Exhibit 4.15
AGREEMENT AND PLAN OF MERGER
AMONG
XXXXXX-PRI AUTOMATION, INC.
MTI ACQUISITION CORP.,
AND
MICROTOOL, INC.
DATED: September 20, 2002
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MICROTOCOL, INC
TABLE OF CONTENTS
1. DEFINITIONS................................................................................................ 1
2. THE MERGER................................................................................................. 9
2.1 PROCEDURE FOR THE MERGERS............................................................................. 9
2.2 FIRST SURVIVING CORPORATION........................................................................... 10
2.3 SECOND SURVIVING CORPORATION.......................................................................... 10
2.4 TIME AND PLACE OF CLOSING............................................................................. 10
2.5 EFFECTIVE TIME........................................................................................ 10
2.6 ARTICLES OF INCORPORATION, BYLAWS AND OFFICERS AND DIRECTORS OF THE FIRST SURVIVING
CORPORATION.................................................................................................. 11
2.7 CERTIFICATE OF INCORPORATION, BYLAWS AND OFFICERS AND DIRECTORS OF THE SECOND
SURVIVING CORPORATION........................................................................................ 11
2.8 RESERVATION OF RIGHT TO REVISE TRANSACTION............................................................ 12
2.9 EFFECT OF FIRST MERGER ON CAPITAL STOCK............................................................... 12
2.10 PAYMENT OF MERGER CONSIDERATION....................................................................... 13
2.11 DISSENTING SHARES..................................................................................... 13
2.12 DETERMINATION OF CLOSING NET ASSETS; ADJUSTMENT OF THE MERGER CONSIDERATION........................... 14
2.13 DELIVERY OF COMPANY SHARES............................................................................ 16
2.14 FURTHER ASSURANCES.................................................................................... 16
2.15 SHAREHOLDER REPRESENTATIVE............................................................................ 16
2.16 RESTRICTED SECURITIES................................................................................. 18
2.17 LEGEND ON CERTIFICATE................................................................................. 18
3. REPRESENTATIONS AND WARRANTIES OF COMPANY.................................................................. 18
3.1 ORGANIZATION, QUALIFICATION AND GOOD STANDING......................................................... 18
3.2 AUTHORITY; NO CONFLICT................................................................................ 19
3.3 CAPITALIZATION........................................................................................ 20
3.4 BOOKS, RECORDS AND ACCOUNTS........................................................................... 21
3.5 FINANCIAL STATEMENTS.................................................................................. 22
3.6 NO UNDISCLOSED LIABILITIES............................................................................ 22
3.7 NO MATERIAL ADVERSE CHANGE............................................................................ 22
3.8 TAXES................................................................................................. 23
3.9 ACCOUNTS RECEIVABLE................................................................................... 24
3.10 TITLE TO PROPERTIES; ENCUMBRANCES..................................................................... 24
3.11 CONDITION AND SUFFICIENCY OF ASSETS................................................................... 26
3.12 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS..................................................... 26
3.13 LEGAL PROCEEDINGS..................................................................................... 26
3.14 ABSENCE OF CERTAIN CHANGES AND EVENTS................................................................. 26
3.15 CONTRACTS; NO DEFAULTS................................................................................ 29
3.16 INSURANCE............................................................................................. 32
3.17 ENVIRONMENTAL MATTERS................................................................................. 32
3.18 EMPLOYEES............................................................................................. 33
3.19 EMPLOYEE BENEFITS..................................................................................... 34
3.20 LABOR RELATIONS....................................................................................... 37
3.21 INTELLECTUAL PROPERTY................................................................................. 38
3.22 CERTAIN PAYMENTS...................................................................................... 40
3.23 RELATIONSHIPS WITH RELATED PERSONS.................................................................... 40
3.24 BROKERS OR FINDERS.................................................................................... 41
3.25 CUSTOMER RELATIONSHIPS................................................................................ 41
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3.26 OUTSTANDING INDEBTEDNESS.............................................................................. 41
3.27 SUPPLIERS; RAW MATERIALS CONTRACTORS.................................................................. 41
3.28 INVENTORIES........................................................................................... 42
3.29 CUSTOMERS............................................................................................. 42
3.30 PAYABLES.............................................................................................. 42
3.31 PRODUCT WARRANTIES; PRODUCT LIABILITY................................................................. 42
3.32 FINANCIAL SERVICE RELATIONS AND POWERS OF ATTORNEY.................................................... 43
3.33 REGULATORY CORRESPONDENCE............................................................................. 43
3.34 DISCLOSURE............................................................................................ 43
3.35 INVESTMENT MATTERS.................................................................................... 43
4. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.................................................... 44
4.1 ORGANIZATION AND GOOD STANDING........................................................................ 44
4.2 AUTHORITY; NO CONFLICT................................................................................ 44
4.3 CAPITALIZATION; PARENT SHARES; MERGER SUB SHARES...................................................... 45
4.4 FILINGS WITH THE COMMISSION........................................................................... 46
4.5 LEGAL PROCEEDINGS..................................................................................... 46
4.6 BROKERS OR FINDERS.................................................................................... 46
4.7 DISCLOSURE............................................................................................ 47
4.8 CURRENT CLAIMS........................................................................................ 47
5. COVENANTS.................................................................................................. 47
5.1 NORMAL COURSE......................................................................................... 47
5.2 CONDUCT OF BUSINESS................................................................................... 47
5.3 CERTAIN FILINGS....................................................................................... 49
5.4 NOTIFICATION OF CERTAIN MATTERS....................................................................... 49
5.5 NO SOLICITATION....................................................................................... 50
5.6 ACCESS TO INFORMATION; CONFIDENTIALITY................................................................ 50
5.7 REASONABLE BEST EFFORTS; FURTHER ACTION............................................................... 51
5.8 RESTRICTION ON DISPOSITION OF XXXXXX SHARES........................................................... 51
5.9 TAX RETURNS FOR YEARS ENDING ON OR PRIOR TO THE CLOSING DATE.......................................... 52
6. ADDITIONAL COVENANTS OF PARENT AND MERGER SUB.............................................................. 52
6.1 CERTAIN FILINGS....................................................................................... 52
6.2 NOTIFICATION OF CERTAIN MATTERS....................................................................... 52
6.3 REGISTRATION.......................................................................................... 53
6.4 NASDAQ NATIONAL MARKET LISTING........................................................................ 55
7. CONDITIONS TO OBLIGATIONS OF PARENT........................................................................ 55
7.1 REPRESENTATIONS AND WARRANTIES........................................................................ 55
7.2 PERFORMANCE OF COVENANTS.............................................................................. 55
7.3 UPDATE CERTIFICATE.................................................................................... 56
7.4 NO GOVERNMENTAL OR OTHER PROCEEDING; ILLEGALITY....................................................... 56
7.5 APPROVALS AND CONSENTS................................................................................ 56
7.6 APPROVAL OF BOARD OF DIRECTORS........................................................................ 56
7.7 OPINION OF COUNSEL.................................................................................... 57
7.8 ESCROW AGREEMENT...................................................................................... 57
7.9 CONFIDENTIALITY, NONSOLICITATION, NONCOMPETITION AND INTELLECTUAL PROPERTY AGREEMENTS................. 57
7.10 [RESERVED]............................................................................................ 57
7.11 TERMINATION OF RIGHTS AND VOTING AGREEMENTS........................................................... 57
7.12 RESIGNATION........................................................................................... 57
7.13 RIGHTS TO CONVERSION.................................................................................. 57
7.14 SECRETARY'S CERTIFICATE............................................................................... 58
7.15 OTHER DOCUMENTS....................................................................................... 58
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7.16 KEY EMPLOYEES......................................................................................... 58
7.17 DUE DILIGENCE REVIEW.................................................................................. 58
7.18 RESULTS............................................................................................... 58
7.19 NO MATERIAL ADVERSE EFFECT............................................................................ 58
7.20 APPROVAL OF PARENT'S COUNSEL.......................................................................... 58
7.21 DISSENTING SHARES..................................................................................... 59
7.22 FIRPTA................................................................................................ 59
7.23 SALES TAX............................................................................................. 59
7.24 EXHIBIT A............................................................................................. 59
8. CONDITIONS TO OBLIGATIONS OF THE COMPANY................................................................... 59
8.1 REPRESENTATIONS AND WARRANTIES........................................................................ 59
8.2 PERFORMANCE OF COVENANTS.............................................................................. 59
8.3 UPDATE CERTIFICATE.................................................................................... 59
8.4 NO GOVERNMENTAL OR OTHER PROCEEDING; ILLEGALITY....................................................... 60
8.5 OFFICER'S CERTIFICATE................................................................................. 60
8.6 ADJUSTMENTS........................................................................................... 60
8.7 TAX-FREE MERGER....................................................................................... 60
9. INDEMNIFICATION............................................................................................ 60
9.1 SURVIVAL.............................................................................................. 60
9.2 INDEMNIFICATION BY THE COMPANY SHAREHOLDERS........................................................... 60
9.3 INDEMNIFICATION BY PARENT............................................................................. 62
9.4 DEFENSE OF THIRD PARTY ACTIONS........................................................................ 63
9.5 MISCELLANEOUS......................................................................................... 63
9.6 PAYMENT OF INDEMNIFICATION............................................................................ 64
10. TERMINATION OF AGREEMENT................................................................................... 64
10.1 TERMINATION........................................................................................... 64
10.2 TERMINATION BY PARENT................................................................................. 65
10.3 TERMINATION BY THE COMPANY............................................................................ 65
10.4 PROCEDURE FOR TERMINATION............................................................................. 65
10.5 EFFECT OF TERMINATION................................................................................. 65
10.6 RIGHT TO PROCEED...................................................................................... 66
11. GENERAL PROVISIONS......................................................................................... 66
11.1 EXPENSES.............................................................................................. 66
11.2 PUBLIC ANNOUNCEMENTS.................................................................................. 66
11.3 NOTICES............................................................................................... 67
11.4 JURISDICTION; SERVICE OF PROCESS...................................................................... 68
11.5 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE................................................. 68
11.6 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.................................................... 68
11.7 SEVERABILITY.......................................................................................... 68
11.8 GOVERNING LAW......................................................................................... 69
11.9 COUNTERPARTS.......................................................................................... 69
11.10 ENTIRE AGREEMENT AND MODIFICATION..................................................................... 69
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("AGREEMENT") entered into as of September
20, 2002, by and among Xxxxxx-PRI Automation, Inc., a Delaware corporation
("PARENT"), MTI Acquisition Corp., a Colorado corporation and a wholly-owned
subsidiary of the Parent (the "MERGER SUB"), and MicroTool, Inc., a Colorado
corporation ("COMPANY").
