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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
ASPEC TECHNOLOGY, INC.,
ASPEC ACQUISITION FOUR CORPORATION,
INBOX SOFTWARE, INC.
AND CERTAIN SHAREHOLDERS OF
INBOX SOFTWARE, INC.
NOVEMBER 17, 1999
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TABLE OF CONTENTS
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1. Certain Definitions...............................................................1
2. Merger............................................................................3
2.1 Merger; Effective Time of the Merger.....................................3
2.2 Closing..................................................................3
2.3 Effect of the Merger.....................................................3
2.4 Inbox Stock Options and Convertible Securities...........................3
3. Effect of Merger on the Capital Stock of Inbox; Exchange of Certificates..........4
3.1 Exchange of Stock and Cash Consideration.................................4
3.2 Dissenters' Rights.......................................................5
3.3 Fractional Shares........................................................5
3.4 Exchange of Certificates.................................................5
3.5 Taking Necessary Action; Further Action..................................6
4. Securities Act Compliance.........................................................6
4.1 Securities Act Exemption.................................................6
4.2 Stock Restrictions.......................................................7
5. Representations and Warranties of Inbox and the Majority Shareholders.............7
5.1 Organization, Qualification, and Corporate Power.........................7
5.2 Authorization............................................................7
5.3 Capitalization...........................................................8
5.4 Noncontravention.........................................................8
5.5 Broker's Fees............................................................9
5.6 Financial Statements.....................................................9
5.7 Subsidiaries.............................................................9
5.8 Title to Assets..........................................................9
5.9 Events Subsequent to Most Recent Fiscal Period End.......................9
5.10 Undisclosed Liabilities.................................................12
5.11 Legal Compliance........................................................12
5.12 Tax Matters.............................................................12
5.13 Properties..............................................................13
5.14 Intellectual Property...................................................14
5.15 Tangible Assets.........................................................15
5.16 Inventory...............................................................15
5.17 Contracts...............................................................15
5.18 Notes and Accounts Receivable...........................................17
5.19 Power of Attorney.......................................................17
5.20 Insurance...............................................................17
5.21 Litigation..............................................................17
5.22 Product Warranty........................................................18
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TABLE OF CONTENTS
(CONTINUED)
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5.23 Product Liability.......................................................18
5.24 Employees...............................................................18
5.25 Employee Benefits.......................................................18
5.26 Guaranties..............................................................20
5.27 Environment, Health, and Safety.........................................20
5.28 Certain Business Relationships With Inbox...............................21
5.29 No Adverse Developments.................................................22
5.30 Full Disclosure.........................................................22
6. Representations and Warranties of Aspec..........................................22
6.1 Organization, Qualification, and Corporate Power........................22
6.2 Authorization...........................................................22
6.3 Capitalization..........................................................23
6.4 Noncontravention........................................................23
6.5 SEC Filings.............................................................23
6.6 Financial Statements....................................................24
6.7 Litigation..............................................................24
6.8 No Adverse Developments.................................................24
7. Pre-Closing Covenants............................................................24
7.1 General.................................................................24
7.2 Notices and Consents....................................................24
7.3 Conduct of Business.....................................................25
7.4 Preservation of Business................................................25
7.5 Access to Information...................................................25
7.6 Notice of Developments..................................................25
7.7 Exclusivity.............................................................25
7.8 Break up Loan...........................................................26
8. Post-Closing Covenants...........................................................27
8.1 General.................................................................27
8.2 Litigation Support......................................................27
8.3 Transition..............................................................27
8.4 Confidentiality.........................................................27
8.5 Inbox Employees.........................................................27
9. Conditions to Obligations........................................................27
9.1 Conditions to Aspec's Obligation to Close...............................27
9.2 Conditions to Inbox's Obligation........................................29
10. Survival of Representations, Warranties and Covenants; Escrow....................29
10.1 Survival of Representations and Warranties..............................29
10.2 Escrow Arrangements.....................................................30
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TABLE OF CONTENTS
(CONTINUED)
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11. Termination......................................................................35
11.1 Termination of the Agreement............................................35
11.2 Effect of Termination...................................................36
12. Miscellaneous....................................................................36
12.1 Publicity...............................................................36
12.2 No Third-Party Beneficiaries............................................36
12.3 Entire Agreement........................................................36
12.4 Succession and Assignment...............................................36
12.5 Counterparts............................................................37
12.6 Headings................................................................37
12.7 Notices.................................................................37
12.8 Governing Law; Dispute Resolution.......................................38
12.9 Amendments and Waivers..................................................39
12.10 Severability............................................................39
12.11 Expenses................................................................39
12.12 Construction............................................................39
12.13 Incorporation of Exhibits and Schedules.................................39
EXHIBITS
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Exhibit A Certificate of Merger
Exhibit B List of Inbox Shareholders
Exhibit C Inbox Disclosure Schedule
Exhibit D Aspec Disclosure Schedule
Exhibit E Employment Agreement--Xxxxx Xxxxx
Exhibit F Employment Agreement--Xxxxxxx Xxxxx
Exhibit G Employment Agreement--Xxxx Xxxx
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "AGREEMENT") is entered
into as of November 17, 1999, by and among Aspec Technology, Inc., a Delaware
corporation ("ASPEC"), Aspec Acquisition Four Corporation, a California
corporation and a wholly-owned subsidiary of Aspec ("MERGER SUB"), Inbox
Software, Inc., a California corporation ("INBOX"), Xxxxx Xxxxx, Xxxx Xxxx, and
Xxxxxxx X. Xxxxx (collectively, the "MAJORITY SHAREHOLDERS") and VenCraft, LLC
("PREFERRED SHAREHOLDER"). Aspec, Merger Sub, Inbox and the Majority
Shareholders are sometimes referred to herein individually as a "PARTY" and
collectively as the "PARTIES".
RECITALS
A. Pursuant to Articles of Merger providing for the merger of Merger Sub
with and into Inbox pursuant to the California Business Corporation Act (the
"CBCA"), the shares of Common Stock of Inbox, no par value, issued and
outstanding immediately prior to the effective time of such merger and all
shares of Common Stock of Inbox reserved for outstanding Inbox vested and
unvested stock options will be converted into an aggregate of 2,400,000 shares
of Aspec Common Stock (the "ASPEC SHARES") and seven million six hundred and
forty thousand dollars ($7,640,000) cash ("CASH"), and Inbox will become a
wholly-owned subsidiary of Aspec.
B. The Parties desire to enter into this Agreement for the purpose of
setting forth certain representations, warranties and covenants made by each to
the other as an inducement to the execution and delivery of this Agreement, and
to serve as conditions precedent to the consummation of the merger of Merger Sub
with and into Inbox.
C. The respective Boards of Directors of Aspec and Inbox have approved
and adopted this Agreement.
NOW, THEREFORE, in consideration of these premises and of the mutual
agreements, representations, warranties and covenants herein contained, the
parties hereto do hereby agree as follows:
AGREEMENT
1. Certain Definitions. As used in this Agreement, the following terms
have the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and vice versa). Certain other terms are defined
in the text of this Agreement.
"AFFILIATE" of a Person means any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such Person.
"BUSINESS CONDITION" means the business, financial condition, results of
operations and assets of such corporate entity.
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"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation, retirement plan, severance plan or similar plan or arrangement;
(b) Employee Pension Benefit Plan; (c) Employee Welfare Benefit Plan; and (d)
any other nonqualified plan providing welfare benefits, including but not
limited to medical, dental, life insurance and disability benefits.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Sec. 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Sec. 3(1).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GROSS NEGLIGENCE" consists of an intentional act, or the failure to
perform a duty, with reckless disregard for the consequences of such act or
failure.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, drawings, specifications, customer and
supplier lists, pricing and cost information, financial information, and
business and marketing plans and proposals), (e) all computer software
(including data and related documentation), (f) all other proprietary rights,
and (g) all copies and tangible embodiments thereof (in whatever form or
medium).
"LOSSES" shall mean any and all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses in connection with any action, suit or proceeding to the extent of the
amount of such actions, suits, proceedings, hearings, investigations, charges,
complaints, claims, demands, injunctions, judgments, orders, decrees, rulings,
damages, dues, penalties, fines, costs, reasonable amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses or fees.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
Business Condition of the corporate entity and its subsidiaries.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Sec. 3(37) and
Code Sec. 414(f).
"INBOX SHAREHOLDERS" shall mean the shareholders of record of Inbox
immediately prior to the Effective Time of the Merger (other than the holders of
Dissenting Shares (as defined herein)).
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"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease arrangements,
and (d) other liens arising in the Ordinary Course of Business and not incurred
in connection with the borrowing of money.
2. Merger.
2.1 Merger; Effective Time of the Merger. Subject to the terms
and conditions of this Agreement, Merger Sub will be merged with and into Inbox
(the "MERGER") in accordance with the CBCA, and, as a result, Inbox will become
a wholly-owned subsidiary of Aspec. In accordance with the provisions of this
Agreement, Articles of Merger in the form attached hereto as Exhibit A, (the
"MERGER AGREEMENT") shall be filed with the California Secretary of State in
accordance with the CBCA on the Closing Date (as defined in Section 2.2) and
each issued and outstanding share of Common Stock, no par value, of Inbox
("INBOX STOCK") shall be converted into a fraction of a share of Common Stock,
$0.001 par value, of Aspec ("ASPEC COMMON STOCK") and cash in the manner
contemplated by Section 3. The Merger shall become effective at the time of the
filing of the Merger Agreement with the California Secretary of State (the date
of such filing being hereinafter referred to as the "EFFECTIVE DATE OF THE
MERGER" and the time of such filing being hereinafter referred to as the
"EFFECTIVE TIME OF THE MERGER").
2.2 Closing. The closing of the Merger (the "CLOSING") will take
place on November 23, 1999, or as soon as practicable after satisfaction or
waiver of the latest to occur of the conditions set forth in Section 9 (the
"CLOSING DATE"), at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000-0000.
2.3 Effect of the Merger. At the Effective Time of the Merger,
(i) the separate existence of Merger Sub shall cease and Merger Sub shall be
merged with and into Inbox (Merger Sub and Inbox are sometimes referred to
herein as the "CONSTITUENT CORPORATIONS" and Inbox after the Merger is sometimes
referred to herein as the "SURVIVING CORPORATION"), (ii) the Articles of
Incorporation of Merger Sub shall be the Articles of Incorporation of the
Surviving Corporation, (iii) the Bylaws of Merger Sub shall be the Bylaws of the
Surviving Corporation, (iv) the directors of Merger Sub shall be the directors
of the Surviving Corporation and (v) the Merger shall, from and after the
Effective Time of the Merger, have all the effects provided by applicable law.
2.4 Inbox Stock Options and Convertible Securities. On the
Effective Time of the Merger, all outstanding stock options of Inbox which are
not exercised prior to Closing shall be converted into Aspec stock options,
respectively, with the number of shares and exercise price being converted at
the same conversion ratio as the "STOCK EXCHANGE RATIO" set forth in Section
3.1. The
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vesting schedule for the new Aspec options shall remain the same as the vesting
schedule for the assumed Inbox options.
3. Effect of Merger on the Capital Stock of Inbox; Exchange of
Certificates.
3.1 Exchange of Stock and Cash Consideration. Each Inbox
Shareholder may elect to receive, for each share of Inbox Common Stock held by
such shareholder, either (i) shares of Aspec Common Stock and cash as set forth
below (the "CASH AND STOCK ELECTION") or (ii) shares of Aspec Common Stock as
set forth below (the "STOCK ELECTION"). For those Inbox Shareholders choosing
the Cash and Stock Election, as of the Effective Time of the Merger, each share
of Inbox Common Stock that is issued and outstanding immediately prior to the
Effective Time of the Merger (except as provided for in Section 3.2 below) held
by such shareholders or designated by such Inbox Shares as subject to the Cash
and Stock Election, shall, by virtue of the Merger and without any action on the
part of Inbox Shareholders, be converted into (i) an amount of cash determined
by dividing $7,640,000 by the aggregate number of shares of Inbox Common Stock
issued and outstanding immediately prior to the Effective Time of the Merger so
designated by Inbox Shareholders electing the Cash and Stock Election (the "CASH
EXCHANGE RATIO"), and (ii) a number of shares of Aspec Common Stock determined
by the following formula:
(Total Inbox Shares Designated X (1.055 - Cash
by Cash Shareholders) Exchange Ratio)
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1.25
where "Total Inbox Shares Designated by Cash Shareholders" equals the aggregate
number of shares of Inbox Common Stock issued and outstanding immediately prior
to the Effective Time of the Merger designated by Inbox Shareholders selecting
the Cash and Stock Election (including any shares issued upon the exercise,
conversion or exchange of outstanding Inbox options or Inbox convertible
securities and any Dissenting Shares). For those Inbox Shareholders choosing the
Stock Election, each share of Inbox Common Stock that is issued and outstanding
immediately prior to the Effective Time of the Merger (except as provided for in
Section 3.2 below) held by such shareholders, shall, by virtue of the Merger and
without any action on the part of Inbox Shareholders, be converted into a number
of shares of Aspec Common Stock determined by the following formula:
(Total Inbox Shares Owned X 1.055
by Stock Shareholders)
--------------------------------------------------------
1.25
where "Total Inbox Shares Owned by Stock Shareholders" equals the aggregate
number of shares of Inbox Common Stock issued and outstanding immediately prior
to the Effective Time of the Merger and all shares of Inbox Common Stock
issuable upon exercise, conversion or exchange of outstanding options (vested
and unvested), designated by Inbox Shareholders selecting the Stock Election
(including any shares issued upon the exercise, conversion or exchange of
outstanding Inbox options or Inbox convertible securities and any Dissenting
Shares) (the "STOCK EXCHANGE RATIO"). An Inbox Shareholder list showing the
shares of Aspec Common Stock and cash to be
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exchanged for the shares of Inbox Common Stock held by each Inbox Shareholder
will be attached as Exhibit B prior to Closing.
