective Time and shall terminate at 5 p.m., Pacific
\nTime, 180 days after the Effective Time (the “Expiration Date”) (the period of
\ntime from the Effective Time through and including the Expiration Date is
\nreferred to herein as the “Escrow Period”); and upon expiration of the Escrow
\nPeriod all shares of Acquiror Common Stock remaining in the Escrow Fund shall be
\ndistributed as set forth in the last sentence of this Section 6.2(c); provided,
\nhowever, that the Escrow Period shall not terminate with respect to such amount
\n(or some portion thereof) that is necessary in the reasonable judgment of
\nAcquiror, subject to the objection of the Stockholder Agent and the subsequent
\narbitration of the matter in the manner as provided in Section 6.2(g) hereof, to
\nsatisfy any unsatisfied claims for Section 2.3 Losses under this Section 6.2
\nconcerning facts and circumstances existing prior to the termination of such
\nEscrow Period which claims are specified in any Officer’s Certificate delivered
\nto the Depositary Agent prior to termination of such Escrow Period. As soon as
\nall such claims, if any, have been resolved, the Depositary Agent shall deliver
\nto the stockholders of Target the remaining portion of the Escrow Fund not
\nrequired to satisfy such claims. Deliveries of certificates for shares of
\nAcquiror Common Stock remaining in the Escrow Fund to the stockholders of Target
\npursuant to this Section 6.2(c) shall be made ratably in proportion to their
\nrespective contributions to the Escrow Fund and Acquiror shall use all requisite
\ncommercially reasonable efforts to have such certificates delivered as promptly
\nas possible after such resolution.<\/p>\n
(d) Protection of Escrow Fund.<\/p>\n
(i) The Depositary Agent shall hold and safeguard the Escrow
\nFund during the Escrow Period, shall treat such fund as a trust fund in
\naccordance with the terms of this Agreement and not as the property of Acquiror
\nand shall hold and dispose of the Escrow Fund only in accordance with the terms
\nhereof.<\/p>\n
(ii) Any shares of Acquiror Common Stock or other Equity
\nEquivalents issued or distributed by Acquiror (“New Shares”) in respect of
\nAcquiror Common Stock in the Escrow Fund which have not been released from the
\nEscrow Fund shall be added to the Escrow Fund. New Shares issued in respect of
\nshares of Acquiror Common Stock which have been released from the Escrow Fund
\nshall not be added to the Escrow Fund but shall be distributed to the record
\nholders thereof. Cash dividends on Acquiror Common Stock shall not be added to
\nthe Escrow Fund but shall be distributed to the record holders of the Acquiror
\nCommon Stock on the record date set for any such dividend.<\/p>\n
(iii) Each stockholder shall have full voting rights with
\nrespect to the shares of Acquiror Common Stock contributed to the Escrow Fund by
\nsuch stockholder (and on any voting securities added to the Escrow Fund in
\nrespect of such shares of Acquiror Common Stock).<\/p>\n
(e) Claims Upon Escrow Fund.<\/p>\n
(i) Upon receipt by the Depositary Agent at any time on or
\nbefore the Expiration Date of a certificate signed by any officer of Acquiror
\n(an “Officer’s Certificate”): (A) stating that Acquiror has paid or properly
\naccrued or reasonably anticipates that it will become obligated to pay or accrue
\na Section 2.3 Loss and (B) specifying in reasonable detail the individual items
\nof Section 2.3 Losses included in the amount so stated, the date on <\/p>\n
50
\n 56<\/p>\n
which each such item was paid or properly accrued, the basis for and facts
\ngiving rise to, such anticipated liability, and the nature of the
\nmisrepresentation to which such item is related, the Depositary Agent shall,
\nsubject to the provisions of Section 6.2(f) and 6.2(g) hereof, delivered to
\nAcquiror out of the Escrow Fund, as promptly as practicable, shares of Acquiror
\nCommon Stock held in the Escrow Fund in an amount equal to such Section 2.3
\nLosses. Where the basis for a claim upon the Escrow Fund by Acquiror is that
\nAcquiror reasonably anticipates that it will pay or accrue a Section 2.3 Loss,
\nno payment will be made from the Escrow Fund for such Section 2.3 Loss unless
\nand until such Section 2.3 Loss is actually paid or accrued.<\/p>\n
(ii) For the purposes of determining the number of shares of
\nAcquiror Common Stock to be delivered to Acquiror out of the Escrow Fund
\npursuant to Section 6.2(e)(i), the shares of Acquiror Common Stock shall be
\nvalued at the Closing Price.<\/p>\n
(f) Objections to Claims. At the time of delivery of any
\nOfficer’s Certificate to the Depositary Agent, a duplicate copy of such
\nOfficer’s Certificate shall be concurrently delivered to the Stockholder Agent
\nand for a period of thirty (30) days after such delivery, the Depositary Agent
\nshall make no delivery to Acquiror of any Escrow Amounts pursuant to Section
\n6.2(e) hereof unless the Depositary Agent shall have received written
\nauthorization from the Stockholder Agent to make such delivery. After the
\nexpiration of such thirty (30) day period, the Depositary Agent shall make
\ndelivery of shares of Acquiror Common Stock from the Escrow Fund in accordance
\nwith Section 6.2(e) hereof, provided that no such payment or delivery may be
\nmade if the Stockholder Agent shall object in a written statement to the claim
\nmade in the Officer’s Certificate, and such statement shall have been delivered
\nto the Depositary Agent prior to the expiration of such thirty (30) day period.<\/p>\n
(g) Resolution of Conflicts; Arbitration.<\/p>\n
(i) In case the Stockholder Agent shall object in writing to
\nany claim or claims made in any Officer’s Certificate, the Stockholder Agent and
\nAcquiror shall attempt in good faith to agree upon the rights of the respective
\nparties with respect to each of such claims. If the Stockholder Agent and
\nAcquiror should so agree, a memorandum setting forth such agreement shall be
\nprepared and signed by both parties and shall be furnished to the Depositary
\nAgent. The Depositary Agent shall be entitled to rely on any such memorandum and
\ndistribute shares of Acquiror Common Stock from the Escrow Fund in accordance
\nwith the terms thereof.<\/p>\n
(ii) If no such agreement can be reached after good faith
\nnegotiation, or in any event, no such agreement has been reached within
\nforty-five (45) days after the delivery of the Officer’s Certificate to the
\nStockholder Agent, then either Acquiror or the Stockholder Agent may demand
\narbitration of the dispute unless the amount of the damage or loss is at issue
\nin a pending Action or Proceeding involving a Third Party Claim, in which event
\narbitration shall not be commenced until such amount is ascertained (provided
\nAcquiror acts diligently to resolve such Third-Party Claim and allows the
\nStockholder Agent to participate in the defense of such Third-Party Claim) or
\nboth parties agree to arbitration; and in either event the matter shall be
\nsettled by arbitration conducted by three (3) arbitrators, one (1) selected by
\nAcquiror and one (1) selected by the Stockholder Agent, and the two (2)
\narbitrators selected by Acquiror and the Stockholder Agent shall select a third
\narbitrator. The Arbitration shall be <\/p>\n
51
\n 57<\/p>\n
governed by the Commercial Arbitration Rules of the American Arbitration
\nAssociation. The arbitrators shall set a limited time period and establish
\nprocedures designed to reduce the cost and time for discovery of information
\nrelating to any dispute while allowing the parties an opportunity, adequate as
\ndetermined in the sole judgment of the arbitrators, to discover relevant
\ninformation from the opposing parties about the subject matter of the dispute.
\nThe arbitrators shall rule upon motions to compel, limit or allow discovery as
\nthey shall deem appropriate given the nature and extent of the disputed claim.
\nThe arbitrators shall also have the authority to impose sanctions, including
\nattorneys’ fees and other costs incurred by the parties, to the same extent as a
\ncourt of law or equity, should the arbitrators determine that discovery was
\nsought without substantial justification or that discovery was refused or
\nobjected to by a party without substantial justification. The decision of a
\nmajority of the three (3) arbitrators as to the validity and amount of any claim
\nin such Officer’s Certificate shall be binding and conclusive upon the parties
\nto this Agreement, and notwithstanding anything in Section 6.2(f) hereof, the
\nDepositary Agent shall be entitled to act in accordance with such decision and
\nmake or withhold payments out of the Escrow Fund in accordance therewith. Such
\ndecision shall be written and shall be supported by written findings of fact and
\nconclusions regarding the dispute which shall set forth the award, judgment,
\ndecree or order awarded by the arbitrators. Each party agrees to confirm any
\nsuch arbitration decision to the Depositary Agent in order to facilitate any
\nrelease of shares of Acquiror Common Stock or other property from the Escrow
\nFund.<\/p>\n
(iii) Judgment upon any award rendered by the arbitrators
\nmay be entered in any court having competent jurisdiction. Any such arbitration
\nshall be held in the county of Santa Clara, California under the commercial
\nrules of arbitration then in effect of the American Arbitration Association. For
\npurposes of this Section 6.2(g), in any arbitration hereunder in which any claim
\nor the amount thereof stated in the Officer’s Certificate is at issue, Acquiror
\nshall be deemed to be the Non-Prevailing Party in the event that the arbitrators
\naward Acquiror less than the sum of one-half ( 1\/2) of the disputed amount of
\nany Section 2.3 Losses plus any amounts not in dispute; otherwise, the
\nstockholders of Target as represented by the Stockholder Agent shall be deemed
\nto be the Non-Prevailing Party. The Non-Prevailing Party to an arbitration shall
\npay its own expenses, the fees of each arbitrator, the administrative costs of
\nthe arbitration and the expenses, including reasonable attorneys’ fees and
\ncosts, incurred by the other party to the arbitration (“Arbitration Related
\nFees”), provided, however, that any Arbitration Related Fees due from Target
\nshall be delivered to Acquiror out of the Escrow Fund, as promptly as
\npracticable, in the form of shares of Acquiror Common Stock held in the Escrow
\nFund in an amount equal to such Arbitration Related Fees. For the purposes of
\ndetermining the number of shares of Acquiror Common Stock to be delivered to
\nAcquiror out of the Escrow Fund to cover any Arbitration Related Fees, the
\nshares of Acquiror Common Stock shall be valued at the Closing Price.<\/p>\n
(h) Stockholder Agent of the Stockholders; Power of Attorney.<\/p>\n
(i) In the event that the Merger is approved by the
\nstockholders of Target, effective upon such vote, and without further act of any
\nstockholder, Vivek Ragavan shall be appointed as agent and attorney-in-fact (the
\n“Stockholder Agent”) for each stockholder of Target (except such stockholders,
\nif any, as shall have perfected their appraisal or dissenters’ rights under the
\nDGCL or California Code, if applicable), for and on behalf of stockholders of
\nTarget, to give and receive notices and communications, to authorize <\/p>\n
52
\n 58<\/p>\n
delivery to Acquiror of shares of Acquiror Common Stock from the Escrow Fund in
\nsatisfaction of claims by Acquiror, to object to such deliveries, to agree to,
\nnegotiate, enter into settlements and compromises of, and demand arbitration and
\ncomply with orders of courts and awards of arbitrators with respect to such
\nclaims, and to take all actions necessary or appropriate in the judgment of the
\nStockholder Agent for the accomplishment of the foregoing and to participate in
\nthe defense of Third-Party Claim. Such agency may be changed by the stockholders
\nof Target from time to time upon not less than thirty (30) days prior written
\nnotice to Acquiror; provided, however, that the Stockholder Agent may not be
\nremoved unless holders of a two-thirds (2\/3) interest in the Escrow Fund agree
\nto such removal and to the identity of the substituted Stockholder Agent. Any
\nvacancy in the position of Stockholder Agent may be filled by approval of the
\nholders of a majority in interest of the Escrow Fund. No bond shall be required
\nof the Stockholder Agent, and the Stockholder Agent shall not receive
\ncompensation for his services. Notices or communications to or from the
\nStockholder Agent shall constitute notice to or from each of the stockholders of
\nTarget.<\/p>\n
(ii) The Stockholder Agent shall not be liable for any act
\ndone or omitted hereunder as Stockholder Agent while acting in good faith, or
\nacting on the advice of counsel. The Stockholder Agent shall have no duty,
\nobligation or responsibility to expend his personal funds in support of his
\nactivities as Stockholder Agent.<\/p>\n
(iii) The Stockholder Agent shall have reasonable access to
\ninformation about Target and the reasonable assistance of Target’s officers and
\nemployees for purposes of performing its duties and exercising its rights
\nhereunder, provided that the Stockholder Agent shall treat confidentially and
\nnot disclose any nonpublic information from or about Target to anyone (except on
\na need to know basis to individuals who agree to treat such information
\nconfidentially).<\/p>\n
(i) Actions of the Stockholder Agent. A decision, act, consent
\nor instruction of the Stockholder Agent shall constitute a decision of all the
\nstockholders for whom a portion of the Escrow Amount otherwise issuable to them
\nin the Merger are deposited in the Escrow Fund and shall be final, binding and
\nconclusive upon each of such stockholders, and the Depositary Agent and Acquiror
\nmay rely upon any such decision, act, consent or instruction of the Stockholder
\nAgent as being the decision, act, consent or instruction of every such
\nstockholder of Target. The Depositary Agent and Acquiror are hereby relieved
\nfrom any liability to any person for any acts done by them in accordance with
\nsuch decision, act, consent or instruction of the Stockholder Agent.<\/p>\n
(j) Third-Party Claims. In the event Acquiror becomes aware of a
\nthird-party claim (a “Third Party Claim”) which Acquiror reasonably expects may
\nresult in a Section 2.3 Loss and a demand against the Escrow Fund, Acquiror
\nshall notify the Stockholder Agent of such claim, and the Stockholder Agent, as
\nrepresentative for the stockholders of Target, shall be entitled, at their
\nexpense, to participate in any defense of such claim. Acquiror shall promptly
\ndefend any such Third-Party Claim and shall have the right in its sole
\ndiscretion to settle any Third Party Claim; provided, however, that if Acquiror
\nsettles any Third Party Claim without the Stockholder Agent’s consent (which
\nconsent shall not be unreasonably withheld or delayed), Acquiror may not make a
\nclaim against the Escrow Fund with respect to the amount of Losses incurred by
\nAcquiror in such settlement. In the event that the Stockholder Agent has<\/p>\n
53
\n 59<\/p>\n
consented to any such settlement, the Stockholder Agent shall have no power or
\nauthority to object under any provision of this Article 6 to the amount of any
\nclaim by Acquiror against the Escrow Fund with respect to the amount of Losses
\nincurred by Acquiror in such settlement.<\/p>\n
(k) Depositary Agent’s Duties.<\/p>\n
(i) The Depositary Agent shall be obligated only for the
\nperformance of such duties as are specifically set forth herein, and as set
\nforth in any additional written escrow instructions which the Depositary Agent
\nmay receive after the date of this Agreement which are signed by an officer of
\nAcquiror and the Stockholder Agent, and may rely and shall be protected in
\nrelying or refraining from acting on any instrument reasonably believed to be
\ngenuine and to have been signed or presented by the proper party or parties. The
\nDepositary Agent shall not be liable for any act done or omitted hereunder as
\nDepositary Agent while acting in good faith and in the exercise of reasonable
\njudgment, and any act done or omitted pursuant to the advice of counsel shall be
\nconclusive evidence of such good faith.<\/p>\n
(ii) The Depositary Agent is hereby expressly authorized to
\ncomply with and obey Orders of any court of law or Governmental or Regulatory
\nAuthority, notwithstanding any notices, warnings or other communications from
\nany party or any other person to the contrary. In case the Depositary Agent
\nobeys or complies with any such Order, the Depositary Agent shall not be liable
\nto any of the parties hereto or to any other person by reason of such
\ncompliance, notwithstanding any such Order being subsequently reversed,
\nmodified, annulled, set aside, vacated or found to have been entered without
\njurisdiction or proper authority.<\/p>\n
(iii) The Depositary Agent shall not be liable in any
\nrespect on account of the identity, authority or rights of the parties executing
\nor delivering or purporting to execute or deliver this Agreement or any
\ndocuments or papers deposited or called for hereunder.<\/p>\n
(iv) The Depositary Agent shall not be liable for the
\nexpiration of any rights under any statute of limitations with respect to this
\nAgreement or any documents deposited with the Depositary Agent.<\/p>\n
(v) In performing any duties under this Agreement, the
\nDepositary Agent shall not be liable to any party for damages, losses, or
\nexpenses, except for gross negligence or willful misconduct on the part of the
\nDepositary Agent. The Depositary Agent shall not incur any such liability for
\n(A) any act or failure to act made or omitted in good faith, or (B) any action
\ntaken or omitted in reliance upon any instrument, including any written
\nstatement or affidavit provided for in this Agreement that the Depositary Agent
\nshall in good faith believe to be genuine, nor will the Depositary Agent be
\nliable or responsible for forgeries, fraud, impersonations or determining the
\nscope of any representative authority. In addition, the Depositary Agent may