RECITALS
WHEREAS, Parent, Merger Sub and the Company desire to effectuate a
business combination of Parent and the Company using a two-step approach as
further described in this Agreement;
WHEREAS, to effectuate this combination, Merger Sub will be merged with
and into the Company (the "FIRST MERGER") and the Company will immediately
thereafter (and in any event no later than the time the Secretary of State of
the State of Colorado shall close for business on the day the First Merger shall
be consummated) be merged with and into Parent (the "SECOND MERGER", and
together with the First Merger, the "MERGERS") and the shareholders of the
Company will receive Parent Common Stock upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the provisions of
the CBCA and the DGCL;
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have approved the Mergers, upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, it is intended that, for federal income tax purposes, the
Mergers shall qualify as a single reorganization transaction under the
provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder (the "CODE"), and this
Agreement shall constitute, and is hereby adopted as, a "plan of reorganization"
for purposes of Section 368 of the Code.
NOW, THEREFORE, in consideration for the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ACCOUNTS RECEIVABLE" - is defined in Section 3.9.
"ADJUSTMENT AMOUNT" - the amount, if any, by which the Merger
Consideration is to be reduced pursuant to Section 2.12.
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"ADJUSTMENT DATE" - is defined in Section 2.12(c).
"AGREEMENT" - this Agreement, including the Schedules and Exhibits
hereto.
"ANCILLARY AGREEMENTS" - are the other agreements to be executed and
delivered pursuant to and in connection with the Agreement.
"ALTERNATIVE ACQUISITION" - is defined in Section 5.5.
"BASE BALANCE SHEET" - is defined in Section 3.5(a).
"BASE BALANCE SHEET DATE" - is defined in Section 3.5(a).
"BASE NET ASSETS" - is defined in Section 2.12(a).
"CLOSING" - is defined in Section 2.4
"CLOSING DATE" - is defined in Section 2.4.
"CLOSING NET ASSETS" - is defined in Section 2.12(a).
"CLOSING STATEMENT" - is defined in Section 2.12(a).
"CODE" - is defined in the Recitals of this Agreement.
"CBCA" - Colorado Business Corporation Act.
"COMMISSION" - is the United States Securities and Exchange Commission.
"COMPANY" - is defined in the first paragraph of this Agreement.
"COMPANY COMMON STOCK" - the common stock, $0.01 par value, of the
Company.
"COMPANY OPTIONS" - all options, whether vested or not, to purchase
shares of Company Common Stock.
"COMPANY SHAREHOLDERS" - the holders of the Company Shares listed on
Exhibit A.
"COMPANY SHARES" - all of the issued and outstanding shares of the
Company's capital stock which includes Company Common Stock and Company
Preferred Stock and all of which is owned by the Company Shareholders.
"COMPANY PREFERRED STOCK" - the Series A Preferred Stock, $0.01 par
value, of the Company.
"COMPANY SHAREHOLDERS' INDEMNIFIED PERSONS" - means the Company, its
directors, officers, employees, and agents, and the Company Shareholders.
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"CONFIDENTIALITY AGREEMENT" - Confidentiality and Nondisclosure
Agreement between Parent and Company, dated April 12, 2002.
"CONSTITUENT CORPORATIONS" - the Parent, Merger Sub and the Company.
"CONTRACT" - any agreement, contract, obligation, promise, commitment
or undertaking (whether written or oral and whether express or implied), other
than those that have been terminated.
"COPYRIGHTS" - " means all copyrights in both published works and
unpublished works, including training manuals, marketing and promotional
materials, internal reports, websites, business plans, mask works, software,
programs and related documentation, and videos and any other expressions,
whether registered or unregistered, and all registrations or applications in
connection therewith.
"CUSTOMERS" - is defined in Section 3.29.
"DGCL" - the Delaware General Corporation Law, as amended.
"DISCLOSURE SCHEDULE" - the disclosure schedules delivered by the
Company and the Parent concurrently with the execution and delivery of this
Agreement and any supplements thereto.
"DISSENTING SHARES" - is defined in Section 2.11.
"EFFECTIVE TIME" - is defined in Section 2.5(a).
"EMPLOYEE BENEFIT PLAN" - is defined in Section 3.19(a).
"ENCUMBRANCE" - means any mortgage, deed of trust, charge, claim,
lease, community property interest, equitable interest, lien, option,
hypothecation, pledge, covenant, condition, security interest, title defect,
right of first refusal, restriction of any kind (including any restriction on
use, voting, transfer, receipt of income or exercise of any other attribute of
ownership), easement, any filing of any financing statement as debtor under the
Uniform Commercial Code or comparable law of any jurisdiction, any other
restriction or limitation whatsoever and any agreement to give or make any of
the foregoing; and the verb "Encumber" shall be construed accordingly.
"ENVIRONMENTAL CLAIM" - any accusation, allegation, notice of
violation, action, claim, Encumbrance, Lien, demand, abatement or other Order or
direction (conditional or otherwise) by any Governmental Authority or any Person
for personal injury (including sickness, disease or death), tangible or
intangible property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or restrictions resulting from or based upon (i) the existence, or the
continuation of the existence, of a Release (including,
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without limitation, sudden or non-sudden accidental or non-accidental Releases)
of, or exposure to, any Hazardous Material or other substance, chemical,
material, pollutant, contaminant, odor, audible noise, or other Release in, into
or onto the environment (including, without limitation, the air soil, soil,
surface water or groundwater) at, in, by, from or related to the Facilities or
any activities conducted thereon; (ii) the environmental aspects of the
transportation, storage, treatment or disposal of Hazardous Materials in
connection with the operation of the Facilities; or (iii) the violation, or
alleged violation, of any Environmental Laws, Orders or Governmental Permits of
or from any Governmental Authority relating to environmental matters connected
with the Facilities.
"ENVIRONMENTAL, HEALTH AND SAFETY LIABILITIES" - any cost, damage,
expense, liability, obligation or other responsibility arising from or under any
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to: (a) any environmental, health or safety matter or condition
(including on-site or off-site contamination, generation, handling and disposal
of Hazardous Materials, occupational safety and health, and regulation of
chemical and Hazardous Materials); (b) fines, penalties, judgments, awards,
settlements, legal or administrative proceedings, damages, losses, litigation,
including civil and criminal claims, demands and responses, investigative,
remedial, response or inspection costs and expenses arising under Environmental
Law or Occupational Safety and Health Law; (c) financial responsibility under
Environmental Law or Occupational Safety and Health Law for cleanup costs or
corrective action, including any investigation, cleanup, removal, containment or
other remediation or response actions required by applicable Environmental Law
or Occupational Safety and Health Law and for any natural resource damages; or
(d) any other compliance, corrective, investigative or remedial measures
required under Environmental Law or Occupational Safety and Health Law. The
terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended
("CERCLA").
"ENVIRONMENTAL LAW" - means Laws, Orders and Governmental Permits
concerning the environment, or activities that might threaten or result in
damage to the environment or human health, or any Laws, Orders and Governmental
Permits that are concerned, in whole or in part, with: (1) the environment and
with protecting or improving the quality of the environment and human and
employee health and safety issues; or (2) the management of pollution or
Hazardous Materials, (including, but not limited to, in the case of the United
States of America, the following federal laws: (a) CERCLA; (b) Resource
Conservation and Recovery Act ("RCRA"); (c) Clean Air Act; (d) Clean Water Act;
(e) Toxic Substances Control Act; (f) Emergency Planning and Community
Right-to-Know Act of 1986; (g) Hazardous Materials Transportation Act; (h)
Federal Water Pollution Control Act; (i) the Federal Insecticide, Fungicide and
Rodenticide Act ("FIFRA"), and (j) Occupational Safety and Health Act ("OSHA"),
as such laws have been amended or supplemented, and the regulations promulgated
pursuant thereto).
"ERISA" - the Employee Retirement Income Security Act of 1974, as
amended, or any successor law.
"ERISA AFFILIATE" - is defined in Section 3.19(b).
"ESCROW AGENT" - is defined in Section 2.10(d).
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"ESCROW AGREEMENT" - is defined in Section 2.10(d).
"ESCROW SHARES" - is defined in Section 2.10(d).
"EXCHANGE ACT" - the Securities Exchange Act of 1934, as amended, or
any successor law.