3.2 Dissenters' Rights. If holders of Inbox Common Stock are
entitled to dissenters' rights at the Effective Time of the Merger under Section
1300 et seq. of the CBCA, the shares as to which dissenters' rights are
available ("DISSENTING SHARES") shall not be converted into Aspec Common Stock
on or after the Effective Time of the Merger, but shall instead be converted
into the right to receive from the Surviving Corporation such consideration as
may be determined to be due with respect to such Dissenting Shares pursuant to
the CBCA. Each holder of Dissenting Shares (a "DISSENTING SHAREHOLDER") who,
pursuant to the provisions of Section 1300 et seq. of the CBCA, becomes entitled
to payment of the value of shares of Inbox Common Stock held by such Dissenting
Shareholder shall receive payment therefor (but only after the value therefor
shall have been agreed upon or finally determined pursuant to such provisions).
In the event of the legal obligation, after the Effective Time of the Merger, to
deliver shares of Aspec Common Stock to any Dissenting Shareholder who shall
have failed to make an effective demand for appraisal or shall have lost his
status as a Dissenting Shareholder, the Surviving Corporation shall issue and
deliver, upon surrender by such Dissenting Shareholder of his certificate or
certificates representing shares of Inbox Common Stock, the shares of Aspec
Common Stock to which such Dissenting Shareholder is then entitled under this
Section 3.2 and Section 1300 et seq. of the CBCA. The Surviving Corporation will
pay all sums due to holders of Dissenting Shares on account of such shares. To
the extent that Aspec or Inbox makes any payment or payments in respect of any
Dissenting Shares, Aspec shall be entitled to recover under the terms of Section
10 hereof (by surrender of shares of Aspec Common Stock) (i) the aggregate
amount by which such payment or payments exceed the aggregate amount of Aspec
Common Stock and cash that otherwise would have been payable in respect of such
shares plus (ii) the aggregate fees and expenses (including reasonable
attorneys' fees and expenses) incurred by Aspec or the Surviving Corporation in
connection with calculating, settling or litigating the amount of, or making,
any such payment.
3.3 Fractional Shares. No fractional shares of Aspec Common
Stock shall be issued in the Merger. In lieu thereof, each holder of shares of
Inbox Common Stock who would otherwise be entitled to receive a fraction of a
share of Aspec Common Stock shall receive from Aspec an amount of cash (rounded
to the nearest whole cent) equal to the product of the fraction of a share of
Aspec Common Stock to which such holder would otherwise be entitled and $1.25.
For the purpose of determining fractional shares, all shares of Aspec Common
Stock to be issued to any Inbox shareholder shall be aggregated.
3.4 Exchange of Certificates.
(a) Exchange Agent. Prior to the Closing Date, Aspec
shall appoint itself or ChaseMellon Shareholder Services, L.L.C. to act as the
exchange agent (the "EXCHANGE AGENT") in the Merger.
(b) Aspec to Provide Aspec Common Stock. Promptly after
the Effective Date of the Merger, Aspec shall make available for exchange in
accordance with this Section 3, through such reasonable procedures as Aspec may
adopt, the shares of Aspec Common Stock issuable pursuant to Section 3.1 in
exchange for outstanding shares of Inbox Common Stock.
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(c) Exchange Procedures. As soon as practicable after
the Effective Date of the Merger, Aspec shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Date of the
Merger represented outstanding shares of Inbox Common Stock (the "CERTIFICATES")
whose shares are being converted into shares of Aspec Common Stock pursuant to
Section 3.1 hereof (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and which
shall be in such form and have such other provisions as Aspec may reasonably
specify, including appropriate investment representations to be made by each
such shareholder) (the "LETTER OF TRANSMITTAL") and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for shares of Aspec
Common Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Aspec, together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor the number of shares of Aspec
Common Stock and cash to which the holder of Inbox Common Stock is entitled
pursuant to Section 3.1 hereof. The Certificate so surrendered shall forthwith
be canceled. No interest will accrue or be paid to the holder of any outstanding
Inbox Common Stock. From and after the Effective Date of the Merger, until
surrendered as contemplated by this Section 3.4, each Certificate shall be
deemed for all corporate purposes to evidence the number of shares of Aspec
Common Stock and cash into which the shares of Inbox Common Stock represented by
such Certificate have been converted.
(d) No Further Ownership Rights in Capital Stock of
Inbox. The shares of Aspec Common Stock and cash delivered upon the surrender
for exchange of shares of Inbox Common Stock in accordance with the terms hereof
shall be deemed to have been delivered in full satisfaction of all rights
pertaining to such Inbox Common Stock. There shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of Inbox
Common Stock which were outstanding immediately prior to the Effective Date of
the Merger. If, after the Effective Date of the Merger, Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Section 3.4, provided that the presenting
holder is listed on Inbox's shareholder list as a holder of Inbox Common Stock.
3.5 Taking Necessary Action; Further Action. Aspec, Merger Sub,
Inbox and the Majority Shareholders shall take all such actions as may be
necessary or appropriate in order to effect the Merger as promptly as possible.
If, at any time after the Effective Date of the Merger, any further action is
necessary or desirable to carry out the purposes of this Agreement and to vest
the Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of Inbox, the officers and
directors of the Surviving Corporation are fully authorized in the name of the
corporation or otherwise to take, and shall take, all such action.
4. Securities Act Compliance.
4.1 Securities Act Exemption. The issuance of the Aspec Common
Stock in the Merger shall not be registered under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), in reliance upon Section 4(2) and/or Regulation
D of the Securities Act.
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4.2 Stock Restrictions. The certificates representing the shares
of Aspec Common Stock issued pursuant to this Agreement shall bear a restrictive
legend (and stop transfer orders shall be placed against the transfer thereof
with Aspec's transfer agent), stating substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SHARES MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED
OR OTHERWISE DISPOSED OF EXCEPT (I) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO, (II) IN COMPLIANCE WITH
RULE 144 OR (III) PURSUANT TO AN OPINION OF COUNSEL FOR ASPEC
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT
OF 1933."
5. Representations and Warranties of Inbox and the Majority
Shareholders. Inbox and each of the Majority Shareholders severally and not
jointly represents and warrants to Aspec and Merger Sub that the statements
contained in this Section 5 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 5), except as set forth in the disclosure
schedule delivered by Inbox to Aspec on the date hereof (and initialed by
Aspec), a copy of which is attached hereto as Exhibit C (referred to herein as
the "INBOX DISCLOSURE SCHEDULE"). The Inbox Disclosure Schedule will be arranged
in paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 5.
5.1 Organization, Qualification, and Corporate Power. Inbox is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of California. Inbox is duly authorized to conduct business
and is in good standing under the laws of each other jurisdiction where such
qualification is required, except where the failure to be so qualified and to be
in good standing would not have a Material Adverse Effect on Inbox. There is no
state, other than California, in which Inbox owns any property or in which it
has any employees, offices or operations. Inbox has full corporate power and
authority, and has all necessary and material licenses and permits, to carry on
the businesses in which it is engaged and to own and use the properties owned
and used by it. Section 5.1 of the Inbox Disclosure Schedule lists the directors
and officers of Inbox. Except as specified in Section 5.1 of the Inbox
Disclosure Schedule, the operations now being conducted by Inbox have not been
conducted under any other name during the past five (5) years.
5.2 Authorization. Inbox has full corporate power and authority
to execute and deliver this Agreement and the Merger Agreement, and, subject to
receipt of the requisite approval of its shareholders, to consummate the
transactions contemplated hereunder and to perform its obligations hereunder and
no other proceedings on the part of Inbox are necessary to authorize the
execution, delivery and performance of this Agreement and the Merger Agreement.
This Agreement and the Merger Agreement and the transactions contemplated
thereby have been approved (or will be approved prior to the Closing Date) by
Inbox's Board of Directors and Shareholders. This Agreement and the Merger
Agreement constitute the valid and legally binding obligations of Inbox,
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enforceable against Inbox in accordance with their respective terms and
conditions. Inbox need not give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental agency
in order to consummate the transactions contemplated by this Agreement; except
that Inbox makes no representation with respect to bankruptcy, insolvency,
reorganization, moratorium or other similar law of general application affecting
creditors' or secured creditors' rights, including (without limitation)
applicable fraudulent transfer laws.
5.3 Capitalization.
(a) Capital Stock. As of the date of this Agreement, the
entire authorized capital stock of Inbox consists of 25,000,000 shares of Common
Stock, 6,449,153 of which are issued and outstanding, and 2,222,222 shares of
Preferred Stock, 2,222,222 of which are issued and outstanding. In addition,
options to purchase 1,414,998 shares of Inbox Common Stock are currently
outstanding. All of the issued and outstanding shares of capital stock have been
duly authorized, are validly issued, fully paid, and non-assessable, and are
held of record by the respective shareholders as set forth in Section 5.3(a) of
the Inbox Disclosure Schedule. All of the outstanding shares of capital stock
have been offered, issued and sold by Inbox in compliance with applicable
Federal and state securities laws. As of the Closing Date, the entire authorized
capital stock of Inbox shall consist of 25,000,000 shares of Common Stock,
8,671,375 of which shall be issued and outstanding and options to purchase
1,414,998 shares of Inbox Common Stock. All shares of Preferred Stock shall be
converted to Common Stock prior to Closing. As of the Closing Date, all of the
then issued and outstanding shares of capital stock shall have been duly
authorized, shall be validly issued, fully paid, and non-assessable, and shall
be held of record by the respective shareholders as set forth in Section 5.3(a)
of the Inbox Disclosure Schedule. As of the Closing Date, all of the then
outstanding shares of capital stock shall have been offered, issued and sold by
Inbox in compliance with applicable Federal and state securities laws.
(b) No Other Rights or Agreements. As of the date of
this Agreement, Section 5.3(b) of the Inbox Disclosure Schedule lists all of the
holders of options, warrants, purchase rights, subscription rights, conversion
rights, convertible debentures or other securities, exchange rights and other
rights that could require Inbox to issue, sell or otherwise cause to become
outstanding any of its capital stock (the "STOCK RIGHTS"), and the number of
shares of Inbox Common Stock subject to such Stock Rights. Except as set forth
in Section 5.3(b) of the Inbox Disclosure Schedule, there are no other
outstanding or authorized Stock Rights. Except as set forth in Section 5.3(b) of
the Inbox Disclosure Schedule, there are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to Inbox. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of Inbox. As of
the Effective Time of the Merger, there will be (i) no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights with
respect to Inbox and (ii) no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of Inbox.
5.4 Noncontravention. Neither the execution and the delivery of
this Agreement by Inbox nor the consummation by Inbox of the transactions
contemplated hereby, will (A) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which Inbox is subject or
any
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13
provision of its Articles of Incorporation or bylaws, or (B) (i) conflict with,
(ii) result in a breach of, (iii) constitute a default under, (iv) result in the
acceleration of, (v) create in any party the right to accelerate, terminate,
modify, or cancel, or (vi) except as set forth in Section 5.4 of the Inbox
Disclosure Schedule, require any notice under, any material agreement, contract,
lease, license, instrument, franchise permit or other arrangement to which Inbox
is a party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets).
5.5 Broker's Fees. Neither Inbox nor any of the Majority
Shareholders has any liability or obligation to pay any fees or commissions to
any broker, finder or agent with respect to the transactions contemplated by
this Agreement.
5.6 Financial Statements. Section 5.6 of the Inbox Disclosure
Schedule contains the following financial statements (collectively the
"FINANCIAL STATEMENTS"): (i) unaudited balance sheets and statements of income
and cash flows as of and for the fiscal year ended December 31, 1998 (the "MOST
RECENT FISCAL YEAR END") for Inbox; and (ii) an unaudited balance sheet and
statements of income and cash flows (the "MOST RECENT FINANCIAL STATEMENTS") as
of and for the fiscal periods ended March 31, 1999, June 30, 1999, and September
30, 1999 (the "MOST RECENT FISCAL PERIOD ENDS") for Inbox. The Financial
Statements (including the notes thereto) have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods covered thereby and present fairly the financial
condition of Inbox as of such dates and the results of operations of Inbox for
such periods; provided, however, that the Most Recent Financial Statements lack
footnotes and certain other presentation items and are subject to normal year
end adjustments. Except as set forth in Section 5.6 of the Inbox Disclosure
Schedule, the books of account of Inbox reflect as of the dates shown thereon
all items of income and expenses, and all assets, liabilities and accruals of
Inbox required to be reflected therein, in accordance with generally accepted
accounting principles consistently applied.