\nconsult with legal counsel in connection with the Depositary Agent’s duties
\nunder this Agreement and shall be fully protected in any act taken, suffered, or
\npermitted by it in good faith in accordance with the advice of counsel. The
\nDepositary Agent is not responsible for determining and verifying the authority
\nof any person acting or purporting to act on behalf of any party to this
\nAgreement.<\/p>\n
54
\n 60<\/p>\n
(vi) If any controversy arises between the parties to this
\nAgreement, or with any other party, concerning the subject matter of this
\nAgreement, its terms or conditions, the Depositary Agent will not be required to
\ndetermine the controversy or to take any action regarding it, except to comply
\nwith any arbitration decision, order or award as provided in Section 6.2(g). The
\nDepositary Agent may hold all documents and shares of Acquiror Common Stock and
\nmay wait for settlement of any such controversy by final appropriate legal
\nproceedings or other means as, in the Depositary Agent’s discretion, the
\nDepositary Agent may be required to wait for, despite what may be set forth
\nelsewhere in this Agreement. In such event, the Depositary Agent will not be
\nliable for any damages. Furthermore, the Depositary Agent may at its option,
\nfile an action of interpleader requiring the parties to answer and litigate any
\nclaims and rights among themselves. The Depositary Agent is authorized to
\ndeposit with the clerk of the court all documents and shares of Acquiror Common
\nStock held in escrow, except all costs, expenses, charges and reasonable
\nattorney fees incurred by the Depositary Agent due to the interpleader action
\nand which the parties jointly and severally agree to pay. Upon initiating such
\naction, the Depositary Agent shall be fully released and discharged of and from
\nall obligations and liability imposed by the terms of this Agreement.<\/p>\n
(vii) The parties and their respective successors and
\nassigns agree jointly and severally to indemnify and hold the Depositary Agent
\nharmless against any and all Losses incurred by the Depositary Agent in
\nconnection with the good faith performance by the Depositary Agent of his or her
\nduties under this Agreement, including any litigation arising from this
\nAgreement or involving its subject matter.<\/p>\n
(viii) The Depositary Agent may resign at any time upon
\ngiving at least 30 days written notice to the parties; provided, however, that
\nno such resignation shall become effective until the appointment of a successor
\ndepositary agent which shall be accomplished as follows: the parties shall use
\ntheir commercially reasonable efforts to mutually agree on a successor
\ndepositary agent within thirty (30) days after receiving such notice. If the
\nparties fail to agree upon a successor depositary agent within such time, the
\nDepositary Agent shall have the right to appoint a successor depositary agent
\nauthorized to do business in the State of California that is a bank or financial
\ninstitution. The successor Depositary Agent shall execute and deliver an
\ninstrument accepting such appointment and it shall, without further acts, be
\nvested with all the estates, properties, rights, powers, and duties of the
\npredecessor depositary agent as if originally named as escrow agent. The
\nDepositary Agent shall be discharged from any further duties and liability under
\nthis Agreement.<\/p>\n
(ix) All fees of the Depositary Agent for performance of its
\nduties hereunder shall be paid by Acquiror. In the event that the conditions of
\nthis Agreement are not promptly fulfilled, or if the Depositary Agent renders
\nany service not provided for in this Agreement, or if the parties request a
\nsubstantial modification of its terms, or if any controversy arises, or if the
\nDepositary Agent is made a party to, or intervenes in, any Action or Proceeding
\npertaining to this escrow or its subject matter, the Depositary Agent shall be
\nreasonably compensated for such extraordinary services and reimbursed for all
\ncosts, attorney’s fees, and expenses occasioned by such default, delay,
\ncontroversy or Action or Proceeding. Acquiror agrees to pay these sums upon
\ndemand.<\/p>\n
55
\n 61<\/p>\n
ARTICLE 7
\n CONDUCT PRIOR TO THE EFFECTIVE TIME<\/p>\n
7.1 CONDUCT OF BUSINESS.<\/p>\n
(a) During the period from the date of this Agreement and
\ncontinuing until the earlier of the termination of this Agreement and the
\nEffective Time, Target and Acquiror each agree (unless such party receives prior
\nconsent in writing from the other party, which consent shall not be unreasonably
\nwithheld) to carry on its business in the ordinary and usual course and
\nconsistent with its past practices, to pay its Liabilities and Taxes consistent
\nwith its past practices (and in any event when due), to pay or perform other
\nobligations when due consistent with its past practices (other than Liabilities,
\nTaxes and other obligations, if any, contested in good faith through appropriate
\nproceedings), and, to the extent consistent with such business, to use
\ncommercially reasonable efforts to preserve intact its present business
\norganization, keep available the services of its present officers and key
\nemployees and preserve its relationships with customers, suppliers,
\ndistributors, licensors, licensees, independent contractors and other Persons
\nhaving business dealings with it, all with the express purpose and intent of
\npreserving unimpaired its goodwill and ongoing businesses at the Effective Time.<\/p>\n
(b) Without limiting Section 7.1(a), and except as otherwise
\nspecifically provided in this Agreement, Target will not, directly or
\nindirectly, prior to the Effective Time, without the prior written consent of
\nAcquiror:<\/p>\n
(i) enter into any material Contract or other material
\ncommitment or transaction, except in the ordinary course of its business
\nconsistent with past practice;<\/p>\n
(ii) amend or otherwise modify (or agree to do so), except
\nin the ordinary course of business, or violate the terms of, any material
\nContract;<\/p>\n
(iii) amend its Certificate of Incorporation or Bylaws;<\/p>\n
(iv) transfer (by way of a License or otherwise) to any
\nPerson rights to any of its material Intellectual Property other than pursuant
\nto licenses granted in the ordinary course of its business consistent with past
\npractice;<\/p>\n
(v) make any change in its accounting policies, principles,
\nmethods, practices or procedures (including for bad debts, contingent
\nliabilities or otherwise, respecting capitalization or expense of research and
\ndevelopment expenditures, depreciation or amortization rates or timing of
\nrecognition of income and expense);<\/p>\n
(vi) commence or settle any material litigation;<\/p>\n
(vii) declare, set aside or pay any dividends on or make any
\nother distributions (whether in cash, stock or property) in respect of any
\nshares of its capital stock, or split, combine or reclassify any of its capital
\nstock or issue or authorize the issuance of any other securities in respect of,
\nin lieu of or in substitution for shares of its capital stock (except upon the
\nconversion of shares of Target Preferred Stock into shares of Target Common<\/p>\n
56
\n 62<\/p>\n
Stock in accordance with the terms of such Target Preferred Stock), or
\nrepurchase, redeem or otherwise acquire, directly or indirectly, any shares of
\nits Capital Stock or Equity Securities (except that Target may repurchase or
\nredeem shares of its capital stock at the original purchase price of such shares
\nin connection with the termination of employment with Target or Target
\nSubsidiary of the Person whose shares are being repurchased or redeemed);<\/p>\n
(viii) acquire any business, company or corporation, whether
\nthrough the purchase of stock, a purchase, lease or License of assets, a merger,
\nconsolidation, tender offer or any other form of business combination;<\/p>\n
(ix) dispose of any significant assets, other than in the
\nordinary course of its business, consistent with its past practices; or<\/p>\n
(x) enter into or approve any contract, arrangement or
\nunderstanding or acquiesce in respect of any arrangement or understanding, to
\ndo, engage in or cause or having the effect of any of the foregoing.<\/p>\n
(c) Without limiting Section 7.1(a), and except as otherwise
\nspecifically provided in this Agreement, Acquiror will not, directly or
\nindirectly, prior to the Effective Time, without the prior written consent of
\nTarget:<\/p>\n
(i) enter into any material Contract or other material
\ncommitment or transaction, except in the ordinary course of its business
\nconsistent with past practice;<\/p>\n
(ii) amend or otherwise modify (or agree to do so), except
\nin the ordinary course of business, or violate the terms of, any material
\nContract;<\/p>\n
(iii) amend its Certificate of Incorporation or Bylaws;<\/p>\n
(iv) transfer (by way of a License or otherwise) to any
\nPerson rights to any of its material Intellectual Property other than pursuant
\nto licenses granted in the ordinary course of its business consistent with past
\npractice;<\/p>\n
(v) make any change in its accounting policies, principles,
\nmethods, practices or procedures (including for bad debts, contingent
\nliabilities or otherwise, respecting capitalization or expense of research and
\ndevelopment expenditures, depreciation or amortization rates or timing of
\nrecognition of income and expense);<\/p>\n
(vi) commence or settle any material litigation;<\/p>\n
(vii) declare, set aside or pay any dividends on or make any
\nother distributions (whether in cash, stock or property) in respect of any
\nshares of its capital stock, or split, combine or reclassify any of its capital
\nstock or issue or authorize the issuance of any other securities in respect of,
\nin lieu of or in substitution for shares of its capital stock of Acquiror, or
\nrepurchase, redeem or otherwise acquire, directly or indirectly, any shares its
\ncapital stock (except that Acquiror may repurchase or redeem shares of its
\ncapital stock at the original <\/p>\n
57
\n 63<\/p>\n
purchase price of such shares in connection with the termination of employment
\nwith Acquiror of the Person whose shares are being repurchased or redeemed);<\/p>\n
(viii) acquire any business, company or corporation, whether
\nthrough the purchase of stock, a purchase, lease or License of assets, a merger,
\nconsolidation, tender offer or any other form of business combination;<\/p>\n
(ix) dispose of any significant assets, other than in the
\nordinary course of its business, consistent with its past practices; or<\/p>\n
(x) enter into or approve any contract, arrangement or
\nunderstanding or acquiesce in respect of any arrangement or understanding, to
\ndo, engage in or cause or having the effect of any of the foregoing.<\/p>\n
7.2 NO SOLICITATION–TARGET.<\/p>\n
(a) Until the earlier of the Effective Time and the date of
\ntermination of this Agreement pursuant to the provisions of Section 8.1 hereof,
\nTarget will not , nor will Target permit any of its directors, officers, agents,
\nemployees, affiliates, attorneys, accountants, financial advisers or other
\nrepresentatives (collectively, “Representatives”) to (directly or indirectly):
\n(i) solicit, encourage, initiate, entertain or participate in any negotiations
\nor discussions with respect to an offer or proposal, oral, written, or
\notherwise, formal or informal, to acquire all or any substantial portion of
\nTarget’s business or assets, whether by purchase of assets, exclusive license,
\njoint venture formation, purchase of stock, business combination or otherwise,
\n(ii) disclose any information not customarily disclosed to any Person concerning
\nTarget and which Target believes would be used for the purposes of formulating
\nany such offer or proposal, (iii) assist, cooperate with, facilitate or
\nencourage any Person to make any offer or proposal to acquire all or any
\nsubstantial portion of Target’s business or assets (directly or indirectly),
\n(iv) agree to, enter into a contract regarding, approve, recommend or endorse
\nany transaction involving, the acquisition of all or any substantial portion of
\nTarget’s business or assets (an “Acquisition Proposal–Target”), or (v)
\nauthorize or permit any of Target’s Representatives to take any such action.
\nTarget shall notify Acquiror as promptly as practical if any proposal or offer
\n(formal or informal, oral, written or otherwise), or any inquiry or contact with
\nany Person with respect thereto, regarding a Acquisition Proposal is made, such
\nnotice to include the identity of the Person proposing such Acquisition
\nProposal-Target and the terms thereof, and shall keep Acquiror apprised on a
\ncurrent basis of the status of any such Acquisition Proposal–Target and of any
\nmodifications to the terms thereof. Target immediately shall cease and cause to
\nbe terminated all existing discussions or negotiations with any parties other
\nthan Acquiror conducted heretofore with respect to any Acquisition
\nProposal–Target. Notwithstanding the foregoing, prior to the date of the
\napproval of this Agreement and the Merger by the stockholders of Target (the
\n“Target Stockholder Approval Date”), Target may furnish information concerning
\nits business, properties or assets to any corporation, partnership, person or
\nother entity or group pursuant to appropriate confidentiality agreements, and
\nmay negotiate and participate in discussions and negotiations with such entity
\nor group concerning an Acquisition Proposal–Target if:<\/p>\n
58
\n 64<\/p>\n
(i) such entity or group has on an unsolicited basis
\nsubmitted a bona fide written proposal to the Target Board of Directors relating
\nto any such transaction which the Target Board of Directors determines in good
\nfaith, represents a superior transaction to the Merger (a “Competing
\nProposal–Target”) and in the good faith judgment of the Target Board of
\nDirectors the person or entity making such Competing Proposal–Target appears to
\nhave the financial means, or the ability to obtain the necessary financing to
\nsuccessfully conclude such Competing Proposal–Target; and<\/p>\n
(ii) in the opinion of the Target Board of Directors such
\naction is required to discharge the Target Board of Directors’ fiduciary duties
\nto the Target’s stockholders under applicable law following receipt of advice
\nfrom independent legal counsel to Target.<\/p>\n
(b) Except as set forth below in this subsection (b), neither
\nthe Target Board of Directors nor any committee thereof shall: (i) fail to
\ninclude, withdraw or modify, or propose to withdraw or modify, in a manner
\nadverse to Acquiror, the approval or positive recommendation by such Board of
\nDirectors or any such committee of this Agreement or the Merger, (ii) approve or
\nrecommend or propose to approve or recommend, any Acquisition Proposal–Target,
\nor (iii) enter into any agreement with respect to any Acquisition
\nProposal–Target, provided, however, that notwithstanding the foregoing, prior
\nto the Target Stockholder Approval Date, the Target Board of Directors may fail
\nto include or may withdraw or modify, its approval or recommendation of this
\nAgreement or the Merger, or may approve or recommend any Acquisition
\nProposal–Target which satisfies the requirements of each of subsection (i) and
\nsubsection (ii) of Section 7.2(a) hereof (any such Acquisition Proposal–Target,
\na “Superior Proposal–Target”), or enter into an agreement with respect to a
\nSuperior Proposal–Target, in each case at any time after the fifth business day
\nfollowing Acquiror’s receipt of written notice from the Target advising Acquiror
\nthat the Target Board of Directors has received a Superior Proposal–Target
\nwhich it intends to accept, specifying the material terms and conditions of such
\nSuperior Proposal–Target and identifying the Person making such Superior
\nProposal–Target.<\/p>\n
7.3 NO SOLICITATION–ACQUIROR.<\/p>\n
(a) Until the earlier of the Effective Time and the date of
\ntermination of this Agreement pursuant to the provisions of Section 8.1 hereof,
\nAcquiror will not take, nor will Acquiror permit any of its directors, officers,
\nagents, employees, affiliates, attorneys, accountants, financial advisers or
\nother representatives (collectively, “Representatives”) to (directly or
\nindirectly): (i) solicit, encourage, initiate, entertain or participate in any
\nnegotiations or discussions with respect to an offer or proposal, oral, written,
\nor otherwise, formal or informal to acquire all or any substantial portion of
\nAcquiror’s business or assets, whether by purchase of assets, exclusive license,
\njoint venture formation, purchase of stock, business combination or otherwise,
\n(ii) disclose any information not customarily disclosed to any Person concerning
\nAcquiror and which Acquiror believes would be used for the purposes of
\nformulating any such offer or proposal, (iii) assist, cooperate with, facilitate
\nor encourage any Person to make any offer or proposal to acquire all or any
\nsubstantial portion of Acquiror’s business or assets (directly or indirectly),
\n(iv) agree to, enter into a contract regarding, approve, recommend or endorse
\nany transaction involving, the acquisition of all or any substantial portion of
\nAcquiror’s business or assets (an “Acquisition Proposal–Acquiror”), or (v)
\nauthorize or permit any of Acquiror’s <\/p>\n
59
\n 65<\/p>\n
Representatives to take any such action. Acquiror shall notify Target
\nas promptly as practical if any proposal or offer (formal or informal, oral,
\nwritten or otherwise), or any inquiry or contact with any Person with respect
\nthereto, regarding a Acquisition Proposal–Acquiror is made, such notice to
\ninclude the identity of the Person proposing such Acquisition Proposal–Acquiror
\nand the terms thereof, and shall keep Target apprised, on a current basis of the
\nstatus of any such Acquisition Proposal–Acquiror and of any modifications to
\nthe terms thereof. Acquiror immediately shall cease and cause to be terminated
\nall existing discussions or negotiations with any parties other than Target
\nconducted heretofore with respect to any Acquisition Proposal–Acquiror.