"EXCHANGE PRICE" - the average closing price of a share of Parent
Common Stock for the 20 consecutive Trading Days ending on the Trading Day that
is two Trading Days immediately prior to the Closing Date, as reported on the
Nasdaq National Market (subject to appropriate adjustment for any stock split,
reverse split, stock dividend, reorganization, recapitalization or other like
change with respect to the Parent Common Stock).
"FACILITIES" - any real property, leaseholds or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures or equipment (including motor vehicles) currently or formerly
owned or operated by the Company.
"FINANCIAL STATEMENTS" - is defined in Section 3.5(a).
"FIRST MERGER" - is defined in the Recitals of this Agreement.
"GAAP" - United States generally accepted accounting principles,
practices and methods.
"GOVERNMENTAL AUTHORITY" - any court, tribunal, authority, agency,
commission, bureau, department, official or other instrumentality of the United
States, any foreign country or any domestic, foreign, state, local, county, city
or other political subdivision.
"GOVERNMENTAL PERMIT" - means any license, permit, order, franchise
agreement, concession, grant, authorization, consent or approval from a
Government Authority.
"HAZARDOUS MATERIALS" - any substance, material or waste which is
regulated by Environmental Law, including, without limitation, any material or
substance which is defined as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste," "restricted hazardous
waste," "subject waste," "contaminant," "toxic waste" or "toxic substance" under
any provision of Environmental Law, including but not limited to, petroleum
products, asbestos and polychlorinated biphenyls.
"HOLDBACK SHARES" - is defined in Section 2.10(c).
"INDEMNIFIED PERSON" - is defined in Section 9.4(d).
"INDEMNIFYING PERSON" - is defined in Section 9.4(a).
"INDEPENDENT CPA" - is defined in Section 2.12(d).
"INDEPENDENT TAX AUDITOR" - is defined in Section 5.9(b).
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"INTERIM BALANCE SHEET" - is defined in Section 3.5(a)
"INTERIM BALANCE SHEET DATE" - is defined in Section 3.5(a).
"INTELLECTUAL PROPERTY ASSETS" - means Licensed Intellectual Property
Assets and Owned Intellectual Property Assets.
"INTERIM FINANCIAL STATEMENTS" - is defined in Section 3.5(a).
"ISO" - is defined in Section 3.19(i).
"KEY EMPLOYEES" - Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxx Xxxxx, Xxxxx
Xxxxxxx, Xxxx Xxxxx, Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxx and Xxxx Xxxxxxx.
"KNOWLEDGE" - Except as specified otherwise in this Agreement, any
reference to the knowledge of any Person shall mean to the actual knowledge of
such Person and, with respect to an entity, includes the actual knowledge of all
directors and officers of the Person.
"LAW" - any federal, state, local or foreign law (including common
law), statute, code, ordinance, rule, regulation or other requirement or
guideline.
"LICENSED INTELLECTUAL PROPERTY ASSETS" - means all of the intellectual
property rights of the Company including without limitation Marks, Patents,
Copyrights and Trade Secrets in every jurisdiction which are licensed to
Company.
"LOSSES" - means all losses, damages (including, without limitation,
punitive and consequential damages actually paid by the Indemnified Person to
third parties), fines, penalties, payments, obligations and all liabilities and
all expenses related thereto incurred by an Indemnified Person. Losses shall
include any reasonable legal fees and costs incurred by any of the Indemnified
Persons subsequent to the Closing in defense of or in connection with any
alleged or asserted liability, payment or obligation, whether or not any
liability or payment, obligation or judgment is ultimately imposed against the
Indemnified Persons and whether or not the Indemnified Persons are made or
become parties to any such action.
"MARKS" - " means all trademarks, service marks, trade names, common
law trademarks, business names, Internet domain names and addresses, trade
dress, slogans, and all registrations or applications therefor, and the goodwill
associated therewith .
"MATERIAL ADVERSE EFFECT" - " means, when used in connection with the
Company or Parent, any change, circumstance or effect which, individually or in
the aggregate, has had or would reasonably be expected to have a material
adverse effect on or cause a material adverse change in, the assets,
liabilities, financial condition or results of operations of such party or on
the ability of such party to execute, deliver and perform this Agreement, any
Ancillary Agreements and the transactions contemplated hereby and thereby.
"MATERIAL PERSONAL PROPERTY" - as defined in Section 3.10.
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"MERGERS" - is defined in the Recitals of this Agreement.
"MERGER CONSIDERATION" - is defined in Section 2.9(b).
"MERGER SUB" - is defined in the first paragraph of this Agreement.
"OCCUPATIONAL SAFETY AND HEALTH LAW" - any legal or governmental
requirement or obligation relating to safe and healthful working conditions or
to reduce occupational safety and health hazards, and any program, whether
governmental or private (including those promulgated or sponsored by industry
associations and insurance companies issuing insurance policies to a party to
this Agreement), designed to provide safe and healthful working conditions.
"ORDER" - any order, consent, consent order, injunction, judgment,
decree, consent decree, ruling, writ, assessment or arbitration award.
"ORGANIZATIONAL DOCUMENTS" - (a) the articles or certificate of
incorporation and the bylaws or code of regulations of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) the articles or certificate of formation and
operating agreement of a limited liability company; (e) any charter, trust
certificate or document or similar document adopted or filed in connection with
the creation, formation or organization of a Person; and (e) any and all
currently effective amendments to any of the foregoing.
"OWNED INTELLECTUAL PROPERTY ASSETS" - means all intellectual property
rights including without limitation Marks, Patents, Copyrights and Trade Secrets
in every jurisdiction which are owned by the Company.
"PARENT" - is defined in the first paragraph of this Agreement.
"PARENT COMMON STOCK" - the Common Stock, $0.01 par value per share, of
Parent.
"PARENT SEC REPORTS" - is defined in Section 4.4.
"PARENT SHARES" - the shares of Parent Common Stock to be issued to the
Company Shareholders in connection with the transactions contemplated hereunder.
"PARENT'S INDEMNIFIED PERSONS" - means the Parent, its subsidiary and
affiliated corporations, their respective directors, officers, employees,
stockholders and agents, the Company after the Closing, and any person serving
as a director, officer, employee or agent of the Company at Parent's request
after the Closing.
"PATENTS" - means all patents, patent applications and inventions and
discoveries that may be patentable, including any patents issuing therefrom, and
any reissues, reexaminations, divisions, continuations in whole or in part,
extensions and foreign counterparts thereof.
"PENSION PLAN" - as defined in Section 3.19(f).
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"PERSON" - any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or governmental body or Governmental Authority.
"PROCEEDING" - any pending claim, action, formal or informal
investigation, arbitration, litigation or other judicial, regulatory or
administrative proceeding.
"REGISTRATION STATEMENT" - the registration statement on Form S-3 to be
filed by Parent with the SEC pursuant to Section 6.4.
"RELATED PERSON" - is defined in Section 3.23.
"RELEASE" - any release, spill, effluent, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching, or migration into
the indoor or outdoor environment of any Hazardous Material through or in the
air, soil, surface water or groundwater.
"REMEDIAL ACTION" - all actions, including, without limitation, any
expenditures, required or voluntarily undertaken to (i) clean up, remove, treat,
or in any other way address any Hazardous Material or other substance in the
indoor or outdoor environment; (ii) prevent the Release or threat of Release, or
minimize the further Release of any Hazardous Material or other substance so it
does not migrate or endanger or threaten to endanger public health or welfare of
the indoor or outdoor environment; (iii) perform pre-remedial studies and
investigations or post-remedial monitoring and care; or (iv) bring any Facility
into compliance with all Environmental Laws and Environmental Permits.
"REQUIRED SHAREHOLDER VOTE" - a majority of the outstanding Company
Shares.
"RESOLUTION PERIOD" - is defined in Section 2.12(d).
"RESTRICTED PARENT SHARES" - is defined in Section 5.8(a).
"REVIEW PERIOD" - is defined in Section 2.12(b).
"SECOND MERGER" - is defined in the recitals of the Agreement.
"SECURITIES ACT" - the Securities Act of 1933, as amended, or any
successor law.
"SHAREHOLDER REPRESENTATIVE" - as defined in Section 2.15(a).
"SUBSIDIARY" - with respect to any Person, any corporation, joint
venture, limited liability company, partnership, association or other business
entity of which more than 50% of the total voting power of stock or other equity
entitled to vote generally in the election of directors or managers or
equivalent persons thereof is owned or controlled, directly or indirectly, by
such Person.
"TAX AUTHORITY" - is defined in Section 3.8(a).
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"TAX RESOLUTION PERIOD" - is defined in Section 5.9(b).
"TAX RETURNS" - means all foreign, federal, state or local, government
income, excise, gross receipts and franchise tax returns, real estate and
personal property tax returns, reports and declarations, including valid
extension therefore, or estimated taxes required to be filed by the Company with
respect to all applicable taxes.
"TAXES" - is defined in Section 3.8(a).
"THIRD PARTY ACTION" - means any written assertion of a claim, or the
commencement of any action, suit, or proceeding, by a third party as to which
any person believes it may be an Indemnified Person under Article 9.
"TRADE SECRETS" - means all trade secrets, know-how, confidential
information, customer lists, technical information, proprietary information,
technologies, processes and formulae, source code, algorithms, architecture,
structure, display screens and development tools, data, plans, drawings and blue
prints, whether tangible or intangible and whether stored, compiled, or
memorialized physically, electronically, photographically, or otherwise .
"TRADING DAY" - any day on which the Nasdaq National Market is open for
business.
"UNRESTRICTED PARENT SHARES" - is defined in Section 5.8(a).