5.7 Subsidiaries. Inbox has no subsidiaries and has not been a
subsidiary of another company.
5.8 Title to Assets. Inbox has good and marketable title to, or
a valid leasehold interest in, the properties and assets (including, without
limitation, all Intellectual Property) used by it, located on its premises, or
shown on the balance sheet contained within the Most Recent Financial Statements
(the "MOST RECENT BALANCE SHEET") or acquired after the date thereof, free and
clear of all Security Interests, except for properties and assets disposed of in
the Ordinary Course of Business since the date of the Most Recent Balance Sheet
and except as set forth in Section 5.8 of the Inbox Disclosure Schedule. No
Person other than Inbox will own at the time of the Closing any assets or
properties (other than leasehold interests) currently utilized in or necessary
to the operations or business of Inbox or situated on any of the premises of
Inbox. There are no existing contracts, agreements, commitments or arrangements
with any Person to acquire any of the assets or properties of Inbox (or any
interest therein) except for this Agreement, and other than with respect to
assets not exceeding $10,000, or properties sold by Inbox in the Ordinary Course
of Business.
5.9 Events Subsequent to Most Recent Fiscal Period End. Except
as set forth in Schedule 5.9 of the Inbox Disclosure Schedule, since the Most
Recent Fiscal Period End, there has
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not been any material adverse change in the Business Condition of Inbox. Subject
to and without limiting the generality of the foregoing, since that date:
(a) Inbox has not sold, leased, transferred, or assigned
any assets or properties, tangible or intangible, outside the Ordinary Course of
Business;
(b) except for those agreements, contracts, leases and
commitments identified in Section 5.17 of the Inbox Disclosure Schedule, Inbox
has not entered into, assumed or become bound under or obligated by any
agreement, contract, lease or commitment (collectively an "INBOX AGREEMENT") or
extended or modified the terms of any Inbox Agreement which (i) involves the
payment of greater than $25,000 per annum or which extends for more than one (1)
year, (ii) involves any payment or obligation to any Affiliate of Inbox other
than in the Ordinary Course of Business, (iii) involves the sale of any material
assets, (iv) involves any OEM relationship, or (v) involves any license of
Inbox's technology;
(c) to the knowledge of Inbox, no party (including
Inbox) has accelerated, terminated, made modifications to, or canceled any
agreement, contract, lease, or license to which Inbox is a party or by which it
is bound and Inbox has not modified, canceled or waived or settled any debts or
claims held by it, outside the Ordinary Course of Business, or waived or settled
any rights or claims of a substantial value, whether or not in the Ordinary
Course of Business;
(d) none of the assets of Inbox, tangible or intangible,
has become subject to any Security Interest;
(e) Inbox has not made any capital expenditures except
in the Ordinary Course of Business and not exceeding $50,000 in the aggregate of
all such capital expenditures;
(f) Inbox has not made any capital investment in, or any
loan to, any other Person;
(g) Inbox has not created, incurred, assumed, prepaid or
guaranteed any indebtedness for borrowed money and capitalized lease
obligations, or extended or modified any existing indebtedness, except as
provided in Sections 5.6 and 5.10 hereof;
(h) Inbox has not granted any license or sublicense of
any rights under or with respect to any Intellectual Property;
(i) there has been no change made or authorized in the
Articles of Incorporation or bylaws of Inbox;
(j) Inbox has not issued, sold, or otherwise disposed of
any of its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (except upon the conversion, exchange or exercise of any such
securities which are described on Section 5.3 of the Inbox Disclosure Schedule)
any of its capital stock;
(k) Inbox has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or
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otherwise acquired any of its capital stock (other than with respect to any
Dissenting Shares (as defined herein));
(l) Inbox has not experienced any damage, destruction,
or loss (whether or not covered by insurance) to its property in excess of
$25,000 in the aggregate of all such damage, destruction and losses;
(m) Inbox has not suffered any repeated, recurring or
prolonged shortage, cessation or interruption of inventory shipments, supplies
or utility services;
(n) Inbox has not made any loan to, or entered into any
other transaction with, or paid any bonuses in excess of an aggregate of $25,000
to, any of its Affiliates, directors, officers, or employees or their
Affiliates, and, in any event, any such transaction was on fair and reasonable
terms no less favorable to Inbox than would be obtained in a comparable arm's
length transaction with a Person which is not such a director, officer or
employee or Affiliate thereof;
(o) Inbox has not entered into any employment contract
or collective bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement;
(p) Inbox has not granted any increase in the base
compensation of any of its directors or officers, or, except in the Ordinary
Course of Business, any of its employees;
(q) Inbox has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers, or
employees (or taken any such action with respect to any other Employee Benefit
Plan);
(r) Inbox has not made any other change in employment
terms for any of its directors or officers, and Inbox has not made any other
change in employment terms for any other employees outside the Ordinary Course
of Business;
(s) Inbox has not suffered any material adverse change
or any threat of any material adverse change in its relations with, or any loss
or threat of loss of, any of its major customers, distributors or dealers;
(t) Inbox has not suffered any material adverse change
or any threat of any material adverse change in its relations with, or any loss
or threat of loss of, any of it major suppliers;
(u) Inbox has not received notice or had knowledge of
any actual or threatened labor trouble or strike, or any other occurrence, event
or condition of a similar character;
(v) Inbox has not changed any of the accounting
principles followed by it or the method of applying such principles, except as
described on Schedule 5.6 of the Inbox Disclosure Schedule;
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(w) Inbox has not made a change in any of its banking or
safe deposit arrangements;
(x) Inbox has not entered into any transaction other
than in the Ordinary Course of Business; and
(y) Inbox has not committed to any of the foregoing.
5.10 Undisclosed Liabilities. Except as set forth in Schedule
5.10 of the Inbox Disclosure Schedule, Inbox has no material liability (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for taxes) of a
character which, under GAAP, should be accrued, shown or disclosed on a balance
sheet of Inbox, except for (i) liabilities set forth on the Most Recent Balance
Sheet and (ii) liabilities which have arisen after the Most Recent Fiscal Period
End in the Ordinary Course of Business.
5.11 Legal Compliance. Inbox has complied in all respects with
all applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof). To the knowledge of
Inbox, no action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand, notice or inquiry has been filed or commenced by or against, or
received by, any governmental body alleging any failure to so comply. Inbox has
all licenses, permits, approvals, registrations, qualifications, certificates
and other governmental authorizations that are necessary for the operations of
Inbox as they are presently conducted.
5.12 Tax Matters.
(a) For purposes of this Agreement, "TAXES" means all
federal, state, municipal, local or foreign income, gross receipts, windfall
profits, severance, property, production, sales, use, value added, license,
excise, franchise, employment, withholding, capital stock, levies, imposts,
duties, transfer and registration fees or similar taxes or charges imposed on
the income, payroll, properties or operations of Inbox, together with any
interest, additions or penalties, deficiencies or assessments with respect
thereto and any interest in respect of such additions or penalties.
(b) Inbox has filed all reports and returns with respect
to any Taxes ("TAX RETURNS") that it was required to file, except as disclosed
in Section 5.12 of the Inbox Disclosure Schedule. All such Tax Returns were
correct and complete in all material respects, and no such Tax Returns are
currently the subject of audit. All Taxes owed by Inbox (whether or not shown on
any Tax Return) were paid in full when due or are being contested in good faith
and are supported by adequate reserves on the Most Recent Financial Statements,
except any state Taxes (other than California related Taxes) which are not
individually or in the aggregate material to Inbox. Inbox has provided adequate
reserves on its Financial Statements for the payment of any taxes accrued but
not yet due and payable. Inbox is not currently the beneficiary of any extension
of time within which to file any Tax Return, and Inbox has not waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to any Tax assessment or deficiency.
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(c) There is no dispute or claim concerning any Tax
liability of Inbox either (A) claimed or raised by any authority in writing or
(B) based upon personal contact with any agent of such authority. There are no
tax liens of any kind upon any property or assets of Inbox, except for inchoate
liens for taxes not yet due and payable.
(d) Inbox has not filed a consent under Sec. 341(f) of
the Internal Revenue Code of 1986, as amended (the "CODE") concerning
collapsible corporations. Inbox has not made any payments, is not obligated to
make any payments, and is not a party to any agreement that under any
circumstances could obligate it to make any payments as a result of the
consummation of the Merger that will not be deductible under Code Sec. 280G.
Inbox has not been a United States real property holding corporation within the
meaning of Code Sec. 897(c)(2) during the applicable period specified in Code
Sec. 897(c)(1)(A)(ii). Inbox is not a party to any tax allocation or sharing
agreement. Inbox (A) has not been a member of any affiliated group within the
meaning of Code Sec. 1504 or any similar group defined under a similar provision
of state, local, or foreign law (an "AFFILIATED GROUP") filing a consolidated
federal Income Tax Return and (B) has no any liability for the taxes of any
Person under Treas. Reg. Section 1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by contract, or otherwise.
(e) The unpaid Taxes of Inbox (A) did not, as of the
Most Recent Fiscal Period End, exceed by any amount the reserve for Tax
liability (other than any reserve for deferred taxes established to reflect
timing differences between book and tax income) set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (B) will not
exceed that reserve as adjusted for operations and transactions through the
Closing Date in accordance with the past custom and practice of Inbox in filing
its Tax Returns.
5.13 Properties.
(a) Inbox does not currently own and has never
previously owned any real property.
(b) Section 5.13 of the Inbox Disclosure Schedule lists
and describes briefly all real property leased or subleased to Inbox. Inbox has
made available to Aspec correct and complete copies of the leases and subleases
listed in Section 5.13 of the Inbox Disclosure Schedule (as amended to date).
With respect to each lease and sublease listed in Section 5.13 of the Inbox
Disclosure Schedule to the knowledge of Inbox:
(i) the lease or sublease is legal, valid,
binding, enforceable, and in full force and effect in all respects;
(ii) no party to the lease or sublease is in
breach or default, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination, modification,
or acceleration thereunder;
(iii) no party to the lease or sublease has
repudiated any provision thereof;
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(iv) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease:
(v) Inbox has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold; and
(vi) all facilities leased or subleased
thereunder have received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation thereof, and
have been operated and maintained in accordance with applicable laws, rules, and
regulations.
5.14 Intellectual Property.
(a) To the knowledge of Inbox, Inbox has not interfered
with, infringed upon, misappropriated or violated any Intellectual Property
rights of third parties. Inbox has not received since its inception any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that Inbox
must license or refrain from using any Intellectual Property rights of any third
party), except as disclosed in Section 5.14 of the Inbox Disclosure Schedule. To
the knowledge of Inbox, no third party has interfered with, infringed upon,
misappropriated, or violated any Intellectual Property rights of Inbox. Each
employee of Inbox has signed an invention assignment and/or confidentiality
agreement with Inbox that provides that any Intellectual Property developed by
such employee while employed by Inbox is the sole property of Inbox.
(b) Section 5.14(b) of the Inbox Disclosure Schedule
identifies (i) all Intellectual Property owned by Inbox including all trade
secrets relating to its products and (ii) each patent or registration which has
been issued to Inbox or any Affiliate of Inbox with respect to any of the
Intellectual Property used in Inbox's business, (iii) each pending patent
application or application for registration which Inbox or any Affiliate of
Inbox has made with respect to any of the Intellectual Property used in Inbox's
business, and (iv) each material license, agreement, or other permission which
Inbox or any Affiliate of Inbox has granted to any third party with respect to
any of the Intellectual Property used in Inbox's business (together with any
exceptions). Inbox has made available to Aspec correct and complete copies of
all such patents, registrations, applications, licenses, agreements, and
permissions (as amended to date). Section 5.14(b) of the Inbox Disclosure
Schedule also identifies (i) each trade name or unregistered trademark used by
Inbox or any Affiliate of Inbox which is material to the business of Inbox and
(ii) each unregistered copyright or trade secret owned by Inbox or any Affiliate
of Inbox with respect to Intellectual Property which is material to the business
of Inbox. With respect to each item of Intellectual Property required to be
identified in Section 5.14(b) of the Inbox Disclosure Schedule:
(i) Inbox possesses all right, title, and
interest in and to the item of Intellectual Property, free and clear of any
Security Interest (except as disclosed in Section 5.8 of the Inbox Disclosure
Schedule), license or other restriction;
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(ii) the item of Intellectual Property is legal
and valid and in full force and effect and is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
knowledge of Inbox, threatened which challenges the legality, validity,
enforceability, use or ownership of the item; and
(iv) Inbox has never agreed to indemnify any
Person for or against any interference, infringement, misappropriation, or other
conflict with respect to the item, except pursuant to the contracts set forth in
Section 5.17 of the Inbox Disclosure Schedule.