\nNotwithstanding the foregoing, prior to the date of the approval of this
\nAgreement and the Merger by the shareholders of Acquiror (the “Acquiror
\nStockholder Approval Date”), Acquiror may furnish information concerning its
\nbusiness, properties or assets to any corporation, partnership, person or other
\nentity or group pursuant to appropriate confidentiality agreements, and may
\nnegotiate and participate in discussions and negotiations with such entity or
\ngroup concerning an Acquisition Proposal–Acquiror if:<\/p>\n
(i) such entity or group has on an unsolicited basis
\nsubmitted a bona fide written proposal to the Acquiror Board of Directors
\nrelating to any such transaction which the Acquiror Board of Directors
\ndetermines in good faith, represents a superior transaction to the Merger (a
\n“Competing Proposal–Acquiror”) and in the good faith judgment of the Acquiror
\nBoard of Directors the person or entity making such Competing Proposal–Acquiror
\nappears to have the financial means, or the ability to obtain the necessary
\nfinancing to successfully conclude such Competing Proposal–Acquiror; and<\/p>\n
(ii) in the opinion of the Acquiror Board of Directors such
\naction is required to discharge the Acquiror Board of Directors’ fiduciary
\nduties to the Acquiror’s stockholders under applicable law following receipt of
\nadvice from independent legal counsel to Acquiror.<\/p>\n
(b) Except as set forth below in this subsection (b), neither
\nthe Acquiror Board of Directors nor any committee thereof shall: (i) fail to
\ninclude, withdraw or modify, or propose to withdraw or modify, in a manner
\nadverse to Target, the approval or positive recommendation by such Board of
\nDirectors or any such committee of this Agreement or the Merger, (ii) approve or
\nrecommend or propose to approve or recommend, any Acquisition
\nProposal–Acquiror, or (iii) enter into any agreement with respect to any
\nAcquisition Proposal–Acquiror, provided, however, that notwithstanding the
\nforegoing, prior to the Acquiror Stockholder Approval Date, the Acquiror Board
\nof Directors may fail to include or may withdraw or modify its approval or
\nrecommendation of this Agreement or the Merger, or may approve or recommend any
\nAcquisition Proposal–Acquiror which satisfies the requirements of each of
\nsubsection (i) and subsection (ii) of Section 7.3(a) hereof (any such
\nAcquisition Proposal–Acquiror, a “Superior Proposal–Acquiror”), or enter into
\nan agreement with respect to a Superior Proposal–Acquiror, in each case at any
\ntime after the fifth business day following Target’s receipt of written notice
\nfrom the Acquiror advising Target that the Acquiror Board of Directors has
\nreceived a Superior Proposal–Acquiror which it intends to accept, specifying
\nthe material terms and conditions of such Superior Proposal–Acquiror and
\nidentifying the Person making such Superior Proposal–Acquiror.<\/p>\n
60
\n 66<\/p>\n
ARTICLE 8
\n TERMINATION, AMENDMENT AND WAIVER<\/p>\n
8.1 TERMINATION. Except as provided in this Section 8.1, this
\nAgreement may be terminated and the Merger abandoned at any time prior to the
\nEffective Time:<\/p>\n
(a) by mutual written consent of Target and Acquiror;<\/p>\n
(b) by Acquiror or Target if:<\/p>\n
(i) there shall be any statute, rule, regulation or order
\nenacted, promulgated or issued or deemed applicable to the Merger by any
\nGovernmental or Regulatory Authority that would make consummation of the Merger
\nillegal or there shall be a final nonappealable order of a federal or state
\ncourt in effect preventing consummation of the Merger;<\/p>\n
(ii) if the Merger is not approved and adopted by the
\naffirmative vote of the stockholders of Target as required by the DGCL, the
\nCalifornia Code (if applicable), and Target’s Certificate of Incorporation and
\nBylaws;<\/p>\n
(iii) if the holders of 5% or more of the outstanding shares
\nof Acquiror Capital Stock shall have voted against the Merger and filed demands
\nfor payment pursuant to the exercise of dissenters’ rights under the California
\nCode with respect to 5% or more of the outstanding shares of Acquiror Capital
\nStock by virtue of the Merger;<\/p>\n
(iv) if the holders of 5% or more of the outstanding shares
\nof Target Capital Stock have not voted in favor of the Merger and filed demands
\nfor payment pursuant to the exercise of dissenters’ rights under the California
\nCode with respect to 5% or more of the outstanding shares of Target Capital
\nStock by virtue of the Merger;<\/p>\n
(v) the Merger, the issuance of Acquiror Common Stock in the
\nMerger, any increase in Acquiror’s authorized capital stock necessary to enable
\nAcquiror to consummate, carry out and perform the Merger as contemplated by this
\nAgreement or any other matter necessary to enable Acquiror to consummate, carry
\nout and perform the Merger as contemplated by this Agreement, is not approved
\nand adopted by the stockholders of Acquiror in accordance with the rules of the
\nNasdaq National Market, the DGCL and, if applicable, the California Code; or<\/p>\n
(vi) the Effective Time has not occurred before 5 p.m.
\n(Pacific Time) on June 30, 2000, provided, however, that the right to terminate
\nthis Agreement under this Section 8.1(b)(iii) shall not be available to any
\nparty whose willful failure to fulfill any obligation hereunder has been the
\ncause of, or resulted in, the failure of the Effective Time to occur on or
\nbefore such date.<\/p>\n
(c) by Target if:<\/p>\n
(i) Target enters into a definitive agreement, as permitted
\nby Section 7.2 with respect to a Superior Proposal–Target, provided, however,
\nthat Target has complied with all provisions thereof, including the notice
\nprovisions therein, and that Target<\/p>\n
61
\n 67<\/p>\n
makes the payment to Acquiror in the amount required by, and within the time as
\nrequired by, Section 8.2(b); or<\/p>\n
(ii) prior to the Effective Time, Acquiror’s Board of
\nDirectors shall have (A) failed to timely provide, or withdrawn, modified or
\nchanged in a manner adverse to Target, its approval or recommendation of this
\nAgreement or the Merger, (B) recommended a Superior Proposal–Acquiror, (C)
\nfailed to notice, call and hold the Acquiror Stockholder Meeting within 45 days
\nafter the SEC has declared the S-4 Registration Statement effective, (D)
\nexecuted a letter of intent, an agreement in principle or definitive agreement
\nrelating to a Superior Proposal–Acquiror or similar business combination with a
\nperson or entity other than Target, or (E) exercised its rights pursuant to
\nSection 7.3 with respect to a Superior Proposal–Acquiror, and, directly or
\nthrough its representatives, continued discussions with any third party
\nconcerning an Superior Proposal–Acquiror for more than ten business days after
\nthe date of receipt of such Superior Proposal–Acquiror.<\/p>\n
(d) by Acquiror if:<\/p>\n
(i) Acquiror enters into a definitive agreement, as
\npermitted by Section 7.3 with respect to a Superior Proposal–Acquiror that
\nprohibits the consummation of, or requires material changes to, the Merger or
\nany other business combination of Acquiror and Target, provided, however, that
\nAcquiror has complied with all provisions thereof, including the notice
\nprovisions therein, and that Acquiror makes simultaneous payment to Target as
\nrequired by Section 8.2(c); or<\/p>\n
(ii) prior to the Effective Time, Target Board of Directors
\nshall have (A) failed to timely provide, or withdrawn, modified or changed in a
\nmanner adverse to Acquiror, its approval or recommendation of this Agreement or
\nthe Merger, (B) recommended a Superior Proposal–Target, (C) executed a letter
\nof intent, an agreement in principle or definitive agreement relating to a
\nSuperior Proposal–Target or similar business combination with a person or
\nentity other than Acqurior, or (D) exercised its rights pursuant to Section 7.2
\nwith respect to a Superior Proposal–Target, and, directly or through its
\nrepresentatives, continued discussions with any third party concerning an
\nSuperior Proposal–Target for more than ten business days after the date of
\nreceipt of such Superior Proposal–Target.<\/p>\n
8.2 TERMINATION FEE.<\/p>\n
(a) In the event that this Agreement shall have been terminated
\npursuant to Section 8.1(b)(iii) or Section 8.1(b)(v), then Acquiror shall
\npromptly, but in no event later than two (2) days after the date of the Acquiror
\nStockholder Meeting, (i) pay Target $25,000,000, plus the amount of interest
\nthat would have accrued from the date of this Agreement until payment of such
\nfee at the Prime Rate as reported in the Wall Street Journal in effect on the
\ndate hereof (such payment shall be made by check, wire transfer and\/or
\nforgiveness of debt, at Acquiror’s option) and (ii) Acquiror will give Target a
\npromissory note (the “Second Note”) for an additional $25,000,000,due on the
\ndate that is the earlier to occur of (A) six (6) months after the date of the
\nAcquiror Stockholder Meeting or (B) the closing of an offering of Acquiror
\nsecurities registered under the Securities Act provided, however, that in the
\nevent<\/p>\n
62
\n 68<\/p>\n
Acquiror does not close an offering of its securities registered under the
\nSecurities Act within six (6) months after the date of the Acquiror Stockholder
\nMeeting, the Second Note shall be due and payable, at Acquiror’s option, in cash
\nor Acquiror’s Common Stock, valued at the average closing price of Acquiror’s
\nCommon Stock for the ten (10) trading days prior to the due date of the Second
\nNote.<\/p>\n
(b) In the event that this Agreement shall have been terminated
\nby Target pursuant to Section 8.1(c)(i) or by Acquiror pursuant to Section
\n8.1(d)(ii), then Target shall promptly, but in no event later than two (2) days
\nafter the date of such termination, pay Acquiror a termination fee of
\n$135,000,000.<\/p>\n
(c) In the event that this Agreement shall have been terminated
\nby Acquiror pursuant to Section 8.1(d)(i) or by Target pursuant to Section
\n8.1(c)(ii), then Acquiror shall promptly, but in no event later than two (2)
\ndays after the date of such termination, pay Target a termination fee of
\n$135,000,000.<\/p>\n
8.3 EFFECT OF TERMINATION. In the event of a valid termination of
\nthis Agreement as provided in Section 8.1, this Agreement shall forthwith become
\nvoid and there shall be no liability or obligation on the part of Acquiror or
\nTarget, or their respective officers, directors or stockholders or Affiliates or
\nAssociates; provided, however, that each party shall remain liable for any
\nbreaches of this Agreement prior to its termination; and provided further that,
\nthe provisions of Section 8.2 of this Agreement shall remain in full force and
\neffect and survive any termination of this Agreement.<\/p>\n
8.4 AMENDMENT. Except as is otherwise required by applicable law,
\nthis Agreement may be amended by the parties hereto at any time by execution of
\nan instrument in writing signed on behalf of each of the parties hereto.<\/p>\n
8.5 EXTENSION; WAIVER. At any time prior to the Effective Time,
\nAcquiror and Target may, to the extent legally allowed, (i) extend the time for
\nthe performance of any of the obligations of the other party hereto, (ii) waive
\nany inaccuracies in the representations and warranties made to such party
\ncontained herein or in any document delivered pursuant hereto, and (iii) waive
\ncompliance with any of the agreements, covenants or conditions for the benefit
\nof such party contained herein. Any agreement on the part of a party hereto to
\nany such extension or waiver shall be valid only if set forth in an instrument
\nin writing signed on behalf of such party.<\/p>\n
ARTICLE 9
\n MISCELLANEOUS PROVISIONS<\/p>\n
9.1 NOTICES. All notices, requests and other communications
\nhereunder must be in writing and will be deemed to have been duly given only if
\ndelivered personally against written receipt or by facsimile transmission
\nagainst facsimile confirmation or mailed by prepaid first class certified mail,
\nreturn receipt requested, or mailed by overnight courier prepaid, to the parties
\nat the following addresses or facsimile numbers:<\/p>\n
63
\n 69<\/p>\n
If to Acquiror to:<\/p>\n
Redback Networks Inc.
\n 1310 Moffett Park Drive
\n Sunnyvale, CA 94089
\n (408) 548-0900 Phone
\n (408) 543-2196
\n Attention: Craig Gentner<\/p>\n
with a copy to:<\/p>\n
Gunderson Dettmer Stough Villeneuve
\n Franklin & Hachigian, LLP
\n 155 Constitution Drive
\n Menlo Park, California 94025
\n (650) 321-2400 Phone
\n (650) 321-2800 Facsimile
\n Attention: Renee Lanam<\/p>\n
If to Target to:<\/p>\n
Siara Systems, Inc.
\n 300 Ferguson Drive
\n Mountain View, CA 94043
\n Attn: CEO
\n Phone: (650) 237-2165
\n Fax: (650) 390-8645<\/p>\n
with a copy to:<\/p>\n
Fenwick & West, LLP
\n Two Palo Alto Square
\n Palo Alto, CA 94306
\n (650) 494-0600 Phone
\n (650) 494-1417 Facsimile
\n Attention: Barry J. Kramer, Esq.<\/p>\n
All such notices, requests and other communications will (i) if delivered
\npersonally to the address as provided in this Section 9.1, be deemed given upon
\ndelivery, (ii) if delivered by facsimile transmission to the facsimile number as
\nprovided for in this Section 9.1, be deemed given upon facsimile confirmation,
\n(iii) if delivered by mail in the manner described above to the address as
\nprovided for in this Section 9.1, be deemed given on the earlier of the third
\nBusiness Day following mailing or upon receipt and (iv) if delivered by
\novernight courier to the address as provided in this Section 9.1, be deemed
\ngiven on the earlier of the first Business Day following the date sent by such
\novernight courier or upon receipt (in each case regardless of whether such
\nnotice, request or other communication is received by any other Person to whom a
\ncopy of such notice is to be delivered pursuant to this Section 9.1). Any party
\nfrom time to time may change <\/p>\n
64
\n 70<\/p>\n
its address, facsimile number or other information for the purpose of notices to
\nthat party by giving notice specifying such change to the other party hereto.<\/p>\n
9.2 ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules
\nhereto, including the Target Disclosure Schedule and the Acquiror Disclosure
\nSchedule, and all agreements required to be executed and delivered pursuant
\nhereto, constitute the entire agreement and understanding among the parties with
\nrespect to the subject matter hereof and supersede all prior agreements and
\nunderstandings, both written and oral, among the parties with respect to the
\nsubject matter hereof, except for the Confidentiality Agreement, which shall
\ncontinue in full force and effect and shall survive any termination of this
\nAgreement or the Closing in accordance with its terms.<\/p>\n
9.3 FURTHER ASSURANCES; POST-CLOSING COOPERATION. At any time or
\nfrom time to time after the Closing, the parties shall execute and deliver to
\nthe other party such other documents and instruments, provide such materials and
\ninformation and take such other actions as the other party may reasonably
\nrequest to consummate the transactions contemplated by this Agreement and
\notherwise to cause the other party to fulfill its obligations under this
\nAgreement and the transactions contemplated hereby. Each party agrees to use
\ndiligent efforts to cause the conditions to its obligations to consummate the
\nMerger to be satisfied.<\/p>\n
9.4 WAIVER. Any term or condition of this Agreement may be waived at
\nany time by the party that is entitled to the benefit thereof, but no such
\nwaiver shall be effective unless set forth in a written instrument duly executed
\nby or on behalf of the party waiving such term or condition. No waiver by any
\nparty of any term or condition of this Agreement, in any one or more instances,
\nshall be deemed to be or construed as a waiver of the same or any other term or
\ncondition of this Agreement on any future occasion. All remedies, either under
\nthis Agreement or by Law or otherwise afforded, will be cumulative and not
\nalternative.<\/p>\n
9.5 THIRD PARTY BENEFICIARIES. The terms and provisions of this
\nAgreement are intended solely for the benefit of each party hereto and their
\nrespective successors or permitted assigns, and it is not the intention of the
\nparties to confer third-party beneficiary rights, and this Agreement does not
\nconfer any such rights, upon any other Person.<\/p>\n
9.6 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any
\nright, interest or obligation hereunder may be assigned (by operation of law or
\notherwise) by any party without the prior written consent of the other party and
\nany attempt to do so will be void. Subject to the preceding sentence, this
\nAgreement is binding upon, inures to the benefit of and is enforceable by the
\nparties hereto and their respective successors and assigns.<\/p>\n
9.7 HEADINGS. The headings and table of contents used in this
\nAgreement have been inserted for convenience of reference only and do not define
\nor limit the provisions hereof.<\/p>\n
9.8 INVALID PROVISIONS. If any provision of this Agreement is held
\nto be illegal, invalid or unenforceable under any present or future Law, and if
\nthe rights or obligations of any party hereto under this Agreement will not be
\nmaterially and adversely affected thereby, (a) such provision will be fully
\nseverable, (b) this Agreement will be construed and enforced as if <\/p>\n
65
\n 71<\/p>\n
such illegal, invalid or unenforceable provision had never comprised a part
\nhereof, (c) the remaining provisions of this Agreement will remain in full force
\nand effect and will not be affected by the illegal, invalid or unenforceable
\nprovision or by its severance herefrom and (d) in lieu of such illegal, invalid
\nor unenforceable provision, there will be added automatically as a part of this
\nAgreement a legal, valid and enforceable provision as similar in terms to such
\nillegal, invalid or unenforceable provision as may be possible.<\/p>\n
9.9 GOVERNING LAW. This Agreement shall be governed by and construed
\nin accordance with the domestic laws of the State of California and the DGCL,
\nwithout giving effect to any choice of law or conflict of law provision or rule
\nthat would cause the application of the laws of any other jurisdiction.<\/p>\n
9.10 CONSTRUCTION. Ambiguities in this Agreement, if any, shall not
\nbe construed strictly or in favor of or against any party hereto but rather
\nshall be given a fair and reasonable construction.<\/p>\n
9.11 COUNTERPARTS. This Agreement may be executed in any number of
\ncounterparts, each of which will be deemed an original, but all of which
\ntogether will constitute one and the same instrument.<\/p>\n
9.12 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
\ndamage would occur in the event that any of the provisions of this Agreement
\nwere not performed in accordance with their specific terms or were otherwise
\nbreached. Except where this Agreement specifically provides for arbitration, it
\nis agreed that the parties shall be entitled to an injunction or injunctions to
\nprevent breaches of this Agreement and to enforce specifically the terms and
\nprovisions hereof in any court of the United States or any state having
\njurisdiction, this being in addition to any other remedy to which they are
\nentitled at law or in equity.<\/p>\n
ARTICLE 10
\n DEFINITIONS<\/p>\n
10.1 DEFINITIONS.<\/p>\n
(a) As used in this Agreement, the following defined terms shall
\nhave the meanings indicated below:<\/p>\n
“Acquiror” has the meaning ascribed to it in the forepart of this
\nAgreement.<\/p>\n
“Acquiror Common Stock” has the meaning ascribed to it in Recital C.<\/p>\n
“Acquiror Financial Statements” has the meaning ascribed to it in
\nSection 3.3.<\/p>\n
“Acquiror Support Agreement” has the meaning ascribed to it in
\nRecital D.<\/p>\n
“Acquisition Proposal — Acquiror” has the meaning ascribed to it in
\nSection 7.3(a).<\/p>\n
“Acquisition Proposal — Target” has the meaning ascribed to it in
\nSection 7.2(a).<\/p>\n
66
\n 72<\/p>\n
“Actions or Proceedings” means any action, suit, complaint,
\npetition, investigation, proceeding, arbitration, litigation or Governmental or
\nRegulatory Authority investigation, audit or other proceeding, whether civil or
\ncriminal, in law or in equity, or before any arbitrator or Governmental
\nRegulatory Authority.<\/p>\n
“Affiliate” means, as applied to any Person, (a) any other Person
\ndirectly or indirectly controlling, controlled by or under common control with,
\nthat Person, or (b) any other Person that owns or controls (i) twenty percent
\n(20%) or more of any class of voting equity securities of that Person or any of
\nits Affiliates or (ii) twenty percent (20%) or more of any class of voting
\nequity securities (including any equity securities issuable upon the exercise of
\nany option or convertible security) of that Person or any of its Affiliates. For
\nthe purposes of this definition, “control” (including with correlative meanings,
\nthe terms “controlling”, “controlled by”, and “under common control with”) as
\napplied to any Person, means the possession, directly or indirectly, of the
\npower to direct or cause the direction of the management and policies of that
\nPerson, whether through ownership of voting securities or by contract or
\notherwise.<\/p>\n
“Agreement” means this Merger Agreement and Plan of Reorganization,