"VOTING AGREEMENT" - the voting agreement in the form of Exhibit F
pursuant to which certain holders of Company Shares have agreed to vote all
Company Shares held by them in favor of approval and adoption of this Agreement
and the Merger.
"WARN" - is defined in Section 3.18(d).
2. THE MERGER
2.1 PROCEDURE FOR THE MERGERS
(a) First Merger. Upon the terms and subject to the conditions set
forth in this Agreement, Merger Sub shall be merged, in accordance with the
CBCA, with and into the Company. The First Merger shall be effected by filing
articles of merger with the Secretary of State of the State of Colorado in
accordance with the CBCA.
(b) Second Merger. Upon the terms and subject to the conditions set
forth in this Agreement, immediately after the First Merger (and in any event no
later than the time the Secretary of State of the State of Colorado shall close
for business on the day the First Merger shall be consummated), the Company
shall be merged, in accordance with the CBCA and the DGCL, with and into Parent.
The Second Merger shall be effected by filing articles of merger with the
Secretary of State of the State of Colorado in accordance with the CBCA and
filing a certificate of ownership and merger with the Secretary of State of the
State of Delaware in accordance with the DGCL.
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2.2 FIRST SURVIVING CORPORATION
Following the First Merger, the separate corporate existence of Merger
Sub shall cease, and the Company shall continue as the surviving corporation
(the "First Surviving Corporation"). The name of the First Surviving Corporation
shall be MicroTool, Inc.
2.3 SECOND SURVIVING CORPORATION
Following the Second Merger, the separate corporate existence of the
Company shall cease, and Parent shall continue as the surviving corporation (the
"Second Surviving Corporation").
2.4 TIME AND PLACE OF CLOSING
The closing of the Merger provided for in this Agreement ( the
"CLOSING") shall be held at the law offices of Xxxxx Xxxxxxx Xxxxxxx Israels
LLP, One Financial Center, Boston, Massachusetts, within three (3) business days
of the satisfaction or waiver of all conditions to the obligations of the
parties to consummate the transactions contemplated hereby (other than
conditions with respect to action that will be taken at the Closing itself), or
at such other place, date or time as may be fixed by mutual agreement of the
parties (the "CLOSING DATE"); provided, however, that in no event shall the
Closing Date be extended beyond November 30, 2002. Each of the parties agrees to
use its reasonable best efforts to close the Merger by October 15, 2002.
2.5 EFFECTIVE TIME
(a) Subject to the provisions of this Agreement, as soon as practicable
after the Closing Date, the parties shall cause the First Merger contemplated by
this Agreement to be consummated by the filing of articles of merger with the
Secretary of State of the State of Colorado executed in accordance with the
relevant provisions of the CBCA, and the parties shall make all other filings or
recordings required under the CBCA. The First Merger shall become effective at
such time as the articles of merger has been duly filed with the Secretary of
State of the State of Colorado, or at such subsequent date or time as the
parties shall agree and specify in the articles of merger (the time the First
Merger becomes effective being hereinafter referred to as the "EFFECTIVE TIME").
(b) Immediately after receiving confirmation from the Secretary of
State of the State of Colorado that the First Merger has been consummated (and
in any event no later than the time the Secretary of State of the State of
Colorado shall close for business on the day the First Merger shall be
consummated), Parent and the First Surviving Corporation shall cause the Second
Merger contemplated by this Agreement to be consummated by the filing of a
certificate of ownership with the Secretary of State of the State of Colorado
executed in accordance with the relevant provisions of the CBCA and the filing
of a certificate of ownership and merger with the Secretary of State of the
State of Delaware executed in accordance with the relevant provisions of the
DGCL, and Parent and the First Surviving Corporation shall make all other
filings or recordings required under the CBCA and the DGCL. The Second Merger
shall become effective at the later of the filing of the certificate of
ownership with the Secretary of State of the State of
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Colorado or the filing of the certificate of ownership and merger with the
Secretary of State of the State of Delaware, or at such subsequent date or time
as the parties shall agree and specify in such filings.
(c) The effectiveness of the Second Merger shall be as provided in this
Agreement and the applicable provisions of the CBCA and the DGCL. Without
limiting the generality of the foregoing, and subject thereto, all the property,
rights, privileges, powers and franchises of First Surviving Corporation shall
vest in the Parent, and all debts, liabilities and duties of the First Surviving
Corporation shall become the debts, liabilities and duties of the Parent.
2.6 ARTICLES OF INCORPORATION, BYLAWS AND OFFICERS AND DIRECTORS OF THE
FIRST SURVIVING CORPORATION
(a) Articles. Unless otherwise determined by Parent in its sole
discretion prior to the Effective Time, at the Effective Time, the articles of
incorporation of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the articles of incorporation of the First Surviving Corporation,
unless and until thereafter changed or amended in accordance with applicable
law.
(b) Bylaws. Unless otherwise determined by Parent in its sole
discretion prior to the Effective Time, at the Effective Time, the bylaws of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
bylaws of the First Surviving Corporation, unless and until thereafter changed
or amended in accordance with applicable law.
(c) Officers And Directors. The officers of Merger Sub immediately
prior to the Effective Time shall be the initial officers of the First Surviving
Corporation, in each case until the earliest of their resignation or removal
from office or their otherwise ceasing to be officers or until their respective
successors are duly elected and qualified. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
First Surviving Corporation, each to hold office in accordance with the
certificate of incorporation and bylaws of the First Surviving Corporation.
2.7 CERTIFICATE OF INCORPORATION, BYLAWS AND OFFICERS AND DIRECTORS OF
THE SECOND SURVIVING CORPORATION
(a) Certificate. Unless otherwise determined by Parent in its sole
discretion prior to the Second Merger, the certificate of incorporation of
Parent, as in effect immediately prior to the Second Merger, shall be the
certificate of incorporation of the Second Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
(b) Bylaws. Unless otherwise determined by Parent in its sole
discretion prior to the Second Merger, the bylaws of Parent, as in effect
immediately prior to the Second Merger, shall be the bylaws of the Second
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law.
(c) Officers And Directors. Unless otherwise determined by Parent prior
to the Second Merger, the officers of Parent immediately prior to the Second
Merger shall be the initial
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officers of the Second Surviving Corporation, in each case until the earliest of
their resignation or removal from office or their otherwise ceasing to be
officers or until their respective successors are duly elected and qualified.
The directors of Parent immediately prior to the Second Merger shall be the
initial directors of the Second Surviving Corporation, each to hold office in
accordance with the certificate of incorporation and bylaws of the Second
Surviving Corporation.
2.8 RESERVATION OF RIGHT TO REVISE TRANSACTION
Not later than the date the Company obtains the Required Shareholder
Vote, Parent (with the consent of the Company, not to be unreasonably withheld)
may change the method of effecting the business combination of Parent and the
Company, and each party shall cooperate in such efforts, including to provide
for (a) a merger of the Company with and into Parent, (b) a merger of the
Company with and into a Subsidiary of Parent , or (c) some other substantially
similar structure; provided, however, that no such change shall (i) alter or
change the amount or kind of consideration to be issued to Company Shareholders
as provided for in this Agreement, (ii) result in the transaction being a
taxable transaction for the Company, Parent or either of their stockholders,
(iii) materially delay receipt of any approval required for the consummation of
the transaction contemplated by this Agreement, (iv) require the Company to
obtain the agreement, consent or approval of any person whose agreement, consent
or approval is not required in connection with the Merger described herein
(unless Parent shall waive the requirement to obtain such agreement, consent or
approval in a manner reasonably satisfactory to the Company), (v) impair or
delay the consummation of the Merger or any other transaction contemplated
hereby or the ability of any party hereto to perform its obligations hereunder
by more than fifteen calendar days or beyond November 30, 2002, or (vi) cause
the Company to breach any representation, warranty, covenant or agreement
(unless Parent shall waive compliance with such representation, warranty,
covenant or agreement in a manner reasonably satisfactory to the Company).
2.9 EFFECT OF FIRST MERGER ON CAPITAL STOCK
As of the Effective Time, by virtue of the First Merger and without any
action on the part of any of the Constituent Corporations or the holders of any
securities of the Constituent Corporations:
(a) At the Effective Time, the effect of the First Merger shall be as
provided in this Agreement and the applicable provisions of the CBCA. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the property, rights, privileges, powers and franchises of Merger Sub
and the Company shall vest in the First Surviving Corporation, and all debts,
liabilities and duties of Merger Sub and the Company shall become the debts,
liabilities and duties of the First Surviving Corporation.
(b) Company Shares. At the Effective Time, by virtue of the Merger and
without any action on the part of Merger Sub, the Company or the Company
Shareholders, the Company Shares (excluding the Treasury Shares and the
Dissenting Shares) shall be converted into the right to receive and be
exchangeable for the number of shares of Parent Common Stock and the amount of
cash set forth next to such Company Shareholder's name on Exhibit A (an
aggregate
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purchase price of $500,000 in cash and 190,000 shares of Parent Common Stock)
subject to adjustment as provided in Section 2.12 hereof (the "MERGER
CONSIDERATION").
(c) Cancellation of Certificates. At the Effective Time, all Company
Common Shares shall cease to be outstanding, shall be canceled and retired and
shall cease to exist, and each certificate (a "Certificate") formerly
representing a Company Share (other than a Treasury Share) shall thereafter
cease to have any rights with respect to the Company Shares, except as provided
herein or by law.