(c) Section 5.14(c) of the Inbox Disclosure Schedule
identifies each material item of Intellectual Property that any third party owns
and that Inbox uses pursuant to license, sublicense, agreement, or permission.
Inbox has made available to Aspec correct and complete copies of all such
licenses, sublicenses, agreements, and permissions (as amended to date). With
respect to each item of Intellectual Property required to be identified in
Section 5.14(c) of the Inbox Disclosure Schedule:
(i) the license, sublicense, agreement or
permission covering the item is legal, valid, binding, enforceable, and in full
force and effect in all material respects;
(ii) no party to the license, sublicense,
agreement, or permission is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default or
permit termination, modification or acceleration thereunder;
(iii) no party to the license, sublicense,
agreement, or permission has repudiated any provision thereof; and
(iv) Inbox has not granted any sublicense or
similar right with respect to the license, sublicense, agreement, or permission.
5.15 Tangible Assets. The buildings, machinery, equipment, and
other tangible assets that Inbox owns and leases are free to the knowledge of
Inbox from material defects (patent and latent) and are in good operating
condition and repair (subject to normal wear and tear) and are usable in the
Ordinary Course of Business.
5.16 Inventory. In all material respects, all of the inventory
of Inbox and any supplies, manufactured and processed parts, work in process or
finished goods, is usable, merchantable and fit for the purpose for which it was
procured or manufactured, and none of such inventory is slow-moving, obsolete,
damaged, or defective, subject to adjustments for operations and transactions
through the Closing Date in accordance with the past custom and practice of
Inbox.
5.17 Contracts. Section 5.17 of the Inbox Disclosure Schedule
lists the following contracts, agreements, commitments and other arrangements to
which Inbox is a party or by which Inbox or any of its assets is bound:
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(a) any agreement (or group of related agreements) for
the lease of personal property to or from any Person or license of any software
or Intellectual Property which involves the payment by or to Inbox of more than
$25,000 per year;
(b) any agreement (or group of related agreements) for
the purchase or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the performance
of which will extend over a period of more than one year or involve
consideration in excess of $25,000;
(c) any agreement for the purchase of supplies,
components, products or services from single source suppliers, custom
manufacturers or subcontractors which involves the payment by Inbox of more than
$25,000 per year;
(d) any agreement concerning a partnership or joint
venture;
(e) any agreement (or group of related agreements) under
which Inbox has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or any capitalized lease obligation in excess of $25,000 or under
which a Security Interest has been imposed on any of its assets, tangible or
intangible;
(f) any agreement concerning noncompetition or restraint
of trade or any agreement on currently active projects which involves
confidentiality;
(g) any agreement with any Inbox shareholder or any of
such shareholder's Affiliates (other than Inbox) or with any Affiliate of Inbox;
(h) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers or
employees;
(i) any collective bargaining agreement;
(j) any agreement for the employment of any individual
on a full-time, part-time, consulting, or other basis;
(k) any agreement under which it has advanced or loaned
any amount to any of its directors, officers, and employees;
(l) any agreement pursuant to which Inbox is obligated
to provide services, maintenance, support or training which involves payments to
Inbox of more than $50,000 per year;
(m) any standard form agreement used by Inbox,
including, but not limited to, any purchase order, statement of standard terms
and conditions of sale, or employment offer letter; and
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(n) any other agreement (or group of related agreements)
the performance of which involves consideration in excess of $25,000 or which is
expected to continue for more than twelve (12) months from the date hereof (or,
in the case of maintenance contracts, in excess of $50,000) and which is
expected to continue for more than twelve (12) months from the date hereof.
Inbox has made available to Aspec a correct and complete copy of each written
agreement listed in Section 5.17 of the Inbox Disclosure Schedule (as amended to
date) and a written summary setting forth the terms and conditions of each oral
agreement referred to in Section 5.17 of the Inbox Disclosure Schedule. With
respect to each such agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect in all respects against Inbox and the
other parties thereto; (B) Inbox is not and, to the knowledge of Inbox, no other
party is in breach or default, and no event has occurred, which with notice or
lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; (C) Inbox has not and, to
the knowledge of Inbox, no other party has repudiated any provision of the
agreement; and (D) Inbox does not have any reason to believe that the service
called for thereunder cannot be supplied in accordance with its terms and
without resulting in a loss to any of Inbox.
5.18 Notes and Accounts Receivable. All notes and accounts
receivable of Inbox, all of which are reflected properly on the books and
records of Inbox in all material respects, are (i) valid receivables subject to
no setoffs, defenses or counterclaims, and are current and collectible, except
to the extent of the reserve for bad debts set forth in the most recent balance
sheet contained in the Most Recent Financial Statements, and (ii) will be
collected in accordance with their terms at their recorded amounts, subject only
to such reserve for bad debts and adjustments for operations and transactions
through the Closing Date in accordance with the past custom and practice of
Inbox.
5.19 Power of Attorney. Except as set forth in Schedule 5.19 of
the Inbox Disclosure Schedule, there are no outstanding powers of attorney
executed on behalf of Inbox.
5.20 Insurance. Inbox has made available to Aspec copies of each
insurance policy (including policies providing property, casualty, liability,
and workers' compensation coverage and bond and surety arrangements) with
respect to which Inbox is a party, a named insured, or otherwise the beneficiary
of coverage. With respect to each such insurance policy: (A) the policy is
legal, valid, binding, enforceable, and in full force and effect (and there has
been no notice of cancellation or nonrenewal of the policy received) with
respect to Inbox and, to the knowledge of Inbox, the other parties thereto; (B)
neither Inbox nor, to the knowledge of Inbox, any other party to the policy is
in breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; (C) neither Inbox nor, to the
knowledge of Inbox, any other party to the policy has repudiated any provision
thereof; and (D) there has been no failure by Inbox to give any notice or
present any claim under the policy in due and timely fashion. Section 5.20 of
the Inbox Disclosure Schedule describes any self-insurance arrangements
presently maintained by Inbox.
5.21 Litigation. Section 5.21 of the Inbox Disclosure Schedule
sets forth each instance in which Inbox (or any of its assets) (i) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge or (ii)
is a party or, to the knowledge of Inbox, is threatened to be
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made a party, to any action, suit, proceeding, hearing, arbitration, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator. To the knowledge of Inbox, there are no facts or circumstances which
would form the basis of any claim against Inbox.
5.22 Product Warranty. All of the services performed and
products licensed, manufactured, sold, leased, and delivered by Inbox have
conformed in all material respects with all applicable contractual commitments
and all express and implied warranties, and, Inbox has no liability (whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due)
for replacement or repair thereof or other damages in connection therewith,
other than in the Ordinary Course of Business in an aggregate amount not
exceeding $25,000. Section 5.22 of the Inbox Disclosure Schedule includes copies
of the standard terms and conditions of license for Inbox (containing applicable
guaranty, warranty, and indemnity provisions).
5.23 Product Liability. To the knowledge of Inbox, Inbox has no
material liability (whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due) arising out of any injury to individuals or
property as a result of the ownership, possession, or use of any product
licensed, manufactured, sold, leased, or delivered by Inbox.
5.24 Employees. No executive, key employee, or significant group
of employees has advised any executive officer of Inbox that he, she or they
plan to terminate employment with Inbox during the next six (6) months. Inbox is
not a party to or bound by any collective bargaining agreement, nor has it
experienced any strike or grievance, claim of unfair labor practices, or other
collective bargaining dispute. To the knowledge of Inbox, Inbox has not
committed any unfair labor practice. To the knowledge of Inbox, there is no
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of Inbox.
5.25 Employee Benefits.
(a) Section 5.25(a) of the Inbox Disclosure Schedule
lists each Employee Benefit Plan that Inbox maintains or to which Inbox
contributes or is obligated to contribute.
(i) Each such Employee Benefit Plan (and each
related trust, or fund established by Inbox) complies in form and in operation
in all material respects with their terms, the applicable requirements of ERISA,
the Code, and other applicable laws.
(ii) All required reports and descriptions
(including Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's, and
Summary Plan Descriptions) have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of Code Sec. 4980B
have been met in all material respects with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan. No event has occurred
and no condition exists with respect to any Employee Benefit Plan that would
subject Inbox to any tax under Code Sections 4972, 4976 or 4979 or to a fine
under ERISA Sections 502(i) or 502(l).
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(iii) All contributions, premiums or other
payments (including all employer contributions and employee salary reduction
contributions) which are due have been paid to each Employee Benefit Plan and
all contributions, premiums or other payments for any period ending on or before
the Closing Date which are not yet due shall been paid to each such Employee
Benefit Plan or shall be accrued in accordance with the custom and practice of
Inbox.
(iv) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan and which is intended to qualify under Code Sec.
401(a), has received a favorable determination letter from the Internal Revenue
Service with respect to the qualification of the plan under Code Section 401(a)
and the exemption of any corresponding trust under Code Section 501, unless the
Internal Revenue Service is deemed to have approved the form of such Plan under
applicable IRS Revenue Procedures. A copy of such determination letters have
been made available to Aspec and nothing has occurred since the date of each
such determination letter that would cause such Employee Pension Benefit Plan to
lose its ability to rely on such letter. Each Employee Pension Benefit Plan has
been restated to comply with the 1986 Tax Reform Act and subsequent applicable
tax legislation to the extent required by governing tax law. A copy of any
determination letters applicable to such restatement which have been received by
Inbox has been made available to Aspec.
(v) Neither Inbox nor any other Person or entity
under common control with Inbox within the meaning of Section 414(b), (c) or (m)
of the Code and the regulations thereunder has now or at any previous time,
maintained, established, sponsored, participated in, or contributed to, any
Employee Pension Benefit Plan that is subject to Part 3 of Subtitle B of Title I
of ERISA, Title IV of ERISA or Section 412 of the Code. No Employee Welfare
Benefit Plan or other Employee Benefit Plan providing welfare benefits is funded
with a trust or other funding vehicle, other than insurance policies or
contracts with a health maintenance organization or similar health care delivery
entity.
(vi) Inbox has made available to Aspec correct
and complete copies of the plan documents and summary plan descriptions, the
most recent determination letter received from the Internal Revenue Service, if
any, the most recent Form 5500 Annual Report, and all related trust agreements,
insurance contracts, and other funding agreements which implement each
maintained Employee Benefit Plan. The terms of any such documentation or other
communication do not prohibit Aspec from amending or terminating any such
Employee Benefit Plan.
(b) With respect to each Employee Benefit Plan that
Inbox, and/or any controlled group of corporations within the meaning of Code
Sec. 1563 (a "CONTROLLED GROUP OF CORPORATIONS") which includes Inbox, maintains
or ever has maintained or to which any of them contributes, ever contributed, or
ever has been required to contribute:
(i) There have been no prohibited transactions
within the meaning of ERISA Sec 406 and Code Sec. 4975 with respect to any such
Employee Benefit Plan. No fiduciary within the meaning of ERISA Sec. 3(21) (a
"FIDUCIARY"), has any liability for breach of fiduciary duty or any other
failure to act or comply in connection with the administration or investment of
the assets of any such Employee Benefit Plan. No action, suit, proceeding,
hearing, or
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investigation with respect to the administration or the investment of the assets
of any such Employee Benefit Plan (other than routine claims for benefits) is
pending or threatened.
(c) Except as disclosed in Schedule 5.25(c) of the Inbox
Disclosure Schedule, Inbox does not maintain or contribute to, has never
maintained or contributed to, and has never been required to contribute to, any
Employee Welfare Benefit Plan or any other Employee Benefit Plan providing
medical, health, or life insurance or other welfare-type benefits for current or
future retired or terminated employees, their spouses, or their dependents
(other than in accordance with Code Sec. 4980B or Part 6 of Subtitle B of Title
I of ERISA).
(d) There is no material liability in connection with
any Employee Benefit Plan that is not fully disclosed or provided for on the
Most Recent Balance Sheet for which disclosure would be required under generally
accepted accounting principles.
(e) No Employee Benefit Plan or Inbox has any material
liability to any plan participant, beneficiary or other person by reason of the
payment of benefits or the failure to pay benefits with respect to benefits
under or in connection with any such Employee Benefit Plan, other than claims in
the normal administration of such plans.
5.26 Guaranties. Inbox is not a guarantor or otherwise
responsible for any liability or obligation (including indebtedness) of any
other Person.
5.27 Environment, Health, and Safety.
(a) For purposes of this Agreement, the following terms
have the following meanings:
"ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" means any and all
federal, state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, plans, injunctions, judgments, decrees, requirements or
rulings now or hereafter in effect, imposed by any governmental authority
regulating, relating to, or imposing liability or standards of conduct relating
to pollution or protection of the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
public health and safety, or employee health and safety, concerning any
Hazardous Materials or Extremely Hazardous Substances, as such terms as defined
herein, or otherwise regulated, under any Environmental, Health and Safety Laws.