\nincluding (unless the context otherwise requires) the Exhibits and Schedules
\nhereto and the certificates and instruments delivered in connection herewith, or
\nincorporated by reference, as the same may be amended or supplemented from time
\nto time in accordance with the terms hereof.<\/p>\n
“Ancillary Agreements” has the meaning ascribed to it in Section
\n2.2.<\/p>\n
“Approval” means any approval, authorization, consent, permit,
\nqualification or registration, or any waiver of any of the foregoing, required
\nto be obtained from or made with, or any notice, statement or other
\ncommunication required to be filed with or delivered to, any Governmental or
\nRegulatory Authority or any other Person.<\/p>\n
“Assets and Properties” of any Person means all assets and
\nproperties of every kind, nature, character and description (whether real,
\npersonal or mixed, whether tangible or intangible, whether absolute, accrued,
\ncontingent, fixed or otherwise and wherever situated), including the goodwill
\nrelated thereto, operated, owned, licensed or leased by such Person, including
\ncash, cash equivalents, Investment Assets, accounts and notes receivable,
\nchattel paper, documents, instruments, general intangibles, real estate,
\nequipment, inventory, goods and Intellectual Property.<\/p>\n
“Associate” means, with respect to any Person, any corporation or
\nother business organization of which such Person is an officer or partner or is
\nthe beneficial owner, directly or indirectly, of twenty percent (20%) or more of
\nany class of voting equity securities, any trust or estate in which such Person
\nhas a substantial beneficial interest or as to which such Person serves as a
\ntrustee or in a similar capacity and any relative or spouse of such Person, or
\nany relative of such spouse, who has the same home as such Person.<\/p>\n
“Books and Records” means all files, documents, instruments, papers,
\nbooks and records relating to the Business or Condition of such party, including
\nfinancial statements, internal reports, Tax Returns and related work papers and
\nletters from accountants, budgets, <\/p>\n
67
\n 73<\/p>\n
pricing guidelines, ledgers, journals, deeds, title policies, minute books,
\nstock certificates and books, stock transfer ledgers, Contracts, Licenses,
\ncustomer lists, computer files and programs (including data processing files and
\nrecords), retrieval programs, operating data and plans and environmental studies
\nand plans.<\/p>\n
“Business Day” means a day other than Saturday, Sunday or any day on
\nwhich banks located in the State of California are authorized or obligated to
\nclose.<\/p>\n
“Business or Condition” means, with respect to Acquiror, the
\nbusiness, condition (financial or otherwise), results of operations or Assets
\nand Properties of Acquiror and each of its Subsidiaries, taking Acquiror
\ntogether with such Subsidiaries as a whole, and, with respect to Target, the
\nbusiness, condition, results of operations or Assets and Properties of Target
\nand Target Subsidiary, taking Target together with Target Subsidiary as a whole.<\/p>\n
“California Code” means the California Corporations Code and all
\namendments and additions thereto.<\/p>\n
“Certificates” has the meaning ascribed to it in Section 1.8(b).<\/p>\n
“Closing” means the closing of the transactions contemplated by
\nSection 1.2.<\/p>\n
“Closing Date” has the meaning ascribed to it in Section 1.2.<\/p>\n
“Closing Price” has the meaning ascribed to it in Section 1.6(f).<\/p>\n
“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of
\n1986, as amended.<\/p>\n
“Consideration” means 31,341,986 shares of Acquiror Common Stock.<\/p>\n
“Contract” means any material contract, including:<\/p>\n
(a) any distributor, sales, advertising, agency or manufacturer’s
\nrepresentative contract;<\/p>\n
(b) any continuing contract for the purchase of materials, supplies,
\nequipment or services involving in the case of any such contact more than two
\nhundred thousand dollars ($200,000) over the life of the contract;<\/p>\n
(c) any trust indenture, mortgage, promissory note, loan agreement
\nor other contract for the borrowing of money, any currency exchange, commodities
\nor other hedging arrangement or any leasing transaction of the type required to
\nbe capitalized in accordance with generally accepted accounting principles;<\/p>\n
(d) any contract for unexpended capital expenditures in excess of
\ntwo hundred thousand dollars ($200,000) in the aggregate;<\/p>\n
68
\n 74<\/p>\n
(e) any contract limiting the freedom of such party to engage in any
\nline of business or to compete with any other Person as that term is defined in
\nthe Exchange Act, as defined herein, or any confidentiality, secrecy or
\nnon-disclosure contract;<\/p>\n
(f) any contract pursuant to which such party is a lessor of any
\nmachinery, equipment, motor vehicles, office furniture, fixtures or other
\npersonal property;<\/p>\n
(g) any contract with any person with whom such party does not deal
\nat arm’s length; or<\/p>\n
(h) any agreement of guarantee, support, indemnification, assumption
\nor endorsement of, or any similar commitment with respect to, the obligations,
\nliabilities (whether accrued, absolute, contingent or otherwise) or indebtedness
\nof any other Person.<\/p>\n
“DGCL” means the General Corporation Law of the State of Delaware.<\/p>\n
“Delaware Certificate of Merger” has the meaning set forth in
\nSection 1.2.<\/p>\n
“Depositary Agent” has the meaning ascribed to it in Section 1.8(b).<\/p>\n
“Dissenting Shares” has the meaning ascribed to it in Section
\n1.7(a).<\/p>\n
“Effective Time” has the meaning ascribed to it in Section 1.2.<\/p>\n
“Environment” means air, surface water, ground water, or land,
\nincluding land surface or subsurface, and any receptors such as persons,
\nwildlife, fish, biota or other natural resources.<\/p>\n
“Environmental Clean-up Site” means any location which is listed or
\nproposed for listing on the National Priorities List, the Comprehensive
\nEnvironmental Response, Compensation and Liability Information System, or on any
\nsimilar state list of sites relating to investigation or cleanup, or which is
\nthe subject of any pending or threatened action, suit, proceeding, or
\ninvestigation related to or arising from any location at which there has been a
\nRelease or threatened or suspected Release of a Hazardous Material.<\/p>\n
“Environmental Law” means any federal, state, local or foreign
\nenvironmental, health and safety or other Law relating to of Hazardous
\nMaterials, including the Comprehensive, Environmental Response Compensation and
\nLiability Act, the Clean Air Act, the Federal Water Pollution Control Act, the
\nSolid Waste Disposal Act, the Federal Insecticide, Fungicide and Rodenticide
\nAct, and the California Safe Drinking Water and Toxic Enforcement Act.<\/p>\n
“Environmental Permit” means any permit, license, approval, consent
\nor authorization required under or in connection with any Environmental Law and
\nincludes without limitation any and all orders, consent orders or binding
\nagreements issued or entered into by a Governmental or Regulatory Authority.<\/p>\n
“Equity Equivalents” means securities (including Options to purchase
\nany shares of Target Capital Stock) which, by their terms, are or may be
\nexercisable, convertible or <\/p>\n
69
\n 75<\/p>\n
exchangeable for or into common stock, preferred stock or other equity
\nsecurities of Target at the election of the holder thereof.<\/p>\n
“ERISA” means the Employee Retirement Income Security Act of 1974,
\nas amended, and the rules and regulations promulgated thereunder.<\/p>\n
“ERISA Affiliate” means each person (as defined in section 3(9) of
\nERISA) that, together with Target, would be treated as a single employer under
\nsection 4001(b) of ERISA or that would be deemed to be a member of the same
\n“controlled group” within the meaning of section 414(b) or (c) of the Internal
\nRevenue Code.<\/p>\n
“Escrow Amount” means 5% of Consideration paid to Target
\nStockholders.<\/p>\n
“Escrow Fund” has the meaning ascribed to it in Section 6.2(a).<\/p>\n
“Escrow Period” has the meaning ascribed to it in Section 6.2(c).<\/p>\n
“Exchange Act” means the Securities Exchange Act of 1934, as
\namended, and the rules and regulations of the SEC thereunder.<\/p>\n
“Exchange Agent” means U.S. Stock Transfer Corporation.<\/p>\n
“Exchange Ratio” has the meaning ascribed to it in Section 1.6(e).<\/p>\n
“Expiration Date” shall mean the date 180 days after the Effective
\nTime.<\/p>\n
“Financial Statement Date” means September 30, 1999.<\/p>\n
“GAAP” means generally accepted accounting principles in the United
\nStates, as in effect from time to time.<\/p>\n
“Good Faith Consultation” with a Person’s independent accountants,
\nas used in Sections 2.23 and 3.22 of this Agreement, means consultation with
\nsuch accountants following disclosure in good faith to such accountants of all
\nfacts requested by such accountants or which the specified Person otherwise had
\nreason to believe would be relevant to such accountants’ assessment.<\/p>\n
“Governmental or Regulatory Authority” means any court, tribunal,
\narbitrator, authority, agency, bureau, board, commission, department, official
\nor other instrumentality of the United States, any foreign country or any
\ndomestic or foreign state, county, city or other political subdivision, and
\nshall include any stock exchange, quotation service and the National Association
\nof Securities Dealers.<\/p>\n
“Hazardous Material” means (a) any chemical, material, substance or
\nwaste including, containing or constituting petroleum or petroleum products,
\nsolvents (including chlorinated solvents), nuclear or radioactive materials,
\nasbestos in any form that is or could become friable, radon, lead-based paint,
\nurea formaldehyde foam insulation or polychlorinated biphenyls, (b) any
\nchemicals, materials, substances or wastes which are now defined as or <\/p>\n
70
\n 76<\/p>\n
included in the definition of “hazardous substances,” “hazardous wastes,”
\n“hazardous materials,” “extremely hazardous wastes,” “restricted hazardous
\nwastes,” “toxic substances,” “toxic pollutants” or words of similar import under
\nany Environmental Law; or (c) any other chemical, material, substance or waste
\nwhich is regulated by any Governmental or Regulatory Authority or which could
\nconstitute a nuisance.<\/p>\n
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of
\n1976, as amended, and the regulations promulgated thereunder.<\/p>\n
“Indebtedness” of any Person means all obligations of such Person
\n(a) for borrowed money, (b) evidenced by notes, bonds, debentures or similar
\ninstruments, (c) for the deferred purchase price of goods or services (other
\nthan trade payables or accruals incurred in the ordinary course of business),
\n(d) under capital leases and (e) in the nature of guarantees of the obligations
\ndescribed in clauses (a) through (d) above of any other Person.<\/p>\n
“Intellectual Property” means all trademarks and trademark rights,
\ntrade names and trade name rights, service marks and service mark rights,
\nservice names and service name rights, patents and patent rights, utility models
\nand utility model rights, copyrights, moral rights, mask work rights, brand
\nnames, trade dress, product designs, product packaging, business and product
\nnames, logos, slogans, rights of publicity, trade secrets, inventions (whether
\npatentable or not), invention disclosures, improvements, processes, formulae,
\nindustrial models, processes, designs, specifications, technology,
\nmethodologies, computer software (including all source code and object code),
\nfirmware, development tools, flow charts, annotations, all Web addresses, sites
\nand domain names, all data bases and data collections and all rights therein,
\nany other confidential and proprietary right or information, whether or not
\nsubject to statutory registration, and all related technical information,
\nmanufacturing, engineering and technical drawings, know-how and all pending
\napplications for and registrations of patents, utility models, trademarks,
\nservice marks and copyrights, and the right to sue for past infringement, if
\nany, in connection with any of the foregoing, and all documents, disks, records,
\nfiles and other media on which any of the foregoing is stored.<\/p>\n
“Internal Revenue Code” means the Internal Revenue Code of 1986, as
\namended, and the rules and regulations promulgated thereunder.<\/p>\n
“Investment Assets” means all debentures, notes and other evidences
\nof Indebtedness, stocks, securities (including rights to purchase and securities
\nconvertible into or exchangeable for other securities), interests in joint
\nventures and general and limited partnerships, mortgage loans and other
\ninvestment or portfolio assets owned of record or beneficially by Target or
\nTarget Subsidiary.<\/p>\n
“IRS” means the United States Internal Revenue Service or any
\nsuccessor entity.<\/p>\n
“Law” or “Laws” means any law, statute, order, decree, consent
\ndecree, judgment, rule, regulation, ordinance or other pronouncement having the
\neffect of law whether in the United States, any foreign country, or any domestic
\nor foreign state, county, city or other political subdivision or of any
\nGovernmental or Regulatory Authority.<\/p>\n
71
\n 77<\/p>\n
“Liabilities” means all Indebtedness, obligations and other
\nliabilities of a Person, whether absolute, accrued, contingent (or based upon
\nany contingency), known or unknown, fixed or otherwise, or whether due or to
\nbecome due.<\/p>\n
“License” means any Contract that grants a Person the right to use
\nor otherwise enjoy the benefits of any Intellectual Property (including any
\ncovenants not to sue with respect to any Intellectual Property).<\/p>\n
“Liens” means any mortgage, pledge, assessment, security interest,
\nlease, lien, easement, license, covenant, condition, restriction, adverse claim,
\nlevy, charge, option, equity, adverse claim or restriction or other encumbrance
\nof any kind, or any conditional sale Contract, title retention Contract or other
\nContract to give any of the foregoing, except for any restrictions on transfer
\ngenerally arising under any applicable federal or state securities law.<\/p>\n
“Loss(es)” means any and all damages, payments, fines, fees, Taxes,
\npenalties, deficiencies, losses (including lost profits or diminution in value),
\nliabilities, expenses, reasonable expenses of investigation, court costs,
\nreasonable fees and expenses of attorneys, accountants and other experts or
\nother expenses of litigation or other proceedings or of any claim, default or
\nassessment (such fees and expenses to include all fees and expenses, including,
\nbut not limited to, fees and expenses of attorneys), incurred in connection with
\nany breach, violation, default or inaccuracy of Target’s representations and
\nwarranties contained in this Agreement.<\/p>\n
“Material Adverse Effect” when used with reference to any entity or
\ngroup of related entities, means any event, change or effect that is (or will
\nwith the passage of time be) materially adverse to the condition (financial or
\notherwise), properties, assets, liabilities, business, operations or results of
\noperations of such entity and its subsidiaries, taken as a whole.<\/p>\n
“Merger” has the meaning ascribed to it in the recitals to this
\nAgreement.<\/p>\n
“NASD” means the National Association of Securities Dealers, Inc.<\/p>\n
“NNM” means the distinct tier of The Nasdaq Stock Market referred to
\nas the Nasdaq National Market.<\/p>\n
“Non-Competition Agreement” has the meaning ascribed to it in
\nSection 6.3(f).<\/p>\n
“Option” with respect to any Person means any security, right,
\nsubscription, warrant, option, “phantom” stock right or other Contract that
\ngives the right to (i) purchase or otherwise receive or be issued any shares of
\ncapital stock or other equity interests of such Person or any security of any
\nkind convertible into or exchangeable or exercisable for any shares of capital
\nstock or other equity interests of such Person or (ii) receive any benefits or
\nrights similar to any rights enjoyed by or accruing to the holder of shares of
\ncapital stock or other equity interests of such Person, including any rights to
\nparticipate in the equity, income or election of directors or officers of such
\nPerson.<\/p>\n
“Order” means any writ, judgment, decree, injunction or similar
\norder of any Governmental or Regulatory Authority (in each such case whether
\npreliminary or final).<\/p>\n
72
\n 78<\/p>\n
“PBGC” means the Pension Benefit Guaranty Corporation established
\nunder ERISA.<\/p>\n
“Permit” means any license, permit, franchise or authorization.<\/p>\n
“Person” means any natural person, corporation, general partnership,
\nlimited partnership, limited liability Target or partnership, proprietorship,
\nother business organization, trust, union, association or Governmental or
\nRegulatory Authority.<\/p>\n
“Proxy Statement” has the meaning ascribed to it in Section 2.26<\/p>\n
“PTO” means the United States Patent and Trademark Office.<\/p>\n
“Registered Intellectual Property” shall mean all United States,
\ninternational and foreign: (i) patents, patent applications (including
\nprovisional applications); (ii) registered trademarks and servicemarks,
\napplications to register trademarks and servicemarks, intent-to-use
\napplications, other registrations or applications to trademarks or servicemarks,
\nor trademarks or servicemarks in which common law rights are owned or otherwise
\ncontrolled; (iii) registered copyrights and applications for copyright
\nregistration; (iv) any mask work registrations and applications to register mask
\nworks; and (v) any other Intellectual Property that is the subject of an
\napplication, certificate, filing, registration or other document issued by,
\nfiled with, or recorded by, any state, government or other public legal
\nauthority.<\/p>\n
“S-4 Registration Statement” has the meaning ascribed to it in
\nSection 2.26.<\/p>\n
“Release” means any spilling, leaking, pumping, pouring, emitting,
\nemptying, discharging, injecting, escaping, leaching, dumping or disposing of a
\nHazardous Material into the Environment.<\/p>\n
“Representatives” has the meaning ascribed to it in Section 7.2.<\/p>\n
“Restricted Stock Purchase Agreement” means a Restricted Stock
\nPurchase Agreement in one of the forms attached to Target Stock Plan pursuant to
\nwhich Target has sold Target Restricted Stock or as may otherwise been entered
\ninto by Target prior to the date of this Agreement.<\/p>\n
“SEC” means the Securities and Exchange Commission or any successor
\nentity.<\/p>\n
“SEC Documents” means, with respect to any Person, each report,
\nschedule, form, statement or other document filed with the SEC by such Person
\npursuant to Section 13(a) and 15(d) of the Exchange Act and all final and
\neffective registration statements and prospectuses filed by such Person with the
\nSEC pursuant to the Securities Act.<\/p>\n
“Section 2.3 Loss(es)” means Losses arising or resulting directly
\nfrom any breach, violation, default or inaccuracy of Target’s representations
\nand warranties set forth in Section 2.3 of this Agreement (as qualified by the
\nTarget Disclosure Schedule, as such may be updated at the Closing Date and prior
\nto the Effective Time, as provided in Article 5).<\/p>\n
73
\n 79<\/p>\n
“Securities Act” means the Securities Act of 1933, as amended, and
\nthe rules and regulations promulgated thereunder.<\/p>\n
“Site” means any of the real properties currently or previously
\nowned, leased, occupied, used or operated by Target or Target Subsidiary, any
\npredecessors of Target or Target Subsidiary, or any entities previously owned by
\nTarget or Target Subsidiary, including all soil, subsoil, surface waters and
\ngroundwater.<\/p>\n
“Stockholder Agent” has the meaning ascribed to it in Section
\n6.2(h)(i).<\/p>\n
“Subsidiary” means, in addition to Target Subsidiary, any Person in
\nwhich Target or Acquiror, as the context requires, directly or indirectly
\nthrough Subsidiaries or otherwise, beneficially owns at least 50% of either the
\nequity interest in, or the voting control of, such Person, whether or not
\nexisting on the date hereof.<\/p>\n
“Surviving Corporation” has the meaning ascribed to it in Section
\n1.1.<\/p>\n
“Target” has the meaning ascribed to it in the forepart of this
\nAgreement.<\/p>\n
“Target Capital Stock” means Target Common Stock and Target
\nPreferred Stock.<\/p>\n
“Target Common Stock” has the meaning ascribed to it in Section 2.3.<\/p>\n
“Target Equity Securities” means Target Options and Target Warrants,
\ncollectively.<\/p>\n
“Target Financials” means the audited consolidated balance sheets of
\nTarget as of September 30, 1999 and the related audited consolidated statements
\nof operations, stockholders’ equity and cash flows for the fiscal year then
\nended, including the notes thereto.<\/p>\n
“Target 401(k) Plan” means Target’s 401(k) Plan.<\/p>\n
“Target Intellectual Property” shall mean the Intellectual Property
\nthat is (i) owned by; (ii) licensed to; or (iii) was developed or created by or
\nfor Target or Target Subsidiary, and is used in or necessary for the conduct of
\nthe present or anticipated business of Target or Target Subsidiary, taken as a