(d) Treasury Stock. Each Company Share owned by the Company ("TREASURY
SHARES") shall automatically be canceled and retired and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
(e) Company Options. Prior to the Closing Date, each Company Option
shall be fully accelerated as to all unvested shares so as to give the holder
thereof the opportunity to exercise such Company Option. Exhibit A shall be
amended prior to the Closing Date to reflect any such option exercise. At the
Effective Time, without any action on the part of any holder of Company Options
or the Company, all remaining unexercised Company Options will terminate.
2.10 PAYMENT OF MERGER CONSIDERATION
The Merger Consideration shall be paid as follows:
(a) at the Closing, the aggregate sum of $500,000 shall be paid to the
Company Shareholders in cash by paying to each Company Shareholder by certified
or bank check or by wire transfer of funds to an account specified by such
Company Shareholder in writing at least three days prior to the Closing Date the
cash amount set forth next to his name under the heading "Cash Payment at
Closing" on Exhibit A hereto, as amended;
(b) at the Closing, an aggregate of 125,000 shares of Parent Common
Stock shall be issued to the Company Shareholders, by issuing to each Company
Shareholder the number of Parent Shares set forth next to his name under the
heading "Parent Shares issued at Closing" on Exhibit A hereto, as amended;
(c) 20,000 Parent Shares (the "HOLDBACK SHARES") shall be reserved for
issuance by the Parent pending adjustment of the Merger Consideration in
accordance with Section 2.12 below; and
(d) at the Closing, the Parent shall deliver to State Street Bank and
Trust Company or any successor escrow agent (the "ESCROW AGENT") appointed
pursuant to the escrow agreement (the "ESCROW AGREEMENT"), 45,000 Parent Shares
(the "ESCROW SHARES") to be held in escrow for two years in accordance with the
terms of the Escrow Agreement substantially in the form attached hereto as
Exhibit B.
2.11 DISSENTING SHARES
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Notwithstanding anything in this Agreement to the contrary, any Company
Shares held by a holder who exercised his or her "appraisal rights" as defined
in the CBCA ("DISSENTING SHARES") shall not be converted as provided in Section
2.9 hereof unless and until such shares cease to be Dissenting Shares. If, after
the Effective Time, any such shares cease to be Dissenting Shares, they shall
thereupon be treated as if they had been converted as of the Effective Time into
the right to receive the Merger Consideration as provided in Section 2.10
hereof, without interest thereon. The Company shall give Parent prompt notice of
any demands received by the Company from any holder of Company Shares for the
purchase of such stock, and, at all times, Parent shall have the right to
participate in all negotiations and proceedings with respect to such demands.
The Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or offer to settle, any such demands.
2.12 DETERMINATION OF CLOSING NET ASSETS; ADJUSTMENT OF THE MERGER
CONSIDERATION
(a) Not later than twenty (20) days after the Closing Date, the
Shareholder Representative shall deliver to the Parent: (i) a balance sheet (the
"CLOSING BALANCE SHEET") which shall reflect the book value of both the
Company's assets and the Company's liabilities as of the Closing Date; and (ii)
a statement (the "CLOSING STATEMENT") reflecting the difference of (A) the
difference of the aggregate value of the Company's assets (excluding any Tax
assets) minus the aggregate value of the Company's liabilities as of the Closing
Date as reflected on the Closing Balance Sheet, including without limitation all
deferred revenue (the "CLOSING NET ASSETS") minus (B) the difference of the
aggregate value of the Company's assets (excluding any Tax assets) minus the
aggregate value of the Company's liabilities as of the Base Balance Sheet Date
as reflected on the Base Balance Sheet, including without limitation all
deferred revenue (the "BASE NET ASSETS"). The Closing Balance Sheet shall be
paid for by the Company Shareholders and prepared and reviewed, on an unaudited
basis, by Xxxxxxx, Xxxxxxx & Xxxxxxxx, LLP, the accountants of the Company on a
basis consistent with the preparation of the Interim Balance Sheet and in
accordance with GAAP, but without footnotes. The Closing Balance Sheet shall
also be accompanied by all necessary and appropriate supporting work papers and
materials. Inventory shall be valued as provided in Section 3.28 hereof as of
the close of business on the Closing Date based on a physical count undertaken
on a mutually agreed upon date that is on or near the Closing Date at which
Parent and Shareholder Representative or their representatives may be present to
observe. If the Closing Net Assets are less than the Base Net Assets by more
than $200,000, then the Adjustment Amount shall equal the difference of the Base
Net Assets minus the sum of the Closing Net Assets plus $200,000. If the Closing
Net Assets are greater than or equal to the Base Net Assets minus $200,000, the
Adjustment Amount shall equal zero.
(b) Following receipt of the Closing Balance Sheet, the Parent and the
Parent's accountants will have a period of forty-five (45) calendar days (the
"REVIEW PERIOD") to review, at the Parent's cost, the Closing Balance Sheet.
During such Review Period, the Parent and the Parent's accountant will be given
reasonable access to any of the Company's employees involved in the preparation
of the Closing Balance Sheet and the records, work papers, trial balances and
similar materials prepared by the Company or their accountants in connection
with the preparation of the Closing Balance Sheet. At or before the end of the
Review Period, the Parent
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will either: (i) accept the Closing Balance Sheet and the Closing Statement in
their entirety, in which case the Closing Net Assets will be deemed to be as set
forth on the Closing Statement, and the Closing Balance Sheet and the Closing
Statement shall become final, binding and conclusive on the Company Shareholders
and the Parent; or (ii) deliver to the Shareholder Representative a written
notice in accordance with paragraph (d) of this Section 2.12 disputing the
Closing Balance Sheet or the Closing Statement. If the Parent fails to provide
the notice set forth in (ii) above within the Review Period, it shall be deemed
acceptance of the Closing Balance Sheet and the Closing Statement.
(c) Within twenty (20) days following the later of: (x) the date the
Closing Balance Sheet and the Closing Statement is accepted by Parent; or (y)
the final, binding and conclusive determination of any dispute with respect to
the Closing Balance Sheet or the Closing Statement as provided in paragraph (d)
of this Section 2.12 (the "ADJUSTMENT DATE"), in either case:
(i) if the Adjustment Amount is zero, then the Parent shall
issue to the Company Shareholders the Holdback Shares by issuing to
each Company Shareholder the number of Holdback Shares indicated next
to his name on Exhibit A under the heading "Holdback Shares"; or
(ii) if the Adjustment Amount is greater than zero but equal
to or less than the value of the Holdback Shares, then the Parent shall
issue to the Company Shareholders the Holdback Shares less that number
of Holdback Shares with a value equal to the Adjustment Amount pro rata
based on the percentage that each Company Shareholder's Holdback Shares
represent of the aggregate Holdback Shares (the Holdback Shares that
are not issued shall be restored to the status of authorized but
unissued shares of Parent Common Stock); or
(iii) if the Adjustment Amount is greater than the value of
the Holdback Shares, then the Holdback Shares shall be restored to the
status of authorized but unissued shares of Parent Common Stock and
each Company Shareholder shall transfer to the Parent such Company
Shareholder's pro rata share of the Merger Consideration first from
such Company Shareholder's Parent Shares issued at Closing, second from
such Company Shareholder's Cash amount at Closing and third from such
Company Shareholder's Escrow Shares.
For the purposes of this Section 2.12 the value of the Holdback Shares and the
other Parent Shares shall be determined based on the Exchange Price.
(d) In the event that any dispute shall arise as to the manner of
preparation or the accuracy of the Closing Balance Sheet or Closing Statement
prior to the expiration of the Review Period, the Parent shall provide the
Shareholder Representative with written notice of each disputed item. In the
event of such a dispute, the Parent and the Shareholder Representative shall
attempt to reconcile in good faith their differences as to such items within
twenty (20) calendar days (the "RESOLUTION PERIOD") of the Shareholder
Representative's receipt of such notice, and any resolution by them as to any
disputed items shall be final, binding and conclusive on the Company
Shareholders and the Parent. If the Parent and the Shareholder Representative
are
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unable to reach a resolution within the Resolution Period, the Parent and the
Shareholder Representative shall submit the dispute to Deloitte & Touche (the
"INDEPENDENT CPA"). The determination of such dispute by the Independent CPA
shall be final, binding and conclusive on the parties. The fees and expenses of
the Independent CPA shall be assessed by the Independent CPA fifty percent (50%)
against the Company Shareholders, jointly and severally, and fifty percent (50%)
against the Parent, and shall be paid by each of them in those proportions;
provided, however, that the prevailing party shall not be responsible for any
portion of the fees and expenses of the Independent CPA if the Independent CPA's
decision causes the Adjustment Amount determined pursuant to this paragraph (d)
to be less than 90% of the Adjustment Amount determined pursuant to paragraph
(b) of this Section 2.12, in the case of the Parent, or not less than 90% of the
Adjustment Amount determined pursuant to paragraph (b) of this Section 2.12, in
the case of the Company Shareholders.
2.13 DELIVERY OF COMPANY SHARES
At the Closing, the Company Shareholders shall deliver or cause to be
delivered to Parent, among other things:
(a) certificates for all the Company Shares owned by each Company
Shareholder, duly endorsed in blank for transfer, or with stock powers attached
duly executed in blank, with all signatures notarized or, at the election of the
Parent, medallion guaranteed;
(b) such other documents as may be required to effect a valid transfer
of the Company Shares by the Company Shareholders, free and clear of any and all
Encumbrances including, without limitation, any Encumbrances or other claims
under Article 8 of the Uniform Commercial Code, provided that Parent and Merger
Sub qualify as Protected Purchasers under Article 8 of the Uniform Commercial
Code to the extent that the Company's representations in Section 3.3 are
accurate;
(c) general releases in substantially the form of Exhibit C by all
officers, directors and stockholders of the Company releasing any liability of
the Company to them, or any claim that they may have against the Company; and
(d) such other documents as may be required elsewhere in this Agreement
or may be reasonably requested by counsel to the Parent.