The term "ENVIRONMENTAL, HEALTH AND SAFETY LAWS" shall include, without
limitation, the Clean Water Act (also known as the Federal Water Pollution
Control Act), 33 U.S.C. Section 1251 et seq., the Toxic Substances Control Act,
15 U.S.C. Section 2601 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et
seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section
136 et seq., the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq., the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., the Superfund Amendment and Reauthorization Act of 1986,
Public Law 99-4, 99, 100 Stat. 1613, the Emergency Planning and Community Right
to Know Act, 42 U.S.C. Section 11001 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., and the Occupational Safety and
Health Act, 29 U.S.C. Section 651 et seq., all as amended, together with any
amendments thereto, regulations promulgated thereunder and all substitutions
thereof.
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"EXTREMELY HAZARDOUS SUBSTANCE" means a substance on the list
described in Section 302 (42 U.S.C. Section 11002(a)(2)) of the Emergency
Planning and Community Right to Know Act, 42 U.S.C. Section 11001 et seq., as
amended.
"HAZARDOUS MATERIAL" means any material or substance that,
whether by its nature or use, is now or hereafter defined as a pollutant,
dangerous substance, toxic substance, hazardous waste, hazardous material,
hazardous substance or contaminant under any Environmental, Health and Safety
Laws, or which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and which is now or
hereafter regulated under any Environmental, Health and Safety Laws, or which is
or contains petroleum, gasoline, diesel fuel or other petroleum hydrocarbon
product.
(b) To the knowledge of Inbox, each of Inbox and its
predecessors and Affiliates (A) has complied with the Environmental, Health, and
Safety Laws (and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, directive or notice has been filed or commenced
against any of them alleging any such failure to comply), (B) has obtained and
been in substantial compliance with all of the terms and conditions of all
permits, licenses, certificates and other authorizations which are required
under the Environmental, Health, and Safety Laws, and (C) has complied in all
material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and timetables
which are contained in the Environmental, Health, and Safety Laws.
(c) To the knowledge of Inbox, Inbox has no liability
(whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), and none of Inbox and its predecessors and Affiliates has handled or
disposed of any Hazardous Materials or extremely Hazardous Substances, arranged
for the disposal of any Hazardous Materials or Extremely Hazardous Substances,
exposed any employee or other individual to any Hazardous Materials or Extremely
Hazardous Substances, or owned or operated any property or facility in any
manner that could give rise to any liability, for damage to any site, location,
surface water, groundwater, land surface or subsurface strata, for any illness
of or personal injury to any employee or other individual, or for any reason
under any Environmental, Health, and Safety Law.
(d) To the knowledge of Inbox, no Extremely Hazardous
Substances are currently, or have been, located at, on, in, under or about all
properties and equipment used in the business of Inbox and its predecessors and
Affiliates.
(e) To the knowledge of Inbox, no Hazardous Materials
are currently located at, on, in, under or about all properties and equipment
used in the business of Inbox and its predecessors and Affiliates in a manner
which violates any Environmental, Health and Safety Laws or which requires
cleanup or corrective action of any kind under any Environmental, Health and
Safety Laws.
5.28 Certain Business Relationships With Inbox. None of the
Majority Shareholders nor Inbox nor any director or officer of Inbox, nor any
member of their immediate families, nor any Affiliate of any of the foregoing,
owns, directly or indirectly, or has an ownership
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interest in any business (corporate or otherwise) which is a party to, or in any
property which is the subject of, any business arrangement or relationship of
any kind with Inbox.
5.29 No Adverse Developments. To the knowledge of Inbox, there
is no development (exclusive of general economic factors affecting business in
general) or threatened development affecting Inbox (or affecting customers,
suppliers, employees, and other Persons which have relationships with Inbox)
that (i) is having or is reasonably likely to have a Material Adverse Effect on
Inbox, or (ii) would prevent Aspec from conducting the business of the Surviving
Corporation following the Closing in the manner in which it was conducted or
planned to be conducted by Inbox prior to the Closing.
5.30 Full Disclosure. No representation or warranty in this
Section 5 or in any document delivered by the Majority Shareholders or Inbox
pursuant to the transactions contemplated by this Agreement, and no statement,
list, certificate or instrument furnished to Aspec pursuant hereto or in
connection with this Agreement, when taken as a whole, contains any untrue
statement of a material fact, or omits to state any fact necessary to make any
statement herein or therein in light of the circumstances under which they were
made not materially misleading. There is no fact, development or threatened
development (excluding general economic factors affecting business in general
known to Inbox) which Inbox has not disclosed to Aspec and which is having or
may have a Material Adverse Effect on Inbox. Inbox has made available to Aspec
true, correct and complete copies of all documents, including all amendments,
supplements and modifications thereof or waivers currently in effect thereunder,
described in the Inbox Disclosure Schedule.
6. Representations and Warranties of Aspec. Aspec represents and
warrants to Inbox that the statements contained in this Section 6 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 6), except as
set forth in the disclosure schedule delivered by Aspec to Inbox on the date
hereof (and initialed by Aspec and Inbox), a copy of which is attached hereto as
Exhibit D (referred to herein as the "ASPEC DISCLOSURE SCHEDULE"). The Aspec
Disclosure Schedule will be arranged in paragraphs corresponding to the numbered
paragraphs contained in this Section 6.
6.1 Organization, Qualification, and Corporate Power. Aspec is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. Aspec is duly authorized to conduct business and
is in good standing under the laws of each other jurisdiction where such
qualification is required. Aspec has full corporate power and authority, and has
all necessary and material licenses and permits, to carry on the businesses in
which it is engaged and to own and use the properties owned and used by it.
6.2 Authorization. Aspec has full power and authority to execute
and deliver this Agreement, and to consummate the transactions contemplated
hereunder and to perform its obligations hereunder and no other proceedings on
the part of Aspec are necessary to authorize the execution, delivery and
performance of this Agreement. This Agreement and the transactions contemplated
hereby have been approved by the unanimous vote of Aspec's Board of Directors.
This Agreement constitutes, the valid and legally binding obligation of Aspec
enforceable against Aspec in accordance with its terms and conditions. Aspec
need not give any notice to, make any
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filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order to consummate the transactions contemplated by
this Agreement.
6.3 Capitalization.
(a) As of August 31, 1999, the authorized capital stock
of Aspec consisted of (i) 75,000,000 shares of Common Stock, of which 27,680,886
shares were issued and outstanding, (ii) 5,000,000 shares of undesignated
preferred stock, none of which were issued and outstanding, and (iii) an
aggregate of approximately 2,773,150 shares subject to outstanding options or
reserved for issuance pursuant to Aspec's employee and director stock plans. All
of the outstanding shares of Aspec's capital stock have been duly authorized and
validly issued and are fully paid and nonassessable. Except as set forth in this
Section 6.3, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of Aspec or obligating Aspec to issue or sell any shares of
capital stock of, or other equity interests in, Aspec. The authorized capital
stock of Merger Sub consists of 1,000 shares of common stock, all of which are
held of record by Aspec.
(b) The shares of Aspec Common Stock to be issued
pursuant to Section 3.1 of this Agreement are duly authorized and reserved for
issuance, and upon issuance thereof will be validly issued, fully paid and
nonassessable.
6.4 Noncontravention. Neither the execution and the delivery of
this Agreement nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Aspec is subject or any provision of its
Certificate of Incorporation or bylaws, or (B) (i) conflict with, (ii) result in
a breach of, (iii) constitute a default under, (iv) result in the acceleration
of, (v) create in any party the right to accelerate, terminate, modify, or
cancel, or (vi) require any notice under, any agreement, contract, lease,
license, instrument, or other arrangement to which Aspec is a party or by which
it is bound or to which any of its assets is subject.
6.5 SEC Filings. Aspec has filed all forms, reports and
documents required to be filed with the SEC since April 1, 1998, and has made
available to Inbox such forms, reports and documents in the form filed with the
SEC. All such required forms, reports and documents (including those that Aspec
may file subsequent to the date hereof and prior to the Closing Date) are
referred to herein as the "ASPEC SEC REPORTS". As of their respective dates, the
Aspec SEC Reports (i) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Aspec SEC Reports, and (ii)
did not at the time they were filed (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing) contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
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statements therein, in the light of the circumstances under which they were
made, not misleading. None of Aspec's subsidiaries is required to file any
forms, reports or other documents with the SEC.
6.6 Financial Statements. Each of the consolidated financial
statements (including, in each case, any related notes thereto) contained in
Aspec SEC Reports (the "ASPEC FINANCIALS"), including any Aspec SEC Reports
filed after the date hereof and prior to the Closing Date, (i) compiled as to
form in all material respects with the published rules and regulations of the
SEC with respect thereto, (ii) was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited interim financial statements, as
may be permitted by the SEC on Form 10-Q under the Exchange Act) and (iii)
fairly presented the consolidated financial position of Aspec and its
subsidiaries as at the respective dates thereof and the consolidated results of
Aspec's operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments. The balance sheet of Aspec contained in Aspec
SEC Form 10Q Report as of August 31, 1999 is hereinafter referred to as the
"ASPEC BALANCE SHEET."
6.7 Litigation. Section 6.7 of the Aspec Disclosure Schedule
sets forth each instance in which Aspec (or any of its assets) (i) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge or (ii)
is a party or, to the knowledge of Aspec, is threatened to be made a party, to
any action, suit, proceeding, hearing, arbitration, or investigation of, in, or
before any court or quasijudicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator.
6.8 No Adverse Developments. To the knowledge of Aspec, there is
no development (exclusive of general economic factors affecting business in
general) or threatened development affecting Aspec (or affecting customers,
suppliers, employees, and other Persons which have relationships with Aspec)
that (i) is having or is reasonably likely to have a Material Adverse Effect on
Aspec, or (ii) would prevent Aspec from conducting its business following the
Closing in the manner in which it was conducted or planned to be conducted by
Aspec prior to the Closing.
7. Pre-Closing Covenants. With respect to the period between the
execution of this Agreement and the earlier of the termination of this Agreement
in accordance with Section 11 hereof and the Effective Time of the Merger:
7.1 General. Each of the Parties will use their reasonable best
efforts to take all actions and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Section 9 below).
7.2 Notices and Consents. Except as otherwise agreed to by
Aspec, Inbox will give any notices to third parties and will use its reasonable
best efforts to obtain any third party consents that are required in connection
with the matters identified in Section 5.4 of the Inbox Disclosure Schedule.
Each of the Parties will give any notices to, make any filings with, and use its
best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the matters identified
in Section 5.4 of the Inbox Disclosure Schedule.
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7.3 Conduct of Business. Inbox will not engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, Inbox will not (a)
issue or sell, or contract to issue or sell, any shares of its capital stock or
that of any of its subsidiaries or any securities convertible into to
exchangeable for shares of capital stock of it or any of its subsidiaries, or
securities, warrants, options or rights to purchase any of the foregoing (other
than shares issued upon exercise of outstanding options or upon the conversion
of outstanding convertible securities described on the Inbox Disclosure
Schedule), (b) purchase or redeem any shares of its capital stock (other than
pursuant to Inbox's option and other employee benefit plans), (c) declare or pay
any dividends or agree to make any other distribution with respect to any shares
of its capital stock, (d) amend its Articles of Incorporation or Bylaws, or (e)
enter into or propose to enter into an agreement with any other person providing
for the possible acquisition by it or any of its subsidiaries (whether by way of
merger, purchase of capital stock, purchase of assets or otherwise) of any
material portion of the capital stock or assets of another entity. In addition,
Inbox will comply with all laws, statutes, ordinances, rules, regulations and
orders applicable to it or to the conduct of its business, except for violations
that could not subject Inbox to a penalty or loss that could constitute a
Material Adverse Effect on Inbox.
7.4 Preservation of Business. Inbox will use its best efforts to
keep its business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers and employees. Aspec will use its best
efforts to keep its business and properties substantially intact, including its
present operations, physical facilities, working conditions, and relationships
with lessors, licensors, suppliers, customers and employees.
7.5 Access to Information. Inbox will permit Aspec and its
representatives to have access at all reasonable times, and in a manner so as
not to interfere with the normal business operations of Inbox, to the business
and operations of Inbox. Neither such access, inspection and furnishing of
information to Aspec and its representatives, nor any investigation by Aspec and
its representatives, shall in any way diminish or otherwise effect Aspec's right
to rely on any representation or warranty made by Inbox or the Majority
Shareholders hereunder. Aspec will permit Inbox and its representatives to have
access at all reasonable times, and in a manner so as not to interfere with the
normal business operations of Aspec, to the business and operations of Aspec.
Neither such access, inspection and furnishing of information to Inbox and its
representatives, nor any investigation by Inbox and its representatives, shall
in any way diminish or otherwise effect Inbox's right to rely on any
representation or warranty made by Aspec hereunder.
7.6 Notice of Developments. Each Party will give prompt written
notice to the others of any adverse development causing a material breach of any
of its own representations and warranties in Section 5 or Section 6 above. No
disclosure by any Party pursuant to this Section 7.6, however, shall be deemed
to amend or supplement the Inbox Disclosure Schedule or the Aspec Disclosure
Schedule or to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.