\nwhole.<\/p>\n
“Target Option” means any Option to purchase Target Capital Stock,
\nwhether or not granted pursuant to Target Stock Plan, that is granted to an
\nemployee, consultant or other individual service provider of Target or Target
\nSubsidiary.<\/p>\n
“Target Preferred Stock” has the meaning ascribed to it in Section
\n2.3.<\/p>\n
“Target Registered Intellectual Property” means all Registered
\nIntellectual Property owned by, or filed in the name of, Target or Target
\nSubsidiary.<\/p>\n
“Target Restricted Stock” means shares of Target Capital Stock which
\nare subject to a repurchase option by Target.<\/p>\n
74
\n 80<\/p>\n
“Target Stockholder Meeting” has the meaning ascribed to it in
\nSection 2.26.<\/p>\n
“Target Stock Plan” has the meaning ascribed to it in Section
\n1.6(c)(i).<\/p>\n
“Target Warrant” means each Target warrant to purchase Target
\nCapital Stock (if any) listed or required to be listed in Section 2.3 of the
\nTarget Disclosure Schedule.<\/p>\n
“Target Subsidiary” has the meaning ascribed to it in Section 2.4.<\/p>\n
“Tax” or “Taxes” means Income Taxes and\/or Other Taxes, as the
\ncontext requires.<\/p>\n
“Tax Authority” has the meaning ascribed to it in Section 2.10(c).<\/p>\n
“Tax Returns” means any return, report, information return,
\nschedule, certificate, statement or other document (including any related or
\nsupporting information) filed or required to be filed with, or, where none is
\nrequired to be filed with a Taxing Authority, the statement or other document
\nissued by, a Taxing Authority in connection with any Tax.<\/p>\n
“Taxing Authority” means any governmental agency, board, bureau,
\nbody, department or authority of any United States federal, state or local
\njurisdiction or any foreign jurisdiction, having or purporting to exercise
\njurisdiction with respect to any Tax.<\/p>\n
“Third Party Claim” has the meaning ascribed to it in Section
\n6.2(j).<\/p>\n
“Third Party Expenses” has the meaning ascribed to it in Section
\n4.5.<\/p>\n
(b) Unless the context of this Agreement otherwise requires, (i)
\nwords of any gender include each other gender, (ii) words using the singular or
\nplural number also include the plural or singular number, respectively, (iii)
\nthe terms “hereof,” “herein,” “hereby” and derivative or similar words refer to
\nthis entire Agreement as a whole and not to any particular Article, Section or
\nother subdivision, (iv) the terms “Article” or “Section” or other subdivision
\nrefer to the specified Article, Section or other subdivision of the body of this
\nAgreement, (v) the phrases “ordinary course of business” and “ordinary course of
\nbusiness consistent with past practice” refer to the business and practice of
\nTarget, (vi) the words “include,” “includes” and “including” shall be deemed to
\nbe followed by the phrase “without limitation,” and (vii) when a reference is
\nmade in this Agreement to Exhibits, such reference shall be to an Exhibit to
\nthis Agreement unless otherwise indicated. All accounting terms used herein and
\nnot expressly defined herein shall have the meanings given to them under GAAP.
\nThe term “party” or “parties” when used herein refer to Acquiror, on the one
\nhand, and Target, on the other.<\/p>\n
(c) When used herein, the phrase “to the knowledge of” any
\nPerson, “to the best knowledge of” any Person, “known to” any Person or any
\nsimilar phrase, means (i) with respect to any Person who is an individual, the
\nactual knowledge of such Person, and (ii) with respect to any other Person, the
\nactual knowledge of the directors and officers of such Person and other
\nindividuals that have a similar position or have similar powers and duties as
\nthe officers and directors of such Person.<\/p>\n
75
\n 81<\/p>\n
[SIGNATURE PAGE FOLLOWS]<\/p>\n
76
\n 82<\/p>\n
IN WITNESS WHEREOF, Acquiror and Target have caused this Agreement
\nto be signed by their duly authorized representatives, all as of the date first
\nwritten above.<\/p>\n
ACQUIROR TARGET<\/p>\n
By: \/s\/ Dennis Barsema By: \/s\/ Vivek Ragavan
\n ——————- ——————–
\n President and Chief President and Chief
\n Executive Officer Executive Officer<\/p>\n
83
\n EXHIBIT A
\n IRREVOCABLE PROXY
\n AND
\n VOTING AGREEMENT<\/p>\n
THIS IRREVOCABLE PROXY AND VOTING AGREEMENT, dated as of November 28,
\n1999 (this “Agreement”), is entered into by and between Siara Systems, Inc., a
\nDelaware corporation (“Siara”), and _____________ (“Stockholder”).<\/p>\n
W I T N E S S E T H:<\/p>\n
WHEREAS, concurrently herewith, Siara and Redback Networks Inc., a
\nDelaware corporation (the “Company”), have entered into a Merger Agreement and
\nPlan of Reorganization, of even date herewith (as such agreement may hereafter
\nbe amended from time to time, the “Merger Agreement”; initially capitalized and
\nother terms used but not defined herein shall have the meanings ascribed to them
\nin the Merger Agreement), pursuant to which Siara will merge with and into the
\nCompany, with the Company to be the surviving corporation (the “Merger”);<\/p>\n
WHEREAS, Stockholder Beneficially Owns (as defined herein) ______ shares
\nof the Company’s Common Stock and _______ options to purchase the Company’s
\nCommon Stock, par value $0.0001 (“Company Common Stock”) (such shares of Company
\nCommon Stock Beneficially Owned by Stockholder being collectively hereinafter
\nreferred to as the “Shares”);<\/p>\n
WHEREAS, as an inducement and a condition to entering into the Merger
\nAgreement, Siara has requested that Stockholder agree, and Stockholder has
\nagreed, to enter into this Agreement;<\/p>\n
NOW, THEREFORE, in consideration of the foregoing and the mutual
\npremises, representations, warranties, covenants and agreements contained
\nherein, the parties hereto hereby agree as follows:<\/p>\n
1. Voting Agreement. Stockholder hereby agrees with Siara that, (except
\nas may be otherwise agreed to in writing by Siara with the Company or
\nStockholder) at any meeting of the Company’s stockholders, however called, or in
\nconnection with any written consent of the Company’s stockholders, as to which
\nany of the matters described below in this Section 1 is put to the vote or
\nwritten consent of the Company’s stockholders, Stockholder shall vote the Shares
\nBeneficially Owned by Stockholder, whether now owned or hereafter acquired prior
\nto such vote: (i) in favor of approval of the Merger Agreement, the Merger and
\nany actions required in furtherance of the transactions contemplated thereby;
\n(ii) against any action or agreement that would result in a breach in any
\nmaterial respect of (A) any representation or warranty of the Company under the
\nMerger Agreement that would have a Material Adverse Effect on the Company or (B)
\nany other agreement, covenant or obligation of the Company under the Merger
\nAgreement; and (iii) against: (A) any Third Party Acquisition (as defined
\nbelow), (B) any change in a majority of the individuals who, as of the date
\nhereof, constitute the Board of Directors of the Company, unless such change
\nresults from an election to replace any such individual who ceases to be a
\nmember of the Board of Directors of the Company due to such<\/p>\n
84<\/p>\n
individual’s death, disability or resignation from the Company’s Board of
\nDirectors for reasons unrelated to any matter that Stockholder agrees to vote
\nagainst hereunder, (C) any extraordinary corporate transaction, such as a
\nmerger, consolidation or other business combination involving the Company and
\nany Third Party (as defined below), (D) a sale, lease, transfer or disposition
\nof any assets of the Company’s business outside the ordinary course of business,
\nor any assets which are material to its business whether or not in the ordinary
\ncourse of business, (E) a reorganization, recapitalization, dissolution or
\nliquidation of the Company, (F) any change in the present capitalization of the
\nCompany or any amendment of the Company’s Certificate of Incorporation or bylaws
\nnot contemplated by the Merger Agreement or not consented to in writing by
\nSiara, (G) any other material change in the Company’s corporate structure other
\nthan the approval of stock options disclosed in the Company’s representations
\nand warranties in the Merger Agreement or in any Disclosure Schedule thereto) or
\nany other change materially affecting the Company’s business, or (H) any other
\naction which is intended, or could reasonably be expected, to impede, interfere
\nwith, delay, postpone or materially adversely affect the Merger or any of the
\nother transactions contemplated by the Merger Agreement, or any of the
\ntransactions contemplated by this Agreement. Stockholder shall not enter into
\nany agreement or understanding with any person the effect of which would be
\ninconsistent or violative of the provisions and agreements contained herein.<\/p>\n
For purposes of this Agreement, “Third Party Acquisition” means the
\noccurrence of any of the following events: (i) the acquisition of the Company by
\nmerger or otherwise by any person (which includes a “person” as such term is
\ndefined in Section 13(d)(3) of the Exchange Act) other than Siara or any
\naffiliate thereof (a “Third Party”); (ii) the acquisition by a Third Party of
\nany material portion (which shall include ten percent (10%) or more) of the
\nassets of the Company, other than the sale or license of its products in the
\nordinary course of business; (iii) the acquisition by a Third Party of ten
\npercent (10%) or more of the outstanding shares of the Company’s capital stock
\n(other than any such acquisition resulting from the exercise or conversion of
\nany stock option, stock warrant, convertible debt instrument and\/or other
\nsecurity of the Company that is outstanding on the date of this Agreement); (iv)
\nthe adoption by the Company of a plan of liquidation or the declaration or
\npayment of an extraordinary dividend; (v) the repurchase by the Company of more
\nthan ten percent (10%) of the outstanding Shares (other than pursuant to rights
\nof refusal or similar rights held by the Company as of the date of this
\nAgreement or pursuant to repurchase options held by the Company that are
\nexercisable in connection with the termination of a person’s employment or
\nservices with or to the Company or any of its subsidiaries); or (vi) the
\nacquisition (or any group of acquisitions) by the Company by merger, purchase of
\nstock or assets, joint venture or otherwise, of a direct or indirect ownership
\ninterest or investment in any business (or businesses) whose annual revenues,
\nnet income or assets is equal to or greater than ten percent (10%) of the most
\nrecent annual revenues, net income or assets of the Company, respectively.<\/p>\n
For purposes of this Agreement, “Beneficially Own,” “Beneficially Owned”
\nor “Beneficial Ownership” with respect to any Shares shall mean Stockholder’s
\nhaving record or beneficial ownership of such Shares or having, through any
\nagreement or arrangement, the power to direct the voting with respect to, or
\notherwise enables Stockholder to legally act in a binding manner with respect
\nto, such Shares as contemplated hereby.<\/p>\n
2
\n 85<\/p>\n
2. Irrevocable Proxy.<\/p>\n
(a) Subject to the terms and conditions of this Agreement, the
\nStockholder hereby constitutes and appoints Siara, which shall act by and
\nthrough Vivek Ragavan and Vinod Khosla (each, a “Proxy Holder”), or either of
\nthem, with full power of substitution, its true and lawful proxy and
\nattorney-in-fact to vote at any meeting (and any adjournment or postponement
\nthereof) of the Company’s stockholders called for purposes of considering
\nwhether to approve the Merger Agreement, the Merger or any of the other
\ntransactions contemplated by the Merger Agreement, or any Third Party
\nAcquisition, or to execute a written consent of stockholders in lieu of any such
\nmeeting, all Shares Beneficially Owned by Stockholder as of the date of such
\nmeeting or written consent (i) in favor of the approval of the Merger Agreement,
\nthe Merger and the other transactions contemplated by the Merger Agreement, with
\nsuch modifications to the Merger Agreement as the parties thereto may make, or
\n(ii) against a Third Party Acquisition, as the case may be. Such proxy shall be
\nlimited strictly to the power to vote the Shares Beneficially Owned by
\nStockholder in the manner set forth in the preceding sentence and shall not
\nextend to any other matters, and shall, without limitation, not extend to any
\npower to vote the Shares in any manner with respect to any proposal to approve
\nany contract, agreement or arrangement that might constitute a “Parachute
\nPayment,” within the meaning of Section 280G of the Internal Revenue Code and in
\naccordance with the requirements of Q&A Numbers 6 and 7 of the Treasury
\nRegulations promulgated thereunder.<\/p>\n
(b) The proxy and power of attorney granted herein shall be
\nirrevocable during the term of this Agreement, shall be deemed to be coupled
\nwith an interest sufficient in law to support an irrevocable proxy and shall
\nrevoke all prior proxies granted by Stockholder. Stockholder shall not grant any
\nproxy to any person which conflicts with the proxy granted herein, and any
\nattempt to do so shall be void. The power of attorney granted herein is a
\ndurable power of attorney and shall survive the death or incapacity of
\nStockholder.<\/p>\n
(c) If Stockholder fails for any reason to vote his, her or its
\nShares in accordance with the requirements of Section 1 hereof, then the Proxy
\nHolder shall have the right to vote the Shares at any meeting of the Company’s
\nstockholders and in any action by written consent of the Company’s stockholders
\nin accordance with the provisions of this Section 2. The vote of the Proxy
\nHolder shall control in any conflict between the Proxy Holder’s vote of such
\nShares and a vote by Stockholder of such Shares.<\/p>\n
3. Director Matters Excluded. Siara acknowledges and agrees that no
\nprovision of this Agreement (including without limitation the provisions of
\nSection 4(d) hereof) shall limit or otherwise restrict Stockholder with respect
\nto any act or omission that Stockholder may undertake or authorize in his
\ncapacity as a director of the Company, including, without limitation, any vote
\nthat Stockholder may make as a director of the Company with respect to any
\nmatter presented to the Board of Directors of the Company.<\/p>\n
4. Other Covenants, Representations and Warranties. Stockholder hereby
\nrepresents and warrants to Siara as follows:<\/p>\n
(a) Ownership of Shares. Stockholder is the Beneficial Owner of
\nall the Shares. On the date hereof, the Shares constitute all of the Shares
\nBeneficially Owned by<\/p>\n
3
\n 86<\/p>\n
Stockholder. Stockholder has voting power with respect to the matters set forth
\nin Section 1 hereof with respect to all of the Shares, with no limitations,
\nqualifications or restrictions on such rights.<\/p>\n
(b) Power; Binding Agreement. Stockholder has the legal capacity,
\npower and authority to enter into and perform all of its obligations under this
\nAgreement. The execution, delivery and performance of this Agreement by
\nStockholder will not violate any agreement or any court order to which
\nStockholder is a party or is subject including, without limitation, any voting
\nagreement or voting trust. This Agreement has been duly and validly executed and
\ndelivered by Stockholder.<\/p>\n
(c) Restriction on Transfer, Proxies and Non-Interference. During
\nthe term of this Agreement, except as expressly contemplated by this Agreement
\nor the Merger Agreement, Stockholder shall not, directly or indirectly: (i)
\noffer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise
\ndispose of, or enter into any contract, option or other arrangement or
\nunderstanding with respect to, or consent to the offer for sale, sale, transfer,
\ntender, pledge, encumbrance, assignment or other disposition of, any or all of
\nthe Shares or any interest therein unless the transferee shall execute a
\nsignature page to this Irrevocable Proxy and Voting Agreement and shall agree to
\nbe bound to the provisions hereof; (ii) grant any proxies or powers of attorney
\nor deposit any Shares into a voting trust or enter into a voting agreement with
\nrespect to any Shares; or (iii) take any action that would make any
\nrepresentation or warranty of Stockholder contained in this Section 4 untrue or
\nincorrect or have the effect of preventing or disabling Stockholder from
\nperforming any of Stockholder’s obligations under this Agreement.<\/p>\n
(d) Other Potential Acquirors. Stockholder: (i) shall immediately
\ncease any existing discussions or negotiations, if any, with any persons
\nconducted heretofore with respect to any acquisition of all or any material
\nportion of the assets of, or any equity interest in, the Company, or any
\nbusiness combination with the Company, in his, her or its capacity as a
\nstockholder of the Company; (ii) from and after the date hereof until the
\nearlier of (A) the termination of the Merger Agreement in accordance with its
\nterms and (B) the Effective Time, shall not, in such capacity as a stockholder
\nof the Company, directly or indirectly, initiate, solicit or knowingly encourage
\n(including, without limitation, by way of furnishing non-public information or
\nassistance), or take any other action to facilitate knowingly, any inquiries or
\nthe making of any Third Party Acquisition; and (iii) shall promptly notify Siara
\nof any proposals for, or inquiries with respect to, a potential Third Party
\nAcquisition received by Stockholder or of which Stockholder otherwise has
\nknowledge.<\/p>\n
(e) Reliance by Siara. Stockholder understands and acknowledges
\nthat Siara is entering into the Merger Agreement in reliance upon Stockholder’s
\nexecution and delivery of this Agreement.<\/p>\n
5. Stop Transfer. Stockholder agrees with, and covenants to, Siara that
\nStockholder shall not request that the Company register the transfer (book-entry
\nor otherwise) of any certificate or uncertificated interest representing any
\nShares, unless such transfer is made pursuant to and in compliance with this
\nAgreement. In the event of a dividend or distribution of capital stock of the
\nCompany, or any change in the Company Common Stock by reason of any stock
\ndividend, split-up, recapitalization, combination, exchange of shares or the
\nlike, the term<\/p>\n
4
\n 87<\/p>\n
“Shares” shall be deemed to refer to and include the Shares as well as all such
\nshares of the Company’s capital stock issued or distributed pursuant to such
\nstock dividends and distributions and any shares of the Company’s capital stock
\ninto which or for which any or all of the Shares may be so changed or exchanged.<\/p>\n
6. Termination. The proxy granted pursuant to Section 2 hereof and
\nStockholder’s covenants and agreements contained herein with respect to the
\nShares shall terminate upon the earliest to occur of: (a) the termination of the
\nMerger Agreement and (b) the Effective Time.<\/p>\n
7. Miscellaneous.<\/p>\n
(a) Entire Agreement. This Agreement constitutes the entire
\nagreement between the parties with respect to the subject matter hereof and
\nsupersedes all other prior agreements and understandings, both written and oral,
\namong the parties with respect to the subject matter hereof.<\/p>\n
(b) Assignment. This Agreement shall not be assigned by operation
\nof law or otherwise without the prior written consent of the other party;
\nprovided, however, that Siara may, in its sole discretion, assign its rights and
\nobligations hereunder to any wholly-owned subsidiary of Siara.<\/p>\n
(c) Amendments, Waivers, Etc. This Agreement may not be amended,
\nchanged, supplemented or otherwise modified or terminated, except upon the
\nexecution and delivery of a written agreement executed by the parties hereto. No
\nwaiver by a party hereto of any of its rights hereunder shall be effective
\nunless and to the extent such waiver is set forth in a writing signed by such
\nparty.<\/p>\n
(d) Notices. All notices, requests, claims, demands and other
\ncommunications hereunder shall be in writing and shall be given by hand
\ndelivery, telecopy, or by mail (registered or certified mail, postage prepaid,
\nreturn receipt requested) or by any nationally-recognized overnight courier
\nservice, such as Federal Express, providing proof of delivery. Any such notice
\nor communication shall be deemed to have been delivered and received (i) in the
\ncase of hand delivery, on the date of such delivery, (ii) in the case of
\ntelecopy, on the date sent if confirmation of receipt is received and such
\nnotice is also promptly mailed by registered or certified mail (return receipt
\nrequested), (iii) in the case of a nationally-recognized overnight courier
\nservice, in circumstances under which such courier guarantees next business day
\ndelivery, on the next business day after the date when sent, and (iv) the case
\nof mailing, on the third business day following that on which the piece of mail
\ncontaining such communication is posted. All communications hereunder shall be
\ndelivered to the respective parties at the following addresses:<\/p>\n
5
\n 88<\/p>\n
If to Stockholder: ———————————–<\/p>\n
———————————–<\/p>\n
———————————–
\n Telephone:
\n Telecopier:
\n Attention:<\/p>\n
with a copy to: Redback Networks Inc.