2.14 FURTHER ASSURANCES
The Company Shareholders from time to time after the Closing, at the
request of the Parent and without further consideration, shall execute and
deliver further instruments of transfer and assignment (in addition to those
delivered under Section 2.14) and take such other action as the Parent may
reasonably require to more effectively convert the Company Shares to Parent
Shares.
2.15 SHAREHOLDER REPRESENTATIVE
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(a) Each Company Shareholder will be deemed to have irrevocably
constituted and appointed, effective as of the Closing, Xxxxxxx X. Xxxxxxx
(together with his permitted successors, the "SHAREHOLDER REPRESENTATIVE"), as
his true and lawful agent and attorney-in-fact to enter into any agreement in
connection with the transactions contemplated by this Agreement and any
transactions contemplated by the Escrow Agreement, to exercise all or any of the
powers, authority and discretion conferred on him under any such agreement, to
waive any terms and conditions of any such agreement (other than the payment of
cash and the issuance of the Parent Shares issuable in accordance with Section
2.10), to give and receive notices on his behalf and to be his exclusive
representative with respect to any matter, suit, claim, action or Proceeding
arising with respect to any transaction contemplated by any such agreement,
including, without limitation, the defense, settlement or compromise of any
claim, action or proceeding for which Parent or, following the Closing, Company
may be entitled to indemnification and the Shareholder Representative agrees to
act as, and to undertake the duties and responsibilities of, such agent and
attorney-in-fact. This power of attorney is coupled with an interest and is
irrevocable.
(b) The Shareholder Representative shall not be liable to anyone for
any action taken or not taken by him in good faith or for any mistake of fact or
law for anything that he may do or refrain from doing in connection with his
obligations under this Agreement (i) with the consent of stockholders who, as of
the date of this Agreement, owned a majority in number of the outstanding
Company Shares or (ii) in the absence of his own gross negligence or willful
misconduct. Any action taken or not taken pursuant to the advice of counsel
shall be conclusive evidence of such good faith. The Company Shareholders shall,
jointly and severally, indemnify and hold the Shareholder Representative, and
each successor thereof, harmless from any and all liability and expenses
(including, without limitation, counsel fees) that may arise out of any action
taken or omitted by him as Shareholder Representative in accordance with this
Agreement, as the same may be amended, modified or supplemented, except such
liability and expense as may result from the gross negligence or willful
misconduct of the Shareholder Representative.
(c) The Shareholder Representative 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
Shareholder Representative shall not be liable for other parties' forgeries,
fraud or false presentations.
(d) The Shareholder Representative shall have reasonable access to
information about the Company and the reasonable assistance of the Company's
officers and employees for purposes of performing his duties and exercising his
rights hereunder, provided that the Shareholder Representative shall treat
confidentially and not disclose any nonpublic information from or about the
Company to anyone (except on a need to know basis to individuals who agree to
treat such information confidentially).
(e) If the Shareholder Representative shall be unable or unwilling to
serve in such capacity, his successor shall be named by those persons holding a
majority of the shares of Company Shares outstanding immediately prior to the
Closing, and such successor(s) shall serve and exercise the powers of the
Shareholder Representative hereunder.
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2.16 RESTRICTED SECURITIES
Each Company Shareholder understands that the Parent Shares have not
been registered under the Securities Act by reason of a specific exemption from
the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of each Company Shareholder's investment
intent as expressed below. Each Company Shareholder acknowledges that the Parent
Shares, when received, must be held indefinitely until it is registered under
the Securities Act or an exemption from such registration is available.
2.17 LEGEND ON CERTIFICATE
Each Company Shareholder hereby consents to the imposition of a legend
substantially similar to the following on each certificate for the Parent Shares
and each Company Shareholder agrees to abide by the restrictions contained
therein until such time that the Parent Shares are registered and authorized for
issuance in accordance with Sections 6.3 and 6.4:
"The shares represented by this certificate have not been registered
under the Securities Act and may not be sold, transferred or assigned unless
registered under the Securities Act or an opinion of counsel, satisfactory to
the corporation, is obtained to the effect that such sale, transfer or
assignment is exempt from the registration requirements of the Securities Act."
3. REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company hereby represents and warrants to Parent that, except as
set forth on the disclosure schedule attached hereto and made a part of this
Agreement identifying the relevant Section and paragraph hereof (the "DISCLOSURE
SCHEDULE"), the statements contained in this Section 3 are true and correct. The
Company has used its best efforts to reference the appropriate paragraph and
Section number on the Disclosure Schedule; however, the failure to properly
reference such Section and paragraph number shall not be a breach of a
representation or warranty if Parent could reasonably ascertain the effect of
the disclosure on the other representations and warranties.
3.1 ORGANIZATION, QUALIFICATION AND GOOD STANDING
(a) Section 3.1(a) of the Disclosure Schedule contains a complete and
accurate list of the jurisdictions in which the Company is authorized to do
business. The Company is a corporation duly organized, validly existing and in
good standing under the laws of Colorado, with full corporate power and
authority to conduct its business as it is now being conducted and where it is
now being conducted and to own or use the assets and properties that it purports
to own or use. The Company is not qualified to do business as a foreign
corporation under the Laws of any jurisdiction and is not required to be
licensed or qualified in any other state or jurisdiction by either its ownership
or use of assets or properties, or the nature of the activities conducted by it,
except where the failure to be so qualified could not reasonably be expected to
have a Material Adverse Effect on the Company taken as a whole. The Company does
not have, and has never had, any Subsidiaries.
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(b) The Company has attached as Section 3.1(b) of the Disclosure
Schedule correct and complete copies of the Organizational Documents of the
Company.
(c) The Board of Directors of the Company, at a meeting duly called and
held, or through an action by written consent, unanimously has (i) determined
that the Mergers are fair and in the best interests of the Company and its
stockholders, (ii) approved the First Merger in accordance with the provisions
of the CBCA, (iii) approved this Agreement, the Mergers and the other
transactions contemplated hereby, (iv) authorized the execution and delivery of
this Agreement and the other transaction documents, (v) directed that this
Agreement and the Merger be submitted to the Company Shareholders for their
approval and (vi) resolved to recommend that the Company Shareholders vote in
favor of the approval of this Agreement and the Mergers.
(d) The Company has obtained and delivered to the Parent the Voting
Agreement of the Company Shareholders that hold sufficient Company Shares to
provide the Required Shareholder Vote. Pursuant to such Voting Agreements among
other things each such Company Shareholder has agreed to vote all Company Shares
owned by him or over which he has voting control, in favor of the Mergers and
this Agreement and irrevocably granted a proxy, coupled with an interest, to the
Parent or its designee to vote such Company Shares in favor of this Agreement
and the Mergers.
3.2 AUTHORITY; NO CONFLICT
(a) The Company has the full corporate power and authority to execute,
deliver and perform this Agreement and the Ancillary Agreements; to perform its
obligations hereunder and thereunder, and to carry out the transactions
contemplated hereby and thereby. All necessary action, corporate or otherwise,
has been taken by the Company to authorize the execution, delivery and
performance of this Agreement and each of the Ancillary Agreements and the
transactions contemplated hereby and thereby. This Agreement has been, and each
Ancillary Agreement will be at the Closing, duly executed and delivered by the
Company and this Agreement and each Ancillary Agreement is, or upon the Closing
will be, the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with their terms, except (i) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, and (ii) that the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to the equitable defenses and to the discretion of the court before
which any proceeding therefore may be brought.
(b) Except as set forth in Section 3.2(b) to the Disclosure Schedule,
neither the execution and delivery of this Agreement or any Ancillary Agreement
nor the performance of the transactions contemplated hereby or thereby will,
directly or indirectly (with or without notice or lapse of time or both):
(i) contravene, conflict with or result in a violation or
breach of (A) any provision of the Organizational Documents of the
Company, (B) any resolution adopted by the board of directors or the
shareholders of the Company, (C) any legal requirement or any Order,
award, decision, settlement or process to which the Company
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MICROTOCOL, INC
or any of the assets or properties owned or used by the Company may be
subject, or (D) any Governmental Permit, which is held or used by the
Company excluding from clauses (C) and (D) any contravention, conflict,
violation or breach that would not, either individually or in the
aggregate have a Material Adverse Effect on the Company taken as a
whole;
(ii) result in a breach of or constitute a default, give rise
to a right of termination, cancellation or acceleration, create any
entitlement to any payment or benefit, or require the consent,
authorization or approval of or any notice to or filing with any third
Person under any Contract or any debt instrument to which the Company
is a party or to which its assets or properties are bound, or require
the consent, authorization or approval of or any notice to or filing
with any Governmental Authority to which the Company or its assets or
properties is subject except for any breaches, defaults, rights of
termination, cancellation or acceleration, entitlements, consents,
approvals, notices or filings that would not, either individually or in
the aggregate, have a Material Adverse Effect on the Company taken as a
whole; or
(iii) result in the imposition or creation of any Encumbrance
upon or with respect to the Company Shares or to any of the assets or
properties owned or used by the Company.