7.7 Exclusivity. From and after the date hereof through the date
which is forty-five (45) days following the date hereof, without the prior
written consent of Aspec, neither Inbox, the Majority Shareholders nor any of
Inbox's other officers, directors, shareholders, agents or
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Affiliates shall, directly or indirectly, (a) solicit, conduct discussions with
or engage in negotiations with any person, other than Aspec, relating to the
possible acquisition of Inbox or any of its subsidiaries (whether by way of
merger, purchase of capital stock, purchase of assets or otherwise) or any
material portion of its or their capital stock or assets, (b) provide
information with respect to Inbox or any of its subsidiaries to any person,
other than Aspec, relating to the possible acquisition of Inbox or any of its
subsidiaries (whether by way of merger, purchase of capital stock, purchase of
assets or otherwise) or any material portion of its or their capital stock or
assets, (c) enter into an agreement with any person, other than Aspec, providing
for the acquisition of Inbox or any of its subsidiaries (whether by way of
merger, purchase of capital stock, purchase of assets or otherwise) or any
material portion of its or their capital stock or assets, (d) make or authorize
any statement, recommendation or solicitation in support of any possible
acquisition of Inbox or any of it subsidiaries (whether by way of merger,
purchase of capital stock, purchase of assets or otherwise) or any material
portion of its or their capital stock or assets by any person, other than by
Aspec, (e) enter into any agreement with any person, other than Aspec, providing
for any extension of credit (other than trade credit in the ordinary course of
business) or other debt investment in Inbox, or (f) enter into any additional
agreement for the licensing or distribution of products, technology, or
intellectual property of Inbox (other than in the ordinary course of business),
whether now existing or hereafter created. In addition to the foregoing, if
Inbox or any of its subsidiaries receives any unsolicited offer or proposal to
enter negotiations relating to any of the above, Inbox shall immediately notify
Aspec thereof, including information as to the identity of the offeror or the
party making any such offer or proposal and the specific terms of such offer or
proposal, as the case may be. From and after the date hereof until the first to
occur of the Closing of the Merger or the termination of this Agreement pursuant
to Section 11 hereof, none of the Majority Shareholders will transfer or offer
to transfer any of their Inbox Common Stock except to Aspec pursuant to the
Merger.
7.8 Break up Loan. In the event that this Agreement is
terminated pursuant to Section 11.(b) or 11.1(c), then Aspec agrees to loan
Inbox the sum of one million one hundred seventy thousand dollars ($1,170,000)
at the prime rate as determined by U.S. Bank (the "Aspec Loan"). The Aspec Loan
may be drawn down in monthly increments starting with a monthly amount of
$225,000, increasing each month over the term of the Aspec Loan by 125% over the
previous month's amount. The Aspec Loan together with all accrued interest shall
be due and payable on the first occurrence of either: (a) one year from the date
of the Aspec Loan, or (b) within thirty (30) days of Inbox securing additional
financing. In the alternative, and at Aspec's option, Aspec agrees to guarantee
with funds on deposit a loan between U.S. Bank and Inbox in the amount of one
million five hundred thousand dollars ($1,500,000) at the prime rate as
determined by U.S. Bank (the "Bank Loan"), and Aspec agrees that such guarantee
will not be withdrawn during the term of the Bank Loan. If Aspec chooses to
guarantee the Bank Loan by Inbox, then Inbox shall repay Aspec the three hundred
thirty thousand dollar ($330,000) loan previously provided to Inbox by Aspec,
together with all accrued interest, within ten (10) days of the Bank Loan
guarantee date.
In the event that this Agreement is terminated pursuant to Section
11.1(b), then Inbox agrees that any monies loaned or guaranteed to Inbox by
Aspec, including accrued interest, may be converted into Inbox preferred stock,
at Aspec's option, at $0.35 per share or the most recent prior purchase price,
whichever is lower, at the same terms and conditions as Inbox's Series A
preferred stock.
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8. Post-Closing Covenants. With respect to the period following the
Effective Time of the Merger:
8.1 General. In case at any time after the Effective Time of the
Merger any further action is necessary to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
Section 10 below).
8.2 Litigation Support. In the event and for so long as any
Party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction (A) on or
prior to the Effective Time of the Merger involving Inbox or the Majority
Shareholders or (B) arising out of Aspec's operation of the business of the
Surviving Corporation following the Effective Time of the Merger in the manner
in which it is presently conducted and planned to be conducted, each of the
other Parties will cooperate with the party, its counsel in the contest or
defense, make available their personnel, and provide such testimony and access
to their books and records as shall be reasonably necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Section 10 below).
8.3 Transition. None of the Majority Shareholders (as long as
such Majority Shareholder remains an Aspec stockholder or employee) will take
any action that is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of Inbox from
maintaining the same business relationships with the Surviving Corporation after
the Effective Time of the Merger as it maintained with Inbox prior to the
Effective Time of the Merger.
8.4 Confidentiality. Each of the parties hereto hereby agrees to
keep such information or knowledge obtained in any due diligence or other
investigation pursuant to the negotiation and execution of this Agreement or the
effectuation of the transactions contemplated hereby, confidential.
8.5 Inbox Employees. Upon the Effective Date of the Merger, all
employees of Inbox shall be offered employment with the Surviving Corporation.
All employees of Inbox that are employees of the Surviving Corporation following
the Closing shall execute Aspec's standard form of employee confidentiality and
inventions assignment agreement.
9. Conditions to Obligations.
9.1 Conditions to Aspec's Obligation to Close. The obligations
of Aspec to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
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(a) the representations and warranties of Inbox and the
Majority Shareholders set forth in Section 5 above shall be true and correct in
all material respects at and as of the Closing Date;
(b) Inbox and the Majority Shareholders shall have
performed and complied with all of their respective covenants hereunder in all
material respects through the Closing;
(c) Inbox shall have obtained such of the third party
consents listed on Section 5.4 of the Inbox Disclosure Schedule as may be
mutually agreed to by Aspec and Inbox;
(d) no action, suit, or proceeding shall be pending
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator (other than such
an action initiated by Aspec or Merger Sub) wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect materially and adversely the right of Aspec or
Merger Sub to control Inbox following the Effective Time of the Merger, and no
law, statute, ordinance, rule, regulation or order shall have been enacted,
enforced or entered which has caused or will likely cause any of the effects
under clause (A), (B) or (C) of this Section 9.1(d) to occur.
(e) the President of Inbox and the Majority Shareholders
shall have delivered to Aspec a certificate to the effect that each of the
conditions specified above in Section 9.1(a) to 9.1(d) (inclusive) is satisfied
in all material respects;
(f) No Material Adverse Effect shall have occurred with
respect to Inbox;
(g) this Agreement and the Merger shall have been
approved by the vote of the holders of a majority of the outstanding shares of
each of the Common Stock and Preferred Stock of Inbox, voting as separate
classes;
(h) Xxxxx Xxxxx, Xxxx Xxxx, Xxxxxxx Xxxxx and Xxxxx
Xxxxxxx shall have accepted employment with the Surviving Corporation, and each
of Xxxxx Xxxxx, Xxxxxxx Xxxxx and Xxxx Xxxx shall have executed and delivered an
Employment Agreement in the form attached hereto as Exhibit E, Exhibit F and
Exhibit G, respectively; and
(i) Aspec may waive any condition (in whole or in part)
specified in this Section 9.1 if it executes a writing so stating at or prior to
the Closing; provided, however, that Aspec shall have no right to request
indemnification pursuant to Section 10 of this Agreement or otherwise make a
claim for damages under this Agreement with respect to any breach of Inbox's or
the Majority Shareholders' representations, warranties or covenants hereunder if
such breach caused a condition to closing set forth in this Section 9.1 of the
Agreement to be unsatisfied and such condition is expressly waived by Aspec.
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9.2 Conditions to Inbox's Obligation. The obligation of Inbox
and the Majority Shareholders to consummate the transactions to be performed by
each of them in connection with the Closing is subject to satisfaction of the
following conditions:
(a) the representations and warranties of Aspec set
forth in Section 6 above shall be true and correct in all material respects at
and as of the Closing Date;
(b) Aspec shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(c) no action, suit, or proceeding shall be pending
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator (other than such
an action initiated by Inbox or any of the Majority Shareholders) wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement
or (B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(d) the Chief Executive Officer or other duly authorized
officer of Aspec shall have delivered to Inbox a certificate to the effect that
each of the conditions specified above in Section 9.2(a) to 9.2(c) (inclusive)
is satisfied in all material respects;
(e) and Aspec and each of Xxxxx Xxxxx, Xxxxxxx Xxxxx and
Xxxx Xxxx shall have executed and delivered an Employment Agreement in the form
attached hereto as Exhibit E, Exhibit F and Exhibit G, respectively;
(f) No Material Adverse Change shall have occurred with
respect to Aspec; and
(g) Inbox and the Majority Shareholders may waive any
condition (in whole or in part) specified in this Section 9.2 if Inbox and the
Majority Shareholders execute a writing so stating at or prior to the Closing;
provided, however, that Inbox and the Majority Shareholders shall have no right
to request indemnification pursuant to Section 10 of this Agreement or otherwise
make a claim for damages under this Agreement with respect to any breach of
Aspec's representations, warranties or covenants hereunder if such breach caused
a condition to closing set forth in this Section 9.2 of the Agreement to be
unsatisfied and such condition is expressly waived by Inbox and the Majority
Shareholders.
10. Survival of Representations, Warranties and Covenants; Escrow.
10.1 Survival of Representations and Warranties. All covenants
of Inbox and the Majority Shareholders to be performed prior to the Effective
Time, and all representations and warranties of Inbox and the Majority
Shareholders in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Merger for a period of twelve (12) months from the
Effective Time. Following the Effective Time, the remedies of Aspec for breach
of any of the foregoing shall be as set forth in Section 10.2. All
representations, warranties and covenants of
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Aspec in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Merger for a period of twelve (12) months from the
Effective Time.
10.2 Escrow Arrangements.
(a) Escrow Fund. As soon as practicable after the
Effective Time, 600,000 shares of Aspec Common Stock which comprise the Escrow
Amount, without any act of any Inbox Shareholder, will be deposited with an
escrow agent selected by Aspec (which shall be reasonably acceptable to Inbox)
as Escrow Agent (the "ESCROW AGENT"), such deposit to constitute an escrow fund
(the "ESCROW FUND") to be governed by the terms set forth herein and at a cost
and expense to be borne by Aspec. The portion of the Escrow Amount contributed
on behalf of each holder of Inbox Common Stock shall be in proportion to the
aggregate Merger Consideration which such holder would otherwise be entitled
under Section 3.1. The Escrow Agent shall not be responsible for confirming that
the shares contributed to the Escrow Fund comprise the Escrow Amount or that the
portion contributed on behalf of each holder of Inbox Common Stock is in the
proper proportion, which determination shall be made by Aspec. The Escrow Fund
shall be available to compensate Aspec and its Affiliates for any and all
actions, suits, proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees, rulings, damages,
dues, penalties, fines, costs, reasonable amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses, and fees, including
court costs and reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding to the extent of the amount of such actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, reasonable amounts paid in settlement, liabilities, obligations,
taxes, liens, losses, expenses or fees (collectively "LOSSES") that Aspec or any
of its Affiliates has incurred by reason of the breach by Inbox or the Majority
Shareholders of any representation, warranty, covenant or agreement of Inbox or
the Majority Shareholders contained herein, or by reason of any
misrepresentation by Inbox or the Majority Shareholders made herein. Aspec,
Inbox and the Majority Shareholders each acknowledge that such Losses, if any,
would relate to unresolved contingencies existing at the Effective Time, which
if resolved at the Effective Time would have led to a reduction in the aggregate
Merger Consideration. Resort to the Escrow Fund shall be the exclusive remedy of
Aspec and its Affiliates against Inbox or any of its directors, officers,
representatives, agents or shareholders or the Majority Shareholders for any
such breaches and misrepresentations if the Merger does close. Notwithstanding
the foregoing, for any claim based upon actual fraud brought during the period
twelve (12) months from the Effective Time, Aspec and its Affiliates shall have
recourse severally against Inbox or any of its directors, officers,
representatives, agents or shareholders or the Majority Shareholders,
respectively, in an amount up to the aggregate consideration received by each
such individual in the Merger; provided, however, that to the extent Losses
exceed such amount, Aspec will be entitled to proceed against the individual
assets of Xxxxx Xxxxx, Xxxx Xxxx or Xxxxxxx X. Xxxxx, respectively, but only to
the extent that such actual fraud was committed by such individual, and then
only to the extent of the assets of the individual. In addition, notwithstanding
the foregoing and except for amounts recoverable pursuant to Section 3.2, Aspec
may not receive any Escrow Amounts from the Escrow Fund unless and until
Officer's Certificates (as defined in paragraph (d) below) identifying Losses,
the aggregate amount of which exceed $75,000, have been delivered to the Escrow
Agent as provided in paragraph (e). In such case Aspec may recover from the
Escrow
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Fund the total of its Losses including the first 75,000 provided that Aspec
shall use its reasonable efforts to mitigate its Losses hereunder.