\n 1389 Moffett Park Drive
\n Sunnyvale, CA 94089
\n Telecopier: 408-548-3599
\n Attention: Craig Gentner<\/p>\n
If to Siara: Siara Systems, Inc.
\n 300 Ferguson Drive, Second Floor
\n Mountain View, CA 94043
\n Telecopier: 650-237-2179
\n Attention: Vivek Ragavan<\/p>\n
with a copy to: Fenwick & West, LLP
\n Two Palo Alto Square
\n Palo Alto, CA, 94036
\n Telecopier: (650) 494-1417
\n Attention: Barry J. Kramer<\/p>\n
or to such other address as the person to whom notice is given may have
\npreviously furnished to the others in writing in the matter set forth above.<\/p>\n
(e) Severability. Whenever possible, each provision of this
\nAgreement will be interpreted in such manner as to be effective and valid under
\napplicable law but if any provision of this Agreement is held to be invalid,
\nillegal or unenforceable in any respect under any applicable law or rule in any
\njurisdiction, such invalidity, illegality or unenforceability will not affect
\nany other provision or portion of any provision in such jurisdiction, and this
\nAgreement will be reformed, construed and enforced in such jurisdiction as if
\nsuch invalid, illegal or unenforceable provision or portion of any provision had
\nnever been contained herein.<\/p>\n
(f) Specific Performance. Each of the parties hereto recognizes
\nand acknowledges that a breach by it of any covenants or agreements contained in
\nthis Agreement will cause the other party to sustain damage for which it would
\nnot have an adequate remedy at law for money damages, and therefore each of the
\nparties hereto agrees that in the event of any such breach the aggrieved party
\nshall be entitled to the remedy of specific performance of such<\/p>\n
6
\n 89<\/p>\n
covenants and agreements and injunctive and other equitable relief in addition
\nto any other remedy to which it may be entitled, at law or in equity.<\/p>\n
(g) No Waiver. The failure of any party hereto to exercise any
\nright, power or remedy provided under this Agreement or otherwise available in
\nrespect hereof at law or in equity, or to insist upon compliance by any other
\nparty hereto with its obligations hereunder, and any custom or practice of the
\nparties at variance with the terms hereof, shall not constitute a waiver by such
\nparty of its right to exercise any such or other right, power or remedy or to
\ndemand such compliance.<\/p>\n
(h) Governing Law. This Agreement shall be governed and construed
\nin accordance with the laws of the State of Delaware, without giving effect to
\nthe principles of conflicts of law thereof.<\/p>\n
(i) Counterparts. This Agreement may be executed in counterparts,
\neach of which shall be deemed to be an original, but all of which, taken
\ntogether, shall constitute one and the same Agreement.<\/p>\n
[The Remainder of This Page Has Intentionally Been Left Blank]<\/p>\n
7
\n 90<\/p>\n
IN WITNESS WHEREOF, Siara and Stockholder have caused this Agreement to
\nbe duly executed as of the day and year first above written.<\/p>\n
Siara Systems, Inc., a Delaware corporation<\/p>\n
By: _______________________________________
\n Name:
\n Title:<\/p>\n
STOCKHOLDER:<\/p>\n
By: _______________________________________
\n Name:<\/p>\n
[SIGNATURE PAGE FOR REDBACK\/SIARA STOCKHOLDER
\n IRREVOCABLE PROXY AND VOTING AGREEMENT]<\/p>\n
91
\n EXHIBIT B
\n IRREVOCABLE PROXY
\n AND
\n VOTING AGREEMENT<\/p>\n
THIS IRREVOCABLE PROXY AND VOTING AGREEMENT, dated as of November 28,
\n1999 (this “Agreement”), is entered into by and between Redback Networks Inc., a
\nDelaware corporation (“Redback”), and ____________________ (“Stockholder”).<\/p>\n
W I T N E S S E T H:<\/p>\n
WHEREAS, concurrently herewith, Redback and Siara Systems, Inc., a
\nDelaware corporation (the “Company”), have entered into a Merger Agreement and
\nPlan of Reorganization, of even date herewith (as such agreement may hereafter
\nbe amended from time to time, the “Merger Agreement”; initially capitalized and
\nother terms used but not defined herein shall have the meanings ascribed to them
\nin the Merger Agreement), pursuant to which the Company will merge with and into
\nRedback, with Redback to be the surviving corporation (the “Merger”);<\/p>\n
WHEREAS, Stockholder Beneficially Owns (as defined herein) the number of
\nshares of common stock, par value $.0001 (“Company Common Stock”) of the Company
\n(the “Shares”), shares of Series A Preferred Stock, par value $0.001, of the
\nCompany (“Company Preferred A Stock”), and shares of Series B Preferred Stock,
\npar value $0.001 (“Company Preferred B Stock”), of the Company as set forth on
\nthe signature page to this Agreement (such shares of Company Common Stock,
\nCompany Preferred A Stock and\/or Company Preferred B Stock Beneficially Owned by
\nStockholder and set forth on the signature page hereto being collectively
\nhereinafter referred to as the “Shares”);<\/p>\n
WHEREAS, as an inducement and a condition to entering into the Merger
\nAgreement, Redback has requested that Stockholder agree, and Stockholder has
\nagreed, to enter into this Agreement;<\/p>\n
NOW, THEREFORE, in consideration of the foregoing and the mutual
\npremises, representations, warranties, covenants and agreements contained
\nherein, the parties hereto hereby agree as follows:<\/p>\n
1. Voting Agreement. Stockholder hereby agrees with Redback that,
\n(except as may be otherwise agreed to in writing by Redback with the Company or
\nStockholder) at any meeting of the Company’s stockholders, however called, or in
\nconnection with any written consent of the Company’s stockholders, as to which
\nany of the matters described below in this Section 1 is put to the vote or
\nwritten consent of the Company’s stockholders, Stockholder shall vote the Shares
\nBeneficially Owned by Stockholder, whether now owned or hereafter acquired prior
\nto such vote: (i) in favor of approval of the Merger Agreement, the Merger and
\nany actions required in furtherance of the transactions contemplated thereby;
\n(ii) against any action or agreement that would result in a breach in any
\nmaterial respect of (A) any representation or warranty of the Company under the
\nMerger Agreement that would have a Material Adverse Effect on the Company or (B)
\nany other agreement, covenant or obligation of the Company under the Merger<\/p>\n
2
\n 92<\/p>\n
Agreement; (iii) against: (A) any Third Party Acquisition (as defined below),
\n(B) any change in a majority of the individuals who, as of the date hereof,
\nconstitute the Board of Directors of the Company, unless such change results
\nfrom an election to replace any such individual who ceases to be a member of the
\nBoard of Directors of the Company due to such individual’s death, disability or
\nresignation from the Company’s Board of Directors for reasons unrelated to any
\nmatter that Stockholder agrees to vote against hereunder, (C) any extraordinary
\ncorporate transaction, such as a merger, consolidation or other business
\ncombination involving the Company and any Third Party (as defined below), (D) a
\nsale, lease, transfer or disposition of any assets of the Company’s business
\noutside the ordinary course of business, or any assets which are material to its
\nbusiness whether or not in the ordinary course of business, (E) a
\nreorganization, recapitalization, dissolution or liquidation of the Company, (F)
\nany change in the present capitalization of the Company or any amendment of the
\nCompany’s Certificate of Incorporation or bylaws not contemplated by the Merger
\nAgreement or not consented to in writing by Redback, (G) any other material
\nchange in the Company’s corporate structure (other than the approval of stock
\noptions disclosed in the Company’s representations and warranties in the Merger
\nAgreement or in any Disclosure Schedule thereto) or any other change materially
\naffecting the Company’s business, or (H) any other action which is intended, or
\ncould reasonably be expected, to impede, interfere with, delay, postpone or
\nmaterially adversely affect the Merger or any of the other transactions
\ncontemplated by the Merger Agreement, or any of the transactions contemplated by
\nthis Agreement; and (iv) if such Stockholder is a holder of shares of Company
\nPreferred A Stock or Company Preferred B Stock, in favor of the conversion of
\nthe Company Preferred A Stock or Company Preferred B Stock, respectively, into
\nshares of Company Common Stock. If the Company Preferred A Stock and\/or the
\nCompany Preferred B Stock is not converted automatically by their terms prior to
\nthe Effective Time, then by no later than immediately prior to the Effective
\nTime, Stockholder shall convert all shares of Company Preferred A Stock or
\nCompany Preferred B Stock owned by such Stockholder into shares of the Company’s
\nCommon Stock. Stockholder shall not enter into any agreement or understanding
\nwith any person the effect of which would be inconsistent or violative of the
\nprovisions and agreements contained herein.<\/p>\n
For purposes of this Agreement, “Third Party Acquisition” means the
\noccurrence of any of the following events: (i) the acquisition of the Company by
\nmerger or otherwise by any person (which includes a “person” as such term is
\ndefined in Section 13(d)(3) of the Exchange Act) other than Redback or any
\naffiliate thereof (a “Third Party”); (ii) the acquisition by a Third Party of
\nany material portion (which shall include ten percent (10%) or more) of the
\nassets of the Company, other than the sale or license of its products in the
\nordinary course of business; (iii) the acquisition by a Third Party of ten
\npercent (10%) or more of the outstanding shares of the Company’s capital stock
\n(other than any such acquisition resulting from the exercise or conversion of
\nany stock option, stock warrant, convertible debt instrument and\/or other
\nsecurity of the Company that is outstanding on the date of this Agreement); (iv)
\nthe adoption by the Company of a plan of liquidation or the declaration or
\npayment of an extraordinary dividend; (v) the repurchase by the Company of more
\nthan ten percent (10%) of the outstanding Shares (other than pursuant to rights
\nof refusal or similar rights held by the Company as of the date of this
\nAgreement or pursuant to repurchase options held by the Company that are
\nexercisable in connection with the termination of a person’s employment or
\nservices with or to the Company or any of its subsidiaries); or (vi) the
\nacquisition (or any group of acquisitions) by the Company by merger, purchase of
\nstock or assets, joint venture or otherwise, of a direct or indirect ownership<\/p>\n
2
\n 93
\ninterest or investment in any business (or businesses) whose annual revenues,
\nnet income or assets is equal or greater than ten percent (10%) of the most
\nrecent annual revenues, net income or assets of the Company, respectively.<\/p>\n
For purposes of this Agreement, “Beneficially Own,” “Beneficially Owned”
\nor “Beneficial Ownership” with respect to any Shares shall mean Stockholder’s
\nhaving record or beneficial ownership of such Shares or having, through any
\nagreement or arrangement, the power to direct the voting with respect to, or
\notherwise enables Stockholder to legally act in a binding manner with respect
\nto, such Shares as contemplated hereby.<\/p>\n
2. Irrevocable Proxy.<\/p>\n
(a) Subject to the terms and conditions of this Agreement, the
\nStockholder hereby constitutes and appoints Redback, which shall act by and
\nthrough Dennis Barsema and Craig Gentner (each, a “Proxy Holder”), or either of
\nthem, with full power of substitution, its true and lawful proxy and
\nattorney-in-fact to vote at any meeting (and any adjournment or postponement
\nthereof) of the Company’s stockholders called for purposes of considering
\nwhether to approve the Merger Agreement, the Merger or any of the other
\ntransactions contemplated by the Merger Agreement, or any Third Party
\nAcquisition, or to execute a written consent of stockholders in lieu of any such
\nmeeting, all Shares Beneficially Owned by Stockholder as of the date of such
\nmeeting or written consent (i) in favor of the approval of the Merger Agreement,
\nthe Merger and the other transactions contemplated by the Merger Agreement, with
\nsuch modifications to the Merger Agreement as the parties thereto may make, or
\n(ii) against a Third Party Acquisition, as the case may be. Such proxy shall be
\nlimited strictly to the power to vote the Shares Beneficially Owned by
\nStockholder in the manner set forth in the preceding sentence and shall not
\nextend to any other matters, and shall, without limitation, not extend to any
\npower to vote the Shares in any manner with respect to any proposal to approve
\nany contract, agreement or arrangement that might constitute a “Parachute
\nPayment,” within the meaning of Section 280G of the Internal Revenue Code and in
\naccordance with the requirements of Q&A Numbers 6 and 7 of the Treasury
\nRegulations promulgated thereunder.<\/p>\n
(b) The proxy and power of attorney granted herein shall be
\nirrevocable during the term of this Agreement, shall be deemed to be coupled
\nwith an interest sufficient in law to support an irrevocable proxy and shall
\nrevoke all prior proxies granted by Stockholder. Stockholder shall not grant any
\nproxy to any person which conflicts with the proxy granted herein, and any
\nattempt to do so shall be void. The power of attorney granted herein is a
\ndurable power of attorney and shall survive the death or incapacity of
\nStockholder.<\/p>\n
(c) If Stockholder fails for any reason to vote his, her or its
\nShares in accordance with the requirements of Section 1 hereof, then the Proxy
\nHolder shall have the right to vote the Shares at any meeting of the Company’s
\nstockholders and in any action by written consent of the Company’s stockholders
\nin accordance with the provisions of this Section 2. The vote of the Proxy
\nHolder shall control in any conflict between the Proxy Holder’s vote of such
\nShares and a vote by Stockholder of such Shares.<\/p>\n
3. Director Matters Excluded. Redback acknowledges and agrees that no
\nprovision of this Agreement (including without limitation the provisions of
\nSection 4(d) hereof) shall limit<\/p>\n
3
\n 94<\/p>\n
or otherwise restrict Stockholder with respect to any act or omission that
\nStockholder may undertake or authorize in his capacity as a director of the
\nCompany, including, without limitation, any vote that Stockholder may make as a
\ndirector of the Company with respect to any matter presented to the Board of
\nDirectors of the Company.<\/p>\n
4. Other Covenants, Representations and Warranties. Stockholder hereby
\nrepresents and warrants to Redback as follows:<\/p>\n
(a) Ownership of Shares. Stockholder is the Beneficial Owner of
\nall the Shares. On the date hereof, the Shares constitute all of the Shares
\nBeneficially Owned by Stockholder. Stockholder has voting power with respect to
\nthe matters set forth in Section 1 hereof with respect to all of the Shares,
\nwith no limitations, qualifications or restrictions on such rights.<\/p>\n
(b) Power; Binding Agreement. Stockholder has the legal capacity,
\npower and authority to enter into and perform all of its obligations under this
\nAgreement. The execution, delivery and performance of this Agreement by
\nStockholder will not violate any agreement or any court order to which
\nStockholder is a party or is subject including, without limitation, any voting
\nagreement or voting trust. This Agreement has been duly and validly executed and
\ndelivered by Stockholder.<\/p>\n
(c) Restriction on Transfer, Proxies and Non-Interference. During
\nthe term of this Agreement, except as expressly contemplated by this Agreement
\nor the Merger Agreement, Stockholder shall not, directly or indirectly: (i)
\noffer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise
\ndispose of, or enter into any contract, option or other arrangement or
\nunderstanding with respect to, or consent to the offer for sale, sale, transfer,
\ntender, pledge, encumbrance, assignment or other disposition of, any or all of
\nthe Shares or any interest therein unless the transferee shall execute a
\nsignature page to this Irrevocable Proxy and Voting Agreement and shall agree to
\nbe bound to the provisions hereof; (ii) grant any proxies or powers of attorney
\nor deposit any Shares into a voting trust or enter into a voting agreement with
\nrespect to any Shares; or (iii) take any action that would make any
\nrepresentation or warranty of Stockholder contained in this Section 4 untrue or
\nincorrect or have the effect of preventing or disabling Stockholder from
\nperforming any of Stockholder’s obligations under this Agreement.<\/p>\n
(d) Other Potential Acquirors. Stockholder: (i) shall immediately
\ncease any existing discussions or negotiations, if any, with any persons
\nconducted heretofore with respect to any acquisition of all or any material
\nportion of the assets of, or any equity interest in, the Company, or any
\nbusiness combination with the Company, in his, her or its capacity as a
\nstockholder of the Company; (ii) from and after the date hereof until the
\nearlier of (A) the termination of the Merger Agreement in accordance with its
\nterms and (B) the Effective Time, shall not, in such capacity as a stockholder
\nof the Company, directly or indirectly, initiate, solicit or knowingly encourage
\n(including, without limitation, by way of furnishing non-public information or
\nassistance), or take any other action to facilitate knowingly, any inquiries or
\nthe making of any Third Party Acquisition; and (iii) shall promptly notify
\nRedback of any proposals for, or inquiries with respect to, a potential Third
\nParty Acquisition received by Stockholder or of which Stockholder otherwise has
\nknowledge.<\/p>\n
4
\n 95<\/p>\n
(e) Reliance by Redback. Stockholder understands and acknowledges
\nthat Redback is entering into the Merger Agreement in reliance upon
\nStockholder’s execution and delivery of this Agreement.<\/p>\n
5. Stop Transfer. Stockholder agrees with, and covenants to, Redback
\nthat Stockholder shall not request that the Company register the transfer
\n(book-entry or otherwise) of any certificate or uncertificated interest
\nrepresenting any Shares, unless such transfer is made pursuant to and in
\ncompliance with this Agreement. In the event of a dividend or distribution of
\ncapital stock of the Company, or any change in the Company Common Stock by
\nreason of any stock dividend, split-up, recapitalization, combination, exchange
\nof shares or the like, the term “Shares” shall be deemed to refer to and include
\nthe Shares as well as all such shares of the Company’s capital stock issued or
\ndistributed pursuant to such stock dividends and distributions and any shares of
\nthe Company’s capital stock into which or for which any or all of the Shares may
\nbe so changed or exchanged.<\/p>\n
6. Termination. The proxy granted pursuant to Section 2 hereof and
\nStockholder’s covenants and agreements contained herein with respect to the
\nShares shall terminate upon the earliest to occur of: (a) the termination of the
\nMerger Agreement and (b) the Effective Time.<\/p>\n
7. Miscellaneous.<\/p>\n
(a) Entire Agreement. This Agreement constitutes the entire
\nagreement between the parties with respect to the subject matter hereof and
\nsupersedes all other prior agreements and understandings, both written and oral,
\namong the parties with respect to the subject matter hereof.<\/p>\n
(b) Assignment. This Agreement shall not be assigned by operation
\nof law or otherwise without the prior written consent of the other party;
\nprovided, however, that Redback may, in its sole discretion, assign its rights
\nand obligations hereunder to any wholly-owned subsidiary of Redback.<\/p>\n
(c) Amendments, Waivers, Etc. This Agreement may not be amended,
\nchanged, supplemented or otherwise modified or terminated, except upon the
\nexecution and delivery of a written agreement executed by the parties hereto. No
\nwaiver by a party hereto of any of its rights hereunder shall be effective
\nunless and to the extent such waiver is set forth in a writing signed by such
\nparty.<\/p>\n
(d) Notices. All notices, requests, claims, demands and other
\ncommunications hereunder shall be in writing and shall be given by hand
\ndelivery, telecopy, or by mail (registered or certified mail, postage prepaid,
\nreturn receipt requested) or by any nationally-recognized overnight courier
\nservice, such as Federal Express, providing proof of delivery. Any such notice
\nor communication shall be deemed to have been delivered and received (i) in the
\ncase of hand delivery, on the date of such delivery, (ii) in the case of
\ntelecopy, on the date sent if confirmation of receipt is received and such
\nnotice is also promptly mailed by registered or certified mail (return receipt
\nrequested), (iii) in the case of a nationally-recognized overnight courier
\nservice, in circumstances under which such courier guarantees next business day
\ndelivery, on the next business day after the date when sent, and (iv) the case
\nof mailing, on the third business day<\/p>\n
5
\n 96<\/p>\n
following that on which the piece of mail containing such communication is
\nposted. All communications hereunder shall be delivered to the respective
\nparties at the following addresses:<\/p>\n
If to Stockholder: ———————————<\/p>\n
———————————<\/p>\n
———————————
\n Telephone:
\n Telecopier:
\n Attention:<\/p>\n
with a copy to: Siara Systems, Inc.
\n 300 Ferguson Drive, Second Floor
\n Mountain View, CA 94043
\n Telecopier: 650-237-2179
\n Attention: Vivek Ragavan<\/p>\n
If to Redback: Redback Networks Inc.
\n 1389 Moffett Park Drive
\n Sunnyvale, CA 94089
\n Telecopier: 408-548-3599<\/p>\n
Attention: Craig Gentner<\/p>\n
with a copy to: Gunderson Dettmer Stough Villeneuve Franklin
\n & Hachigian LLP
\n 155 Constitution Drive
\n Menlo Park, CA 94025
\n Telecopier: (650) 321-2800<\/p>\n
Attention: Renee F. Lanam<\/p>\n
or to such other address as the person to whom notice is given may have
\npreviously furnished to the others in writing in the matter set forth above.<\/p>\n
(e) Severability. Whenever possible, each provision of this
\nAgreement will be interpreted in such manner as to be effective and valid under
\napplicable law but if any provision of this Agreement is held to be invalid,
\nillegal or unenforceable in any respect under any applicable law or rule in any
\njurisdiction, such invalidity, illegality or unenforceability will not affect
\nany other provision or portion of any provision in such jurisdiction, and this
\nAgreement will be reformed, construed and enforced in such jurisdiction as if
\nsuch invalid, illegal or unenforceable provision or portion of any provision had
\nnever been contained herein.<\/p>\n
(f) Specific Performance. Each of the parties hereto recognizes
\nand acknowledges that a breach by it of any covenants or agreements contained in
\nthis Agreement<\/p>\n
6
\n 97<\/p>\n
will cause the other party to sustain damage for which it would not have an
\nadequate remedy at law for money damages, and therefore each of the parties
\nhereto agrees that in the event of any such breach the aggrieved party shall be
\nentitled to the remedy of specific performance of such covenants and agreements
\nand injunctive and other equitable relief in addition to any other remedy to
\nwhich it may be entitled, at law or in equity.<\/p>\n
(g) No Waiver. The failure of any party hereto to exercise any
\nright, power or remedy provided under this Agreement or otherwise available in
\nrespect hereof at law or in equity, or to insist upon compliance by any other
\nparty hereto with its obligations hereunder, and any custom or practice of the
\nparties at variance with the terms hereof, shall not constitute a waiver by such
\nparty of its right to exercise any such or other right, power or remedy or to
\ndemand such compliance.<\/p>\n
(h) Governing Law. This Agreement shall be governed and construed
\nin accordance with the laws of the State of Delaware, without giving effect to
\nthe principles of conflicts of law thereof.<\/p>\n
(i) Counterparts. This Agreement may be executed in counterparts,
\neach of which shall be deemed to be an original, but all of which, taken
\ntogether, shall constitute one and the same Agreement.<\/p>\n
[The Remainder of this Page Has Intentionally Been Left Blank]<\/p>\n
7
\n 98<\/p>\n
IN WITNESS WHEREOF, Redback and Stockholder have caused this Agreement
\nto be duly executed as of the day and year first above written.<\/p>\n
Redback Networks Inc., a Delaware corporation<\/p>\n
By: _______________________________________
\n Name:
\n Title:<\/p>\n
STOCKHOLDER:<\/p>\n
By: _______________________________________
\n Name:<\/p>\n
Number of Shares of Company Common Stock
\n Owned (if any): _____________________<\/p>\n
Number of Shares of Company Preferred A
\n Stock Owned (if any): ________________<\/p>\n
Number of Shares of Company Preferred B
\n Stock Owned (if any): ________________<\/p>\n
[SIGNATURE PAGE FOR REDBACK\/SIARA STOCKHOLDER
\n IRREVOCABLE PROXY AND VOTING AGREEMENT]<\/p>\n
99
\n AMENDMENT TO REDBACK NETWORKS, INC. AMENDED
\n AND RESTATED INVESTORS’ RIGHTS AGREEMENT<\/p>\n
THIS AMENDMENT to the Redback Networks, Inc. Amended and
\nRestated Investors’ Rights Agreement dated July 2, 1998 (the “Prior Agreement”)
\nis made as of _____________________, by and among Redback Networks Inc., a
\nDelaware corporation (the “Company”), the investors of the Company listed on
\nSchedule A to the Prior Agreement, each of which is herein referred to as an
\n“Existing Investor,” the founders listed on Schedule B to the Prior Agreement,
\neach of which is herein referred to as a “Founder,” Siara Systems, Inc., a
\nDelaware corporation (“Siara”) and the former security holders of Siara listed
\non Schedule A hereto (the “New Investors”) who have received securities of the
\nCompany in connection with that certain Merger Agreement and Plan of
\nReorganization dated November __, 1999 (the “Merger Agreement”) by and among the
\nCompany and Siara. Capitalized terms used herein shall have the same meanings as
\nset forth in the Prior Agreement, unless otherwise specified.<\/p>\n
RECITALS<\/p>\n
WHEREAS, the Existing Investors have heretofore purchased
\nSeries A, Series B, Series C and\/or Series D Preferred Stock from the Company
\nand possess registration rights contained in the Prior Agreement;<\/p>\n
WHEREAS, in order to induce Siara to enter into the Merger
\nAgreement, the Existing Investors and the Company desire to amend the Prior
\nAgreement in order to provide to the New Investors the same registration rights
\nheld by the Existing Investors under the Prior Agreement;<\/p>\n
WHEREAS, pursuant to Section 4.8 of the Prior Agreement,
\nthe Company and the holders of a majority of the outstanding Registrable
\nSecurities may amend the Prior Agreement on behalf of all such holders by
\napproving this Amendment, and the Existing Investors executing this Amendment
\nrepresent such a majority;<\/p>\n
WHEREAS, certain of the New Investors are parties to that
\nAmended and Restated Investors’ Rights Agreement dated December 21, 1998 between
\nSiara and such New Investors (the “Siara Agreement”);<\/p>\n
WHEREAS, in order to induce the Company to enter into the
\nMerger Agreement, the New Investors and Siara desire to terminate the rights
\ngranted pursuant to the Siara Agreement, effective upon the Effective Time (as
\ndefined in the Merger Agreement); and<\/p>\n
WHEREAS, pursuant to Section 5.2 of the Siara Agreement,
\nSiara and the holders of a majority of the outstanding Investors’ Shares (as
\ndefined in the Siara Agreement) may amend the Prior Agreement, which amendment
\nshall be binding on all parties thereto, and the New Investors executing this
\nAmendment represent such a majority;<\/p>\n
100<\/p>\n
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:<\/p>\n
1. Amendment of Prior Agreement.<\/p>\n
Paragraph 1.1(f) of the Prior Agreement is hereby amended
\nto read in its entirety as follows:<\/p>\n
(f) The term “Registrable Securities” means (i) the Common
\n Stock issuable or issued upon conversion of the Series A
\n Preferred Stock, the Series B Preferred Stock, the Series C
\n Preferred Stock and the Series D Preferred Stock, (ii) the
\n shares of Common Stock issued to the Founders; provided,
\n however, that such shares of Common Stock shall not be
\n deemed Registrable Securities and the aforementioned
\n individuals shall not be deemed Holders for the purposes of
\n Sections 1.2, 1.12 and 4.8, (iii) the Common Stock issued
\n or issuable upon conversion, pursuant to the Merger
\n Agreement, of all “Registrable Securities,” as defined in
\n that certain Siara Systems, Inc. Amended and Restated
\n Investors’ Rights Agreement dated December 21, 1998;
\n provided, however, that such shares of Common Stock shall
\n not be deemed Registrable Securities for the purposes of
\n Sections 1.2 and 1.12, (iv) any Common Stock of the Company
\n issuable upon the conversion or exercise of warrants issued
\n by Siara Systems, Inc. to U.S. Telesource, Inc., Broadband
\n Office, Transamerica Business Credit Corporation, Comdisco,
\n Inc., Imperial Bank, Fenwick & West LLP, ______________,
\n __________________ and _____________, which are assumed by
\n the Company and converted into warrants to purchase shares
\n of the Company’s Common Stock pursuant to the Merger
\n Agreement; provided, however, that such shares of Common
\n Stock shall not be deemed Registrable Securities for the
\n purposes of Sections 1.2 and 1.12, and (v) any Common Stock
\n of the Company issued as (or issuable upon the conversion
\n or exercise of any warrant, right or other security that is
\n issued as) a dividend or other distribution with respect
\n to, or in exchange for, or in replacement of the shares
\n referenced in (i), (ii), (iii), and (iv) of this paragraph,
\n excluding in all cases, however, any Registrable Securities
\n sold by a person in a transaction in which his rights under
\n this Section 1 are not assigned.<\/p>\n
2. Amendment and Termination of Siara Agreement. Siara and
\nthe New Investors, who hold at least a majority of the Investors’ Shares (as
\ndefined in the Siara Agreement), hereby agree to terminate the Siara Agreement
\nand all rights and obligations of the parties thereunder, with such termination
\nto become effective upon the Effective Time (as defined in the Merger
\nAgreement).<\/p>\n
3. Counterparts. This Amendment may be executed by the
\nCompany, the Existing Investors and the New Investors named below in any number
\nof counterparts and shall become effective when executed by the Company and
\nExisting Investors holding at least a majority of the outstanding Registrable
\nSecurities. Each New Investor shall be offered the opportunity to become a party
\nto this Amendment, and the registration rights extended pursuant to Section 1 of
\nthis Amendment shall become effective as to each New Investor upon execution and
\ndelivery of this Amendment by such New Investor.<\/p>\n
101<\/p>\n
IN WITNESS WHEREOF, the parties have executed this
\nAgreement as of the date first above written.<\/p>\n
REDBACK NETWORKS INC.<\/p>\n
By:
\n ————————————–
\n Dennis L. Barsema, President<\/p>\n
Address: 1389 Moffett Park Drive
\n Sunnyvale, CA 94089<\/p>\n
SIARA SYSTEMS, INC.<\/p>\n
By:
\n ————————————–
\n Vivek Ragavan, President<\/p>\n
Address: 300 Ferguson Drive, 2nd Floor
\n Mountain View, CA 94043<\/p>\n
SIGNATURE PAGE TO AMENDMENT TO INVESTORS’ RIGHTS AGREEMENT
\n 102<\/p>\n
EXISTING INVESTORS:<\/p>\n
MAYFIELD VIII,
\n A CALIFORNIA LIMITED PARTNERSHIP
\n By: MAYFIELD VIII MANAGEMENT, L.L.C.