3.3 CAPITALIZATION
(a) The authorized equity securities of the Company consist of: (i)
10,000,000 shares of Common Stock, $0.01 par value per share; and (ii) 3,000,000
shares of Series A Preferred Stock, $0.01 par value per share. As of the date
hereof, 5,544,270 shares of Common Stock and 750,000 shares of Preferred Stock
were issued and outstanding, and following the event specified in Section
2.9(e), the right to purchase 1,002,416 shares of Common Stock will be fully
vested and exercisable pursuant to Company Options issued and outstanding prior
to the Effective Time. Section 3.3(a) of the Disclosure Schedule contains a
complete and accurate list of all issued and outstanding options, warrants or
other rights to acquire Company capital stock including the name of the holder,
the issue date, the exercise price, the amount and type of security underlying
such right and the expiration date.
(b) No equity securities of the Company are held in the treasury of the
Company. All of the outstanding equity securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. Section
3.3(b) of the Disclosure Schedule sets forth a complete and correct list of all
of the Company Shareholders and the number of shares of each type of capital
stock of the Company owned, of record and beneficially, by each such Company
Shareholder. Except as set forth on said Schedule 3.3(b) of the Disclosure
Schedule, no Company Shareholder owns of record or beneficially any other shares
of capital stock of the Company, or any rights, options, or warrants with
respect thereto. The Company Shares to be delivered by the Company Shareholders
to the Parent hereunder will be, when delivered pursuant to the terms of this
Agreement and upon payment therefor, duly authorized, validly issued, fully paid
and nonassessable, and will be free of any adverse claim, lien or restriction
including, without limitation, any preemptive rights. Except as set forth in
Section 3.3(b) to the Disclosure
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Schedule, the Company is subject to no liability on account of the issuance or
sale of any securities including, without limitation, all outstanding Company
Shares. Section 3.3(b) of the Disclosure Schedule sets forth all outstanding
securities of the Company, including but not limited to securities reserved for
any purpose, all debt and equity securities and Company Shares. Except as set
forth on Schedule 3.3(a) of the Disclosure Schedule there are no (i) outstanding
or authorized subscriptions, warrants, options or other rights granted by the
Company or binding upon the Company to purchase or acquire, or preemptive rights
with respect to the issuance or sale of, the capital stock of the Company or
which obligate or may obligate the Company to issue any additional shares of its
capital stock or any securities convertible into or evidencing the right to
subscribe for any shares of its capital stock, (ii) other securities of the
Company directly or indirectly convertible into or exchangeable for shares of
capital stock of the Company, (iii) restrictions on the transfer of the
Company's capital stock (other than restrictions under the Securities Act and
state securities laws), (iv) voting rights with respect to the capital stock of
the Company or (v) stock appreciation, phantom stock or similar rights with
respect to the Company. Except as set forth on Section 3.3(b) of the Disclosure
Schedule none of the securities of the Company are subject to "antidilution" or
similar provisions. Except as set forth on Section 3.3(b) of the Disclosure
Schedule there are no voting trusts or other Contracts or understandings to
which the Company or any Company Shareholder is a party with respect to the
transfer, voting or registration of the capital stock of the Company. Except as
set forth on Section 3.3(b) of the Disclosure Schedule there are no Contracts
relating to the sale or transfer of any equity securities or other securities of
the Company. Except as set forth on Section 3.3(b) of the Disclosure Schedule
the Company does not own, nor does it have any Contract to acquire any equity
securities or other securities of any Person or any direct or indirect equity or
ownership interest in any other business. Except as set forth on Section 3.3(b)
of the Disclosure Schedule no Person has any preemptive rights with respect to
any security of the Company or any of its subsidiaries.
3.4 BOOKS, RECORDS AND ACCOUNTS
(a) The books of account and other records of the Company, all of which
have been made available to Parent, are true, complete and correct in all
material respects. The minute books of the Company contain true, accurate and
complete records of all meetings held of, and corporate action taken by, the
shareholders, the board of directors, and committees of the board of directors
of the Company. The stock books of the Company are true, complete and correct.
(b) Except as disclosed in Section 3.4(b) of the Disclosure Schedule,
the Company's books, records and accounts fairly and accurately reflect
transactions and dispositions of assets by the Company, and the system of
internal accounting controls of the Company is sufficient to assure that: (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(c) At the Closing, all of such books, records and accounts will be in
the possession of the Company.
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3.5 FINANCIAL STATEMENTS
(a) For purposes of this Agreement: "FINANCIAL STATEMENTS" shall mean
(i) the unaudited balance sheet of the Company as of December 31, 2000, (ii) the
unaudited balance sheet of the Company (the "BASE BALANCE SHEET") as of December
31, 2001 (the "BASE BALANCE SHEET DATE"), and (iii) the related income
statements and statements of cash flows for the two years ended December 31,
2000, and December 31, 2001. The "INTERIM FINANCIAL STATEMENTS" shall mean the
audited balance sheet of the Company (the "INTERIM BALANCE SHEET") as of June
30, 2002 (the "INTERIM BASE BALANCE SHEET DATE"), and the related unaudited
income statement and statement of cash flows for the six months ended on such
date. True and complete copies of such Financial Statements and Interim
Financial Statements are attached as Section 3.5(a) to the Disclosure Schedule.
(b) The Financial Statements and the Interim Financial Statements (i)
have been prepared from the books and records of the Company and, in the case of
the Interim Financial Statements, in accordance with GAAP consistently applied
during the periods covered thereby, (ii) fully reflect all liabilities and
contingent liabilities of the Company required to be reflected therein as at the
date thereof, and (iii) fairly present the financial position of the Company as
of the date of the balance sheet included in the Interim Financial Statements
and the results of its operations for the period indicated; provided, however,
(x) the Financial Statements do not include footnotes, and (y) the Financial
Statements have neither been reviewed nor audited. The Company has provided all
management letters delivered to the Company from its auditors over the last two
years.
3.6 NO UNDISCLOSED LIABILITIES
The Company does not have any material liabilities or obligations of
any nature (whether known or unknown, absolute, accrued, contingent or
otherwise, and whether due or to become due), except for (i) liabilities or
obligations reflected or reserved against in the Interim Financial Statements;
(ii) current liabilities incurred in the ordinary course of business since the
date of the Interim Financial Statements, consistent with past practices, (none
of which is a claim for breach of contract, breach of duty, breach of warranty,
tort or infringement of an intellectual property right), which liabilities, to
the extent outstanding on the Closing Date will be reflected on the Closing
Balance Sheet; or (iii) liabilities disclosed on Section 3.6 to the Disclosure
Schedule hereto. There is no event or circumstance that currently has a Material
Adverse Effect, or, to the Knowledge of the Company, in the future (so far as
can now be actually foreseen) may have a Material Adverse Effect, on the Company
that has not been specifically disclosed herein or in the Disclosure Schedule
3.7 NO MATERIAL ADVERSE CHANGE
Except as disclosed in Section 3.7 of the Disclosure Schedule, since
the Interim Balance Sheet Date, there has not been any event or circumstance
which has had a Material Adverse Effect on the Company, and, to the Knowledge of
the Company, no event has occurred or circumstance exists that could reasonably
be expected to result in a Material Adverse Effect on the Company. To the
Knowledge of the Company, there is no event or circumstance that would
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be reasonably likely to result in a Material Adverse Effect on the Company that
has not been specifically disclosed herein or in the Disclosure Schedule.
3.8 TAXES
(a) "TAXES" shall mean all taxes, charges, fees, Encumbrances, customs,
duties or other assessments, however denominated, including any interest,
penalties, additions to tax or additional taxes that may become payable in
respect thereof, imposed by the United States government, any state, local or
foreign government, or any agency or political subdivision of any such
government (a "TAX AUTHORITY"), which taxes shall include, without limiting the
generality of the foregoing, all income taxes, payroll and employee withholding
taxes, unemployment insurance, social security, sales and use taxes, excise
taxes, capital taxes, franchise taxes, gross receipt taxes, occupation taxes,
real and personal property taxes, value added taxes, stamp taxes, transfer
taxes, workers' compensation taxes, taxes relating to benefit plans and other
obligations of the same or similar nature.
(b) (i) Except as disclosed in Section 3.8(b)(i) of the Disclosure
Schedule, the Company has filed or caused to be filed with the appropriate
Taxing Authorities in a timely manner all Tax Returns, required to be filed by
them; (ii) the information on such Tax Returns is complete and accurate in all
material respects; (iii) the Company has paid in full on a timely basis all
Taxes or made adequate provision in the Interim Financial Statements for all
Taxes (whether or not shown on any Tax Return) required to be paid by it; (iv)
there are no Encumbrances for Taxes upon the assets or properties of the Company
other than for Taxes not yet due and payable; and (v) no deficiencies for Taxes
have been claimed, proposed, or assessed by any Tax Authority or other
Governmental Authority with respect to the Company, and there are no pending or,
to the Company's Knowledge, threatened audits, investigations or claims for or
relating to any liability in respect of Taxes of the Company.
(c) There are no outstanding Contracts or waivers with respect to the
Company extending the statutory period of limitation applicable to any Taxes,
and the Company has not requested any extension of time within which to file any
Tax Return that has not yet been filed.