(b) Escrow Period; Distribution upon Termination of
Escrow Periods. Subject to the following requirements, the Escrow Fund shall
remain in existence during the period following the Closing for twelve (12)
months (the "ESCROW PERIOD"). At the expiration of the Escrow Period a portion
of the Escrow Fund shall be released from Escrow to the appropriate persons who,
prior to the Merger, were Inbox Shareholders, in an amount equal to the initial
Escrow Fund less an amount equal to the sum of (i) all amounts theretofore
distributed out of the Escrow Fund to Aspec pursuant to this Section 10 and (ii)
an amount equal to such portion of the Escrow Fund which, in the reasonable
judgment of Aspec, subject to the objection of the Agent (as defined below) and
the subsequent arbitration of the matter in the manner provided in Section
10.2(f) hereof, is necessary to satisfy any unsatisfied claims specified in any
Officer's Certificate theretofore delivered to the Escrow Agent prior to the end
of the Escrow Period, which amount shall remain in the Escrow Fund (and the
Escrow Fund shall remain in existence) until such claims have been resolved. As
soon as all such claims have been resolved (such resolution to be evidenced by
the written agreement of Aspec and Agent (as defined below) or the written
decision of the arbitrators as described in Section 10.2(f)), the Escrow Agent
shall deliver to the appropriate persons who, prior to the Merger, were Inbox
Shareholders the remaining portion of the Escrow Fund not required to satisfy
such claims. Deliveries of Escrow Amounts to the shareholders of Inbox pursuant
to this Section 10.2(b) and 10.2(d)(iii) shall be made in proportion to their
respective original contributions to the Escrow Fund, as calculated by the Agent
(as defined below).
(c) Protection of Escrow Fund. The Escrow Agent shall
hold and safeguard the Escrow Fund during the Escrow Period, shall treat such
fund as a trust fund in accordance with the terms of this Agreement and not as
the property of Aspec and shall hold and dispose of the Escrow Fund only in
accordance with the terms hereof.
(d) Distributions; Voting; Claims Upon Escrow Fund.
(1) Any shares of Aspec Common Stock or other
equity securities issued or distributed by Aspec (including shares issued upon a
stock split) ("NEW SHARES") in respect of Aspec Common Stock in the Escrow Fund
which have not been released from the Escrow Fund, shall be added to the Escrow
Fund and become a part thereof. Any cash dividends paid on Aspec Common Stock in
the Escrow Fund, shall be paid to the persons who, prior to the Merger, were
shareholders in accordance with their respective contributions to the Escrow
Fund. New Shares issued in respect of Aspec Common Stock which have been
released from the Escrow Fund shall not be added to the Escrow Fund, but shall
be distributed to the record holders thereof.
(2) Each person who, prior to the Merger was a
shareholder of Inbox shall have voting rights with respect to the shares of
Aspec Common Stock contributed to the Escrow Fund on behalf of such shareholder
(and on any voting securities added to the Escrow Fund in respect of such shares
of Aspec Common Stock) so long as such shares of Aspec Common Stock or other
voting securities are held in the Escrow Fund.
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(3) Upon receipt by the Escrow Agent at any time
on or before the last day of the Escrow Period of a certificate signed by any
officer of Aspec (an "OFFICER'S CERTIFICATE"): (A) stating that Aspec has
incurred and paid or properly accrued Losses, or reasonably anticipates that it
may have to pay or accrue Losses, (B) specifying in reasonable detail the
individual items of Losses included in the amount so stated, the date each such
item was incurred and paid or properly accrued, or the basis for such
anticipated liability, and the nature of the misrepresentation, breach of
warranty or claim to which such item is related, and (C) indicating the number
of shares of Aspec Common Stock to be disbursed to Aspec out of the Escrow Fund,
the Escrow Agent shall, subject to the provisions of Section 10.2(e) hereof,
deliver to Aspec out of the Escrow Fund, as promptly as practicable, such
amounts held in the Escrow Fund equal to such Losses.
(4) For the purposes of determining the number
of shares of Aspec Common Stock to be disbursed to Aspec out of the Escrow Fund,
the shares of Aspec Common Stock shall be valued at the Fair Market Value of
such shares. For purposes hereof, the "FAIR MARKET VALUE" of the Aspec Common
Stock shall be determined by using the average closing price of the Aspec Common
Stock as reported in the Wall Street Journal, for the ten (10) consecutive
trading days ending five (5) days prior to the date that the shares of Aspec
Common Stock are disbursed to Aspec out of the Escrow Fund.
(e) Objections to Claims. At the time of delivery of any
Officer's Certificate to the Escrow Agent, a duplicate copy of such certificate
shall be delivered to the Agent (as defined in Section 10.2(g)), and for a
period of thirty (30) days after such delivery the Escrow Agent shall make no
delivery to Aspec of any Escrow Amount specified in such Officer's Certificate
unless the Escrow Agent shall have received written authorization from the Agent
to make such delivery. After the expiration of such thirty (30) day period, the
Escrow Agent shall make delivery of an amount from the Escrow Fund in accordance
with such Officer's Certificate and Section 10.2(d) hereof, provided that no
such payment or delivery may be made if the Agent shall object in a written
statement to the claim made in the Officer's Certificate, and such statement
shall have been delivered to the Escrow Agent prior to the expiration of such
thirty (30) day period.
(f) Resolution of Conflicts; Arbitration.
(i) In case the Agent shall so object in writing
to any claim or claims made in any Officer's Certificate, the Agent and Aspec
shall attempt in good faith to agree upon the rights of the respective parties
with respect to each of such claims. If the Agent and Aspec should so agree, a
memorandum setting forth such agreement shall be prepared and signed by both
parties and shall be furnished to the Escrow Agent. The Escrow Agent shall be
entitled to rely on any such memorandum and distribute amounts from the Escrow
Fund in accordance with the terms thereof.
(ii) If no such agreement can be reached after
good faith negotiation, either Aspec or the Agent may demand arbitration of the
matter unless the amount of the damage or loss is at issue in pending litigation
with a third party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration; and in either such
event the matter shall be settled by arbitration conducted by three (3)
arbitrators. Aspec and the
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Agent shall each select one (1) arbitrator, and the two (2) arbitrators so
selected shall select a third arbitrator. The arbitrators shall, within ten (10)
business days after the last day of any hearings on any motion, issue a
definitive ruling on such motion. The arbitrators shall also, within twenty (20)
business days from the last day of any hearings regarding the imposition of
sanctions or the issuance of any awards, issue a definitive ruling on the
imposition of any such sanctions or the issuance of any such award in such
arbitration. The arbitrators shall also establish procedures designed to reduce
the cost and time for discovery while allowing the parties an opportunity,
adequate in the sole judgement of the arbitrators, to discover relevant
information from the opposing parties about the subject matter of the dispute.
The arbitrators shall rule upon motions to compel or limit discovery and shall
have the authority to impose sanctions, including attorneys fees and costs, to
the same extent as a court of competent law or equity, should the arbitrators
determine that discovery was sought without substantial justification or that
discovery was refused or objected to without substantial justification. The
decision of a majority of the three (3) arbitrators as to the validity and
amount of any claim in such Officer's Certificate shall be binding and
conclusive upon the parties to this Agreement, and notwithstanding anything in
Section 10.2(e) hereof, the Escrow Agent shall be entitled to act in accordance
with such decision and make or withhold payments out of the Escrow Fund in
accordance therewith. Such decision shall be written and shall be supported by
written findings of fact and conclusions which shall set forth the award,
judgment, decree or order awarded by the arbitrators. In the event that the
Escrow Agent has not received evidence of resolution under either Section
10.2(f)(i) or this Section 10.2(f)(ii), Escrow Agent shall continue to hold the
Escrow Funds in accordance herewith.
(iii) Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction. Any such
arbitration shall be held in Santa Xxxxx County, California under the rules then
in effect of the American Arbitration Association. Each party to any arbitration
pursuant to this Section 10.2(f) shall pay its own expenses; the fees of each
arbitrator and the administrative fee of the American Arbitration Association
shall be borne equally by Aspec, on the one hand and the Majority Shareholders,
on the other. Neither the expenses that the Agent incurs in the course of any
arbitration pursuant to this Section 10.2(f) nor the Agent's portion of the fees
of the arbitrators or the administrative fees for the American Arbitration
Association shall be deducted from any amounts held in the Escrow Fund.
(g) Agent of the Shareholders; Power of Attorney.
(i) In the event that the Merger is approved by
the Inbox Shareholders, effective upon such vote, and without further act of any
shareholder, Xxxxx Xxxxx is appointed as agent and attorney-in-fact (together,
the "AGENT") for each Inbox Shareholder on whose behalf shares were deposited
into escrow, for and on behalf of shareholders of Inbox, to give and receive
notices and communications, to authorize delivery to Aspec of shares from the
Escrow Fund in satisfaction of claims by Aspec, to object to such deliveries, to
agree to, negotiate, enter into settlements and compromises of, and demand
arbitration and comply with orders of courts and awards of arbitrators with
respect to such claims, and to take all actions necessary or appropriate in the
judgment of Agent for the accomplishment of the foregoing. Such agency may be
changed by the Inbox Shareholders from time to time upon not less than thirty
(30) days' prior written notice to Aspec and Escrow Agent; provided that the
Agent may not be removed unless holders of a two-thirds interest of the Escrow
Amount in the Escrow Fund agree to such removal and to the identity of
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the substituted agent. No bond shall be required of the Agent, and the Agent
shall not receive compensation for his or her services. Notices or
communications to or from the Agent shall constitute notice to or from each of
the shareholders of Inbox.
(ii) The Agent shall not be liable for any act
done or omitted hereunder as Agent while acting in good faith and in the
exercise of reasonable judgment. The shareholders of Inbox on whose behalf the
Escrow Amount was contributed to the Escrow Fund shall severally indemnify the
Agent and hold the Agent harmless against any loss, liability or expense
incurred without negligence or bad faith on the part of the Agent and arising
out of or in connection with the acceptance or administration of the Agent's
duties hereunder, including the reasonable fees and expenses of any legal
counsel retained by the Agent.
(h) Actions of the Agent. A decision, act, consent or
instruction of the Agent shall constitute a decision of all the shareholders for
whom a portion of the Escrow Amount otherwise issuable to them are deposited in
the Escrow Fund and shall be final, binding and conclusive upon each of such
shareholders, and the Escrow Agent and Aspec may rely upon any such decision,
act, consent or instruction of the Agent as being the decision, act, consent or
instruction of each every such shareholder of Inbox. The Escrow Agent and Aspec
are hereby relieved from any liability to any person for any acts done by them
in accordance with such decision, act, consent or instruction of the Agent.
(i) Third-Party Claims. In the event Aspec becomes aware
of a third-party claim which Aspec believes may result in a demand against the
Escrow Fund, Aspec shall notify the Agent of such claim, and the Agent and the
shareholders of Inbox who have monies in the escrow shall be entitled, at their
expense, to participate in any defense of such claim. Aspec shall have the right
in its sole discretion to settle any such claim; provided, however, that Aspec
shall not settle any such claim without the prior written consent of Agent,
which consent shall not be unreasonably withheld; provided, further, that except
with the consent of the Agent, no settlement of any such claim with third-party
claimants shall alone be determinative of the amount of any claim against the
Escrow Fund. In the event that the Agent has consented to any such settlement,
the Agent shall have no power or authority to object under any provision of this
Section 10 to the amount of any claim by Aspec against the Escrow Fund with
respect to such settlement to the extent that such amount is consistent with the
terms of such settlement.
(j) Escrow Agent's Duties.
(i) The Escrow Agent shall be obligated only for
the performance of such duties as are specifically set forth in this Agreement
and as set forth in any additional written escrow instructions which the Escrow
Agent may receive after the date of this Agreement which are signed by an
officer of Aspec and the Agent, and may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed to be genuine
and to have been signed or presented by the proper party or parties. The Escrow
Agent shall not be liable for any act done or omitted hereunder as Escrow Agent
while acting in good faith and in the exercise of reasonable judgment, and any
act done or omitted pursuant to the advice of counsel shall be conclusive
evidence of such good faith.
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(ii) The Escrow Agent is hereby expressly
authorized to disregard any and all warnings given by any of the parties hereto
or by any other person, excepting only orders or process of courts of law, and
is hereby expressly authorized to comply with and obey orders, judgments or
decrees of any court. In case the Escrow Agent obeys or complies with any such
order, judgment or decree of any court, the Escrow Agent shall not be liable to
any of the parties hereto or to any other person by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction.
(iii) The Escrow Agent shall not be liable in
any respect on account of the identity, authority or rights of the parties
executing or delivering or purporting to execute or deliver this Agreement or
any documents or papers deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for
the expiration of any rights under any statute of limitations with respect to
this Agreement or any documents deposited with the Escrow Agent.