\n A DELAWARE LIMITED LIABILITY COMPANY,
\n Its General Partner<\/p>\n
By:
\n —————————————<\/p>\n
MAYFIELD ASSOCIATES FUND III,
\n A CALIFORNIA LIMITED PARTNERSHIP
\n By: MAYFIELD VIII MANAGEMENT, L.L.C.
\n A DELAWARE LIMITED LIABILITY COMPANY,
\n Its General Partner<\/p>\n
By:
\n —————————————<\/p>\n
Address: 2800 Sand Hill Road
\n Menlo Park, California 94025<\/p>\n
SIGNATURE PAGE TO AMENDMENT TO INVESTORS’ RIGHTS AGREEMENT<\/p>\n
103<\/p>\n
SEQUOIA CAPITAL VII
\n A CALIFORNIA LIMITED PARTNERSHIP<\/p>\n
SEQUOIA TECHNOLOGY PARTNERS VII
\n A CALIFORNIA LIMITED PARTNERSHIP<\/p>\n
SEQUOIA 1995 LLC<\/p>\n
SQP 1997
\n A CALIFORNIA LIMITED PARTNERSHIP<\/p>\n
SEQUOIA 1997
\n A CALIFORNIA LIMITED PARTNERSHIP<\/p>\n
By: SC VII-A Management, LLC
\n a California Limited Liability Company,
\n its General Partner<\/p>\n
By:______________________________<\/p>\n
_________________________________
\n Print Name<\/p>\n
_________________________________
\n Title<\/p>\n
Address: 3000 Sand Hill Road, Building 4, Suite 280
\n Menlo Park, California 94025<\/p>\n
SIGNATURE PAGE TO AMENDMENT TO INVESTORS’ RIGHTS AGREEMENT<\/p>\n
104<\/p>\n
ACCEL V L.P.
\n By: Accel V Associates L.L.C.
\n Its General Partner<\/p>\n
By:___________________________________
\n Managing Member<\/p>\n
ACCEL INTERNET\/STRATEGIC
\n TECHNOLOGY FUND L.P.
\n By: Accel Internet\/Strategic Technology Fund
\n Associates L.L.C.
\n Its General Partner<\/p>\n
By:___________________________________
\n Managing Member<\/p>\n
ACCEL KEIRETSU V L.P.
\n By: Accel Keiretsu V Associates L.L.C.
\n Its General Partner<\/p>\n
By:___________________________________
\n Managing Member<\/p>\n
ACCEL INVESTORS ’96 L.P.<\/p>\n
By:_______________________________________
\n General Partner<\/p>\n
ELLMORE C. PATTERSON PARTNERS<\/p>\n
By:_______________________________________
\n General Partner<\/p>\n
Address: 428 University Avenue
\n Palo Alto, California 94301<\/p>\n
SIGNATURE PAGE TO AMENDMENT TO INVESTORS’ RIGHTS AGREEMENT<\/p>\n
105<\/p>\n
LIGHTHOUSE CAPITAL PARTNERS II, L.P.
\n By Lighthouse Management Partners II, L.P.,
\n Its General Partner
\n By Lighthouse Capital Partners, Inc.,
\n Its General Partner<\/p>\n
By:_______________________________________
\n Richard D. Stubblefield, Managing Director<\/p>\n
Address: 100 Drakes Landing Road, Suite 260
\n Greenbrae, California 94904-3121<\/p>\n
MARSHALL SMITH<\/p>\n
By:_______________________________________<\/p>\n
Address: 26535 Weston Drive
\n Los Altos Hills, California 94022<\/p>\n
JOANNE KNIGHT<\/p>\n
By:_______________________________________<\/p>\n
Address: 793 View Street
\n Mountain View, California 94041<\/p>\n
SIGNATURE PAGE TO AMENDMENT TO INVESTORS’ RIGHTS AGREEMENT<\/p>\n
106<\/p>\n
________________________________________
\n Gaurav Garg<\/p>\n
G & H Partners<\/p>\n
By:_____________________________________<\/p>\n
SIGNATURE PAGE TO AMENDMENT TO INVESTORS’ RIGHTS AGREEMENT<\/p>\n
107<\/p>\n
NEW INVESTOR:<\/p>\n
Name:__________________________________<\/p>\n
By:____________________________________<\/p>\n
Print Name:____________________________<\/p>\n
Title:_________________________________<\/p>\n
Address:____________________________________________<\/p>\n
____________________________________________<\/p>\n
SIGNATURE PAGE TO AMENDMENT TO INVESTORS’ RIGHTS AGREEMENT<\/p>\n
108<\/p>\n
SCHEDULE A<\/p>\n
SCHEDULE OF NEW INVESTORS<\/p>\n
Kleiner Perkins Caufield & Byers VII, L.P.<\/p>\n
KPCB VIII Founders Fund, L.P.<\/p>\n
KPCB Information Sciences Zaibatsu Fund II, L.P.<\/p>\n
Norwest Venture Partners VII, LP<\/p>\n
ADC Telecommunications, Inc.<\/p>\n
Comdisco, Inc.<\/p>\n
Paul Johnson<\/p>\n
Presidio Venture Partners<\/p>\n
John M. McQuillan<\/p>\n
Transamerica Business Credit Corporation<\/p>\n
Imperial Bank<\/p>\n
U.S. Telesource, Inc.<\/p>\n
Broadband Office<\/p>\n
Fenwick & West LLP<\/p>\n
_______________________________________________<\/p>\n
_______________________________________________<\/p>\n
_______________________________________________<\/p>\n
109
\n EXHIBIT D<\/p>\n
CERTIFICATE OF MERGER<\/p>\n
OF<\/p>\n
SIARA SYSTEMS, INC.
\n (A DELAWARE CORPORATION)<\/p>\n
INTO<\/p>\n
REDBACK NETWORKS INC.
\n (A DELAWARE CORPORATION)<\/p>\n
UNDER SECTION 251 OF THE DELAWARE GENERAL CORPORATION LAW<\/p>\n
1. The undersigned corporation hereby certifies that:<\/p>\n
FIRST: The constituent corporations of the merger are SIARA
\nSYSTEMS, INC., a Delaware corporation, and REDBACK NETWORKS INC., a Delaware
\ncorporation.<\/p>\n
SECOND: A Merger Agreement and Plan of Reorganization between the
\nconstituent corporations has been approved, adopted, certified, executed and
\nacknowledged by each of the constituent corporations in accordance with Section
\n251 of the General Corporation Law of the State of Delaware.<\/p>\n
THIRD: The name of the surviving corporation of the merger is
\nREDBACK NETWORKS INC.<\/p>\n
FOURTH: The Restated Certificate of Incorporation of the
\nsurviving corporation shall be in the form attached hereto as Exhibit A.<\/p>\n
FIFTH: The executed Merger Agreement and Plan of Reorganization
\nis on file at the surviving corporation’s office. The address of said office is
\n1389 Moffett Park Drive, Sunnyvale, California 94089.<\/p>\n
SIXTH: A copy of the Merger Agreement and Plan of Reorganization
\nwill be furnished by the surviving corporation on request and without cost to
\nany stockholder of any constituent corporation.<\/p>\n
2. This Certificate of Merger shall be effective on ____________.<\/p>\n
110<\/p>\n
IN WITNESS WHEREOF, the undersigned has executed this Certificate
\nof Merger on _______________.<\/p>\n
REDBACK NETWORKS INC.
\n a Delaware corporation<\/p>\n
By:__________________________________<\/p>\n
Name:________________________________<\/p>\n
Its:_________________________________<\/p>\n
111
\n EXHIBIT E<\/p>\n
REDBACK NETWORKS INC.<\/p>\n
Officer’s Certificate<\/p>\n
Pursuant to Section 5.2(d) of the Merger Agreement and Plan of
\nReorganization, dated as of November 28, 1999 (the “Merger Agreement”;
\ncapitalized terms used but not defined herein shall have the respective meanings
\nascribed to them in the Merger Agreement), by and among Redback Networks Inc., a
\nDelaware corporation (the “ACQUIROR”), Siara Systems, Inc., a Delaware
\ncorporation (the “TARGET”), and the Stockholder Agent, I, Dennis L. Barsema, in
\nmy capacity as President and Chief Executive Officer of Acquiror and on behalf
\nof Acquiror, and not individually, DO HEREBY CERTIFY that:<\/p>\n
1. I am the duly elected, qualified and acting President and
\nChief Executive Officer of Acquiror.<\/p>\n
2. Each of the representations and warranties made by Acquiror in
\nArticle 2 of the Merger Agreement, as modified by Acquiror Disclosure Schedule
\n(other than representations and warranties which by their express terms are made
\nsolely as of a specified date earlier than the date of this Officer’s
\nCertificate) is true and correct in all material respects on and as of the date
\nhereof as though such representation or warranty was made on and as of the date
\nhereof; and each of the representations and warranties made by Acquiror in the
\nMerger Agreement as of a specified date earlier than the date of this Officer’s
\nCertificate is true and correct in all material respects on and as of such
\nearlier date, as modified by Acquiror Disclosure Schedule.<\/p>\n
3. Acquiror has performed and complied in all material respects
\nwith each agreement, covenant and obligation required by the Merger Agreement to
\nbe so performed or complied with by Acquiror on or before the date hereof.<\/p>\n
112<\/p>\n
IN WITNESS WHEREOF, the undersigned has executed this Certificate
\nas of the ___ day of ___________, _____.<\/p>\n
By:
\n ————————————–
\n Dennis L. Barsema
\n President and Chief Executive Officer
\n Redback Networks Inc.<\/p>\n
***REDBACK NETWORKS INC. OFFICER’S CERTIFICATE***<\/p>\n
113
\n EXHIBIT F<\/p>\n
LEGAL OPINION OF COUNSEL TO REDBACK NETWORKS INC.<\/p>\n
[subject to standard introductory language, including qualifications,
\nlimitations, etc. and subject to disclosures in Acquiror’s Disclosure Schedule]<\/p>\n
1. Redback Networks Inc. (“Acquiror”) is a corporation duly
\nincorporated, validly existing and in good standing under the laws of the State
\nof Delaware and has all requisite corporate power and authority to own its
\nproperties and to conduct its business as presently conducted. The Company is
\nqualified to do business in
\n —————————————————-<\/p>\n
———————–.<\/p>\n
2. Acquiror has all requisite corporate power and authority to
\nexecute, deliver and perform its obligations under the Merger Agreement and the
\nAncillary Agreements to which it is a party (the “Transaction Documents”). The
\nexecution, delivery and performance of Transaction Documents have been duly
\nauthorized by all necessary corporate and shareholder action of Acquiror, and
\nthe Transaction Documents have been duly executed and delivered by Acquiror.
\nEach of the Transaction Documents constitutes a legal, valid and binding
\nobligation of Acquiror, enforceable against Acquiror in accordance with its
\nterms.<\/p>\n
3. The authorized capitalization of the Company is as follows:<\/p>\n
Common Stock. 80,000,000 shares of Common Stock, $0.0001 par
\nvalue (the “Common Stock”) and 10,000,000 shares of Preferred Stock, none of
\nwhich, to our knowledge, are issued or outstanding.<\/p>\n
4. The execution and delivery by Acquiror and the performance by
\nAcquiror of its obligations under the Transaction Documents do not (i) violate
\nany provision of any federal or Delaware law, rule or regulation applicable to
\nAcquiror; (ii) violate any provision of the Certificate of Incorporation or
\nBylaws of Acquiror, or (iii) require any consents, approvals, permits, order or
\nauthorizations of, or any qualifications, registrations, designations,
\ndeclarations or filings with, any federal or California state governmental
\nauthority on the part of the Acquiror except (x) as contemplated by the
\nAgreement or (y) as have been obtained and are effective.<\/p>\n
114<\/p>\n
EXHIBIT G
\n SIARA SYSTEMS, INC.<\/p>\n
Officer’s Certificate<\/p>\n
Pursuant to Section 5.3(d) of the Merger Agreement and Plan of
\nReorganization, dated as of November 28, 1999 (the “Merger Agreement”;
\ncapitalized terms used but not defined herein shall have the respective meanings
\nascribed to them in the Merger Agreement), by and among Redback Networks Inc., a
\nDelaware corporation (“ACQUIROR”), Siara Systems, Inc., a Delaware corporation
\n(the “TARGET”), and the Stockholder Agent, I, Vivek Ragavan, in my capacity as
\nPresident and Chief Executive Officer of Target and on behalf of Target, and not
\nindividually, DO HEREBY CERTIFY that:<\/p>\n
1. I am the duly elected, qualified and acting President and
\nChief Executive Officer of Target.<\/p>\n
2. Each of the representations and warranties made by Target in
\nArticle 2 of the Merger Agreement, as modified by Target Disclosure Schedule
\n(other than representations and warranties which by their express terms are made
\nsolely as of a specified date earlier than the date of this Officer’s
\nCertificate) is true and correct in all material respects on and as of the date
\nhereof as though such representation or warranty was made on and as of the date
\nhereof; and each of the representations and warranties made by Target in the
\nMerger Agreement as of a specified date earlier than the date of this Officer’s
\nCertificate is true and correct in all material respects on and as of such
\nearlier date, as modified by Target Disclosure Schedule.<\/p>\n
3. Target has performed and complied in all material respects
\nwith each agreement, covenant and obligation required by the Merger Agreement to
\nbe so performed or complied with by Target on or before the date hereof.<\/p>\n
115<\/p>\n
IN WITNESS WHEREOF, the undersigned has executed this Certificate
\nas of the ___ day of _____________, _____.<\/p>\n
By:______________________________________
\n Vivek Ragavan
\n President and Chief Executive Officer
\n Siara Systems, Inc.<\/p>\n
116<\/p>\n
EXHIBIT H
\n LEGAL OPINION OF COUNSEL TO SIARA SYSTEMS, INC.<\/p>\n
[subject to standard introductory language, including qualifications,
\n limitations, etc. and subject to disclosures in Target’s Disclosure Schedule.]<\/p>\n
1. Siara Systems, Inc. (the “Target”) is a corporation duly
\norganized, validly existing and in good standing under the laws of the State of
\nDelaware and has all requisite corporate power and authority to own its
\nproperties and to conduct its business as presently conducted. The Target is
\nqualified to do business in
\n —————————————————-<\/p>\n
————————.<\/p>\n
2. The Target has the requisite corporate power and authority to
\nexecute, deliver and perform its obligations under the Merger Agreement and the
\nAncillary Agreements to which it is a party (the “Transaction Documents”). The
\nexecution, delivery and performance of Transaction Documents by the Target have
\nbeen duly authorized by all necessary corporate and shareholder action of the
\nTarget, and the Transaction Documents have been duly executed and delivered by
\nthe Target. Each of the Transaction Documents constitutes a legal, valid and
\nbinding obligation of the Target, enforceable against the Target in accordance
\nwith its terms.<\/p>\n
3. The authorized capitalization of the Target is as follows:<\/p>\n
(a) Preferred Stock. _____________ shares of Preferred
\nStock, _____ par value (the “Preferred Stock”), _____________ of which shares
\nhave been designated Series A Preferred Stock, of which, to our knowledge,
\n_____________ are issued and outstanding, _____________ of which shares have
\nbeen designated Series B Preferred Stock, _____________ of which, to our
\nknowledge, are issued and outstanding and ______ of which have been designated
\nSeries C Preferred Stock, none of which, to our knowledge, are issued and
\noutstanding prior to the Closing. Such _____________ shares of outstanding
\nSeries A Preferred Stock and Series B Preferred Stock have been duly authorized
\nand validly issued, nonassessable, and, to our knowledge, are fully paid.<\/p>\n
(b) Common Stock. _____________ shares of Common Stock,
\n______ par value (the “Common Stock”), _____________ of which, to our knowledge,
\nhave been duly authorized and validly issued, and, to our knowledge, are fully
\npaid and nonassessable.<\/p>\n
(c) Right to Acquire Stock. To our knowledge, except for (i)
\nthe conversion privileges of the Series A Preferred Stock and Series B Preferred
\nStock, (ii) [rights of first refusal set forth in the Disclosure Schedule],
\n(iii) warrants to purchase _____________ shares of Common Stock, and (iv)
\n_____________ shares of Common Stock reserved for issuance to employees,
\nconsultants, officers, or directors of the Target pursuant to the Target Stock
\nPlan, of which _____________ , to our knowledge, are currently outstanding,
\nthere are, to our knowledge, no options, warrants, conversion privileges or
\nother rights (or agreements for any such rights) outstanding to purchase or
\notherwise obtain from the Target any of the Target’s securities.<\/p>\n
117<\/p>\n
4. The execution, delivery and performance of the obligations of
\nthe Target under the Transaction Documents, do not (i) to our knowledge, violate
\nany provision of any federal, Delaware corporate or California law, rule or
\nregulation applicable to the Target, (ii) violate any provision of the Target’s
\nRestated Certificate of Incorporation or Bylaws, or (iii) require any consents,
\napprovals, permits, order or authorizations of, or any qualifications,
\nregistrations, designations, declarations or filings with, any federal or
\nCalifornia state governmental authority on the part of the Target as of the
\nClosing except (i) as contemplated by the Agreement or (ii) as have been
\nobtained and are effective.<\/p>\n
5. To our knowledge, there is no action, suit, proceeding or
\ninvestigation pending against the Target before any court or governmental
\nagency.<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8660],"corporate_contracts_industries":[],"corporate_contracts_types":[9622,9626],"class_list":["post-43467","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-redback-networks-inc","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43467","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43467"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43467"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43467"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43467"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}