(v) The Escrow Agent may resign as Escrow Agent
at any time with or without cause by giving at least thirty (30) days' prior
written notice to each of Aspec and the Agent, such resignation to be effective
thirty (30) days following the date such notice is given. In addition, Aspec and
Agent may jointly remove the Escrow Agent as escrow agent at any time with or
without cause, by an instrument (which may be executed in counterparts) given to
the Escrow Agent, which instrument shall designate the effective date of such
removal. In the event of any such resignation or removal, a successor escrow
agent which shall be a bank or trust company organized under the laws of the
United States of America or any state thereof having a combined capital and
surplus of not less than $100,000,000, shall be appointed by Aspec with the
approval of Agent, which approval shall not be unreasonably withheld. Any such
successor escrow agent shall deliver to Aspec and the Agent a written instrument
accepting such appointment, and thereupon it shall succeed to all the rights and
duties of the Escrow Agent hereunder and shall be entitled to receive the Escrow
Fund. Thereafter, the predecessor Escrow Agent shall be discharged for any
further duties and liabilities under this Agreement.
11. Termination.
11.1 Termination of the Agreement. This Agreement may be
terminated at any time prior to the Closing as follows:
(a) Aspec and Inbox may terminate this Agreement as to
all Parties by mutual written consent at any time prior to the Closing.
(b) Aspec may terminate this Agreement by giving written
notice to Inbox and the Majority Shareholders at any time prior to the Closing
(A) in the event either of Inbox or the Majority Shareholders has materially
breached any representation, warranty, or covenant contained in this Agreement
and Aspec has notified Inbox and the Majority Shareholders of the breach or (B)
if the Closing shall not have occurred on or before November 30, 1999, by reason
of the failure of any condition precedent under Section 9.1 hereof (unless the
failure results primarily from Aspec
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itself materially breaching any representation, warranty, or covenant contained
in this Agreement). For purposes of clause 11.1(b)(A) above, a breach shall be
deemed material if it results or is reasonably expected to result in an adverse
change causing a loss to Inbox of $500,000 or more.
(c) Inbox may terminate this Agreement by giving written
notice to Aspec at any time prior to the Closing (A) in the event Aspec has
materially breached any representation, warranty, or covenant contained in this
Agreement and Inbox has notified Aspec of the breach, or (B) if the Closing
shall not have occurred on or before November 30, 1999, by reason of the failure
of any condition precedent under Section 9.2 hereof (unless the failure results
primarily from Inbox or the Majority Shareholders materially breaching any
representation, warranty, or covenants contained in this Agreement).
11.2 Effect of Termination.
(a) If any Party terminates this Agreement pursuant to
Section 11 above, all rights and obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party (except for any
liability of any Party then in breach); provided, however, that the
Confidentiality Agreement shall survive in accordance with its terms.
12. Miscellaneous.
12.1 Publicity. No Party shall issue any press release or make
any public announcement relating to the subject matter of this Agreement prior
to the Closing without the prior written approval of Aspec and Inbox.
Notwithstanding the foregoing, Aspec may disclose the Merger in its filings with
the Securities and Exchange Commission to the extent required by applicable
securities laws.
12.2 No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties, the
shareholders of Inbox and their respective successors and permitted assigns.
12.3 Entire Agreement. This Agreement (including the exhibits
and schedules hereto) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof (including that certain letter agreement between Aspec and
Inbox dated September 17, 1999). Notwithstanding the foregoing, Inbox and Aspec
agree that the terms of the Confidentiality Agreement shall remain in effect.
12.4 Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties.
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12.5 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
12.6 Headings. The Section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
12.7 Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (a) five
(5) days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, (c) one (1) business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid or (d) one
(1) business day after the business day of facsimile transmission, if delivered
by facsimile transmission with copy by first class mail, postage prepaid, and
shall be addressed to the intended recipient as set forth below:
If to Aspec or Merger Sub:
Aspec Technology, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, President and Chief Executive Officer
Copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: J. Xxxxxx Xxxxxxxxxx, Esq.
If to Inbox or the Majority Shareholders:
Inbox Software, Inc.
000 Xxxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx, President and Chief Executive Officer
Copy to:
Xxxxxxxx Xxxxx Morosoli & Maser LLP
000 Xxxx Xxxx Xxxx, Xxxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
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Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties written notice of such change in accordance with the above provisions.
12.8 Governing Law; Dispute Resolution.
(a) This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of California without giving
effect to any choice or conflict of law provision or rule (whether of the State
of California or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California.
(b) It is the express intention of the Parties to this
Agreement to make a good faith effort to resolve, without resort to arbitration,
any dispute arising under or related to this Agreement. In the event of a
dispute relating to any provision of this Agreement which cannot be resolved
promptly by negotiations between the Parties involved directly in the dispute,
any Party to the dispute may give the other Party written notice of its intent
to arbitrate, as provided in this Section 12.8. No arbitration may commence
earlier than thirty (30) days after the delivery of the notice of intent to
arbitrate, unless the failure to commence arbitration is reasonably likely to
result in some demonstrable harm.
(c) The Parties hereto agree that the appropriate and
exclusive forum for any disputes among any of the Parties hereto arising out of
this Agreement or the transactions contemplated hereby, shall be settled by
arbitration in Santa Xxxxx County, California, in accordance with the rules of
the American Arbitration Association, and judgment upon any award rendered by
the arbitrator or arbitrators may be entered in any court having jurisdiction
thereof. The arbitration panel will consist of three (3) people to be mutually
selected by the Parties to the dispute. In the event that the Parties to the
dispute cannot agree upon the arbitrators within ten (10) days after the
commencement of the arbitration procedures, one (1) arbitrator shall be selected
by Aspec, one (1) arbitrator shall be selected by the Majority Shareholders
involved in the dispute and one (1) arbitrator shall be selected by the two (2)
other arbitrators so designated. The parties further agree, to the extent
permitted by law, that final and non-appealable judgment against any of them in
any action or proceeding contemplated above shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States by suit
on the judgment, a certified or exemplified copy of which shall be conclusive
evidence of the fact and amount of such judgment. The Parties hereby consent to
the jurisdiction of the Superior Court of the State of California and the United
States District Courts of California and waive any objections or rights as to
forum nonconvenience, lack of personal jurisdiction or similar grounds with
respect to the enforcement of any such judgment.
(d) In the event of any arbitration proceeding
hereunder, the arbitrator(s) shall have the discretion to award the prevailing
party reimbursement of all costs and expenses incurred in connection with said
action, including reasonable attorney's fees.
(e) To the extent that Aspec or the Majority
Shareholders have or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution,
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execution or otherwise) with respect to itself or its property, Aspec and the
Majority Shareholders (as the case may be) hereby irrevocably waive such
immunity in respect of its obligations with respect to this Agreement.
12.9 Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
Aspec, Merger Sub, Inbox and the Majority Shareholders. No waiver by any Party
of any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
occurrence.
12.10 Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
12.11 Expenses. Each of Aspec, Inbox and the Majority
Shareholders will bear its or their own costs and expenses (including legal and
accounting fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby; provided, however, that the Majority
Shareholders will be responsible for (i) any brokers', finders' or advisory fees
payable on behalf of Inbox in connection with the Agreement and the transactions
contemplated hereby, and (ii) any legal or accounting fees undertaken on behalf
of Inbox or the Majority Shareholders in connection with the Agreement and the
transactions contemplated hereby in excess of $50,000 which may be paid by
Inbox.
12.12 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
12.13 Incorporation of Exhibits and Schedules. The Exhibits
identified in this Agreement are incorporated herein by reference and made a
part hereof.
-39-
44
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
as of the date first above written.
Aspec: ASPEC TECHNOLOGY, INC.
By: /s/ XXXXXXX XXXXXXX
---------------------------------------
Xxxxxxx Xxxxxxx
President and Chief Executive Officer
Merger Sub: ASPEC ACQUISITION FOUR
CORPORATION
By: /s/ XXXXXX X. DELL'OCA
---------------------------------------
Xxxxxx X. Dell'Oca
President
Inbox: INBOX SOFTWARE, INC.
By: /s/ XXXXXXX X. XXXXX
---------------------------------------
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
Majority Shareholders: /s/ XXXXX XXXXX
------------------------------------------
Xxxxx Xxxxx
/s/ XXXX XXXX
------------------------------------------
Xxxx Xxxx
/s/ XXXXXXX X. XXXXX
------------------------------------------
Xxxxxxx X. Xxxxx
Preferred Shareholder: VenCraft, LLC
By: /s/ XXXXX XXXXXXXX
---------------------------------------
Xxxxx Xxxxxxxx, Member
(AGREEMENT AND PLAN OF REORGANIZATION SIGNATURE PAGE)
45
AMENDMENT TO
AGREEMENT AND PLAN OF REORGANIZATION
This Amendment to the Agreement and Plan of Reorganization (the
"AGREEMENT") dated as of November 17, 1999, by and among Aspec Technology, Inc.,
a Delaware corporation ("ASPEC"), Aspec Acquisition Four Corporation, a
California corporation and a wholly-owned subsidiary of Aspec ("MERGER SUB"),
Inbox Software, Inc., a California corporation ("INBOX"), Xxxxx Xxxxx, Xxxx
Xxxx, and Xxxxxxx X. Xxxxx (collectively, the "MAJORITY SHAREHOLDERS") and
VenCraft, LLC ("PREFERRED SHAREHOLDER") is made as of November 30, 1999 by and
among Aspec, Merger Sub, Inbox and the Majority Shareholders (the "PARTIES").
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Section 2.3 of the Reorganization Agreement is amended to read in its
entirety as follows:
"2.3 Effect of the Merger. At the Effective Time of the Merger, (i) the
separate existence of Merger Sub shall cease and Merger Sub shall be
merged with and into Inbox (Merger Sub and Inbox are sometimes referred
to herein as the "CONSTITUENT CORPORATIONS" and Inbox after the Merger
is sometimes referred to herein as the "SURVIVING CORPORATION"), (ii)
the Articles of Incorporation of Inbox shall be the Articles of
Incorporation of the Surviving Corporation, (iii) the Bylaws of Inbox
shall be the Bylaws of the Surviving Corporation, (iv) the directors of
Merger Sub shall be the directors of the Surviving Corporation and (v)
the Merger shall, from and after the Effective Time of the Merger, have
all the effects provided by applicable law."
2. Section 11.1 of the Reorganization Agreement is amended to read in
its entirety as follows:
"11.1 Termination of the Agreement. This Agreement may be terminated at
any time prior to the Closing as follows:
(a) Aspec and Inbox may terminate this Agreement as to all
Parties by mutual written consent at any time prior to the Closing.
(b) Aspec may terminate this Agreement by giving written notice
to Inbox and the Majority Shareholders at any time prior to the Closing
(A) in the event either of Inbox or the Majority Shareholders has
materially breached any representation, warranty, or covenant contained
in this Agreement and Aspec has notified Inbox and the Majority
Shareholders of the breach or (B) if the Closing shall not have occurred
on or before December 30, 1999, by reason of the failure of any
condition precedent under Section 9.1 hereof (unless the failure results
primarily from Aspec itself materially
46
breaching any representation, warranty, or covenant contained in this
Agreement). For purposes of clause 11.1(b)(A) above, a breach shall be
deemed material if it results or is reasonably expected to result in an
adverse change causing a loss to Inbox of $500,000 or more.
(c) Inbox may terminate this Agreement by giving written notice
to Aspec at any time prior to the Closing (A) in the event Aspec has
materially breached any representation, warranty, or covenant contained
in this Agreement and Inbox has notified Aspec of the breach, or (B) if
the Closing shall not have occurred on or before December 30, 1999, by
reason of the failure of any condition precedent under Section 9.2
hereof (unless the failure results primarily from Inbox or the Majority
Shareholders materially breaching any representation, warranty, or
covenants contained in this Agreement)."
3. Aspec may accomplish the transaction through a Delaware subsidiary
rather than a California subsidiary, and all references in the Agreement
to Aspec Acquisition Four Corporation, a California corporation, shall
be replaced with Aspec Acquisition Five Corporation, a Delaware
corporation.
4. Except as expressly amended herein, the Reorganization Agreement
shall remain in full force and effect.
5. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
6. This Amendment shall be governed by the laws of the State of
California.
47
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
Aspec: ASPEC TECHNOLOGY, INC.
By: /s/ XXXXXXX XXXXXXX
-------------------------------------
Xxxxxxx Xxxxxxx
President and Chief Executive Officer
Merger Sub: ASPEC ACQUISITION FOUR
CORPORATION
By: /s/ XXXXXX X. DELL'OCA
-------------------------------------
Xxxxxx X. Dell'Oca
President
Inbox: INBOX SOFTWARE, INC.
By: /s/ XXXXXXX X. XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
Majority Shareholders: /s/ XXXXX XXXXX
----------------------------------------
Xxxxx Xxxxx
/s/ XXXX XXXX
----------------------------------------
Xxxx Xxxx
/s/ XXXXXXX X. XXXXX
----------------------------------------
Xxxxxxx X. Xxxxx
Preferred Shareholder: VenCraft, LLC
By: /s/ XXXXX XXXXXXXX
-------------------------------------
Xxxxx Xxxxxxxx, Member