(d) (i) Except as disclosed in Section 3.8(d) of the Disclosure
Schedule, the Company has made provision for all Taxes payable by it and such
provision is reflected on the Base Balance Sheet and the Interim Financial
Statements with respect to any period covered thereby as to Taxes in such Period
that are not payable prior to the date of such Base Balance Sheet or Interim
Financial Statements; (ii) the provisions for Taxes with respect to the Company
(on a consolidated basis) on the Interim Financial Statements for any period
ending on or prior to the date of the Interim Financial Statements (excluding
any reserve for deferred Taxes established to reflect timing differences between
book and Tax income) are adequate to cover all Taxes with respect to such
periods, after adjusted in the ordinary course of business and in accordance
with the past practices of the Company through the Closing Date, are adequate to
cover all Taxes through the Closing Date; (iii) the Company has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
shareholder or other third Person; (iv) all material elections with respect to
Taxes made by the Company as of the date hereof are set forth in Section 3.8 of
the Disclosure
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Schedule; (v) there are no private letter rulings in respect of any Tax pending
between the Company and any Tax Authority; (vi) the Company has never been a
member of an affiliated group within the meaning of Section 1504 of the Code, or
filed or been included in a combined, consolidated or unitary return of any
Person (other than with respect to the Company and any of its subsidiaries);
(vii) the Company is not liable for Taxes of any other Person except with
respect to liability for sales taxes imposed by Law, and the Company is not
currently under any contractual obligation to indemnify any Person with respect
to Taxes, or a party to any tax sharing agreement or any other agreement
providing for payments by the Company with respect to Taxes; (viii) the Company
is not, nor has it been, a United States real property holding corporation (as
defined in Section 897(c)(2) of the Code), during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code; (ix) the Company is not a
"collapsible corporation" under Section 341 of the Code; (x) the Company is not
a personal holding company within the meaning of Section 542 of the Code; (xi)
the Company is not a party to any joint venture, partnership or other
arrangement or Contract that could be treated as a partnership for Tax purposes;
(xii) the Company has not agreed to nor is it required, as a result of a change
in method of accounting or otherwise, to include any adjustment under Section
481 of the Code (or any corresponding provision of state, local or foreign Law)
in taxable income; (xiii) the Company is not a party to any Contract,
arrangement or plan that could result (taking into account the transactions
contemplated by this Agreement), separately or in the aggregate, in the payment
of any "excess parachute payments" within the meaning of Section 280G or Section
4999 of the Code; (xiv) neither the Company nor any of its subsidiaries has
distributed stock of another Person, or has had its stock distributed by another
Person, in a transaction that was purported or intended to be governed in whole
or in part by Section 355 or Section 361 of the Code; and (xiv) Section 3.8 of
the Disclosure Schedule contains a list of all jurisdictions to which any Tax is
properly payable or in which any Tax Return is required to be filed by the
Company, and no written claim has ever been made by any Tax Authority in any
other jurisdiction that the Company is subject to taxation in such jurisdiction.
3.9 ACCOUNTS RECEIVABLE
All accounts receivable, notes receivable, contracts receivable,
unbilled invoices and other receivables of the Company that are reflected on the
Financial Statements or on the accounts receivable ledger of the Company as of
the Closing Date (collectively, the "ACCOUNTS RECEIVABLE") represent or will
represent valid and enforceable obligations (i) arising from sales actually made
or services actually performed in the ordinary course of business, (ii) arising
out of transactions with unaffiliated parties and (iii) subject to no setoff,
defense or counterclaim. All of the Accounts Receivable are or will be
collectible at the full recorded amount thereof within one hundred twenty (120)
days of invoice date through normal means of collection, less any applicable
reserves established in accordance with GAAP. An accurate summary of the aging
of the Accounts Receivable on the Interim Balance Sheet Date is attached as
Section 3.9 to the Disclosure Schedule. Since January 1, 2002, there has not
been a material change in the Company's receivables aging practice.
3.10 TITLE TO PROPERTIES; ENCUMBRANCES
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(a) The Company does not now own, nor has it ever owned, any real
property. Section 3.10(a) of the Disclosure Schedule contains a complete and
accurate list of all leaseholds or other interests in real property held by the
Company. Section 3.10(a) of the Disclosure Schedule sets forth for each such
property, the owner thereof, a brief description thereof (including approximate
square footage), the use made of such property and the approximate annual costs,
fees and Taxes associated with such property. The Company has delivered or made
available to Parent true, correct and complete copies of the real property
leases to which the Company is party or pursuant to which it uses or occupies
any real property.
(b) Set forth on Section 3.10(b) of the Disclosure Schedule is a
listing of the machinery, equipment and other tangible personal property with an
original cost in excess of $25,000 used or owned by the Company and a listing of
all leases under which the Company leases any personal property as of the
Closing Date requiring annual rental payments in excess of $10,000, together
with a description of such property (collectively, the "MATERIAL PERSONAL
PROPERTY"). All Material Personal Property is located at 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000. Except as set forth on Section 3.10(b) of the
Disclosure Schedule, all of the assets and properties of the Company are
reflected on the Interim Financial Statements (except to the extent not required
to be so reflected by GAAP). The only intangible assets and properties owned by
the Company or used in the conduct of its business are the Intellectual Property
Assets.
(c) All of the foregoing agreements set forth on Sections 3.10(a) and
3.10(b) of the Disclosure Schedule are valid, subsisting and enforceable in
accordance with their terms against the parties thereto. The Company is in
material compliance with all terms and conditions of such agreements and no
event has occurred nor does any circumstance exist that (with or without notice
or the passage of time or both) would constitute a material violation or default
under any such agreements and the Company has neither given nor received written
notice of any alleged violation or of any default under any such agreement.
(d) The Company has good and marketable title to all of the assets and
properties, real and personal, tangible and intangible, it owns or purports to
own, or uses in its business, including those reflected on its books and records
and in the Interim Financial Statements (except for accounts receivable
collected and inventories, materials and supplies disposed of in the ordinary
course of business consistent with past practice after the date of the Interim
Financial Statements). Except as set forth on Section 3.10(d) of the Disclosure
Schedule, all assets and properties owned, leased or used by the Company are
free and clear of all Encumbrances and other adverse claims or charges or
interests of any kind, except for (a) liens for current Taxes not yet due, (b)
workmen's, common carrier and other similar liens arising in the ordinary course
of business, none of which materially detracts from the value or impairs the use
of the asset or property subject thereto, or impairs the operations of the
Company, and (c) Encumbrances disclosed in the Interim Financial Statements.
(e) There are no condemnation, environmental, zoning or other land use
regulation proceedings, either instituted or to the Company's Knowledge, planned
to be instituted, that would detrimentally affect the use and operation of the
Company's leased real property for its intended purpose.
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3.11 CONDITION AND SUFFICIENCY OF ASSETS
Except as disclosed in Section 3.11 of the Disclosure Schedule, the
Facilities and other assets and property owned or used by the Company are
structurally sound, are in working condition and repair (normal wear and tear
excepted), and are adequate for the uses to which they are being put, and none
of such Facilities or other property and assets owned or used by the Company is
in need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. The Facilities and other assets
and property owned or used by the Company are sufficient for the continued
conduct of its business after the Closing in substantially the same manner as
conducted prior to the Closing.
3.12 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS
(a) The Company is in compliance in all material respects with all
Laws, licenses and Orders affecting the assets or properties owned or used by
the Company or the business or operations of the Company including federal,
state, local and foreign Laws, licenses and Orders. The Company has not been
charged with violating nor, to the Knowledge of the Company, has it been
threatened with a charge of violating, nor, to the Knowledge of the Company, is
the Company under investigation with respect to a possible violation of, any
provision of any federal, state, local or foreign Law, Order or administrative
ruling or license relating to any of its assets or properties or any aspect of
its business.
(b) Section 3.12 of the Disclosure Schedule contains a complete and
accurate list of each Governmental Permit that is held by the Company or that
otherwise relates to the business of, or to any of the assets or properties
owned or used by, the Company. Each Governmental Permit listed or required to be
listed in Section 3.12 of the Disclosure Schedule is valid and in full force and
effect and is not subject to any Proceedings for suspension, modification or
revocation.
3.13 LEGAL PROCEEDINGS
(a) The Company has not received notice of, nor to the Knowledge of the
Company does there exist, any Proceeding that has been commenced by or against
the Company, or any of the officers, directors, former officers or directors,
employees, shareholders or agents of the Company (in their capacities as such)
or that otherwise relates to the business of, or any of the assets or properties
owned or used by, the Company.
(b) There is no Proceeding that challenges, or that may have the effect
of preventing, delaying, making illegal, or otherwise interfering with, any of
the transactions contemplated hereby.
(c) To the Knowledge of the Company, no Proceeding has been threatened.
3.14 ABSENCE OF CERTAIN CHANGES AND EVENTS
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Except as set forth in Section 3.14 of the Disclosure Schedule, since
the Interim Balance Sheet Date, the Company has conducted its business only in
the ordinary course, consistent with past practice, and there has not been any:
(a) contingent liability incurred by the Company as guarantor or
otherwise with respect to the obligations of others;
(b) declaration, setting aside, making or payment of any dividend or
other distribution or repurchase or payment in respect of shares of capital
stock of the Company;
(c) issuance, sale, disposition or Encumbrance of, or authorization for
issuance, sale, disposition or Encumbrance of, or grant or issue of any options,
warrants or rights to acquire with respect to, any shares of its capital stock
or any other of its securities or any security convertible or exercisable into
or exchangeable for any such shares or securities, or any change in its
outstanding securities or shares of capital stock or its capitalization, whether
by reason of a reclassification, recapitalization, stock split, combination,
exchange or readjustment of shares, stock dividend or otherwise;
(d) obligation or liability incurred by the Company other than
obligations and liabilities incurred in the ordinary course of business
consistent with past practice (none of which is a claim for breach of contract,
breach of duty, breach of warranty, tort or infringement of an intellectual
property right);
(e) Encumbrance of its assets or properties;
(f) change in the payment of any bonuses, salaries or other
compensation to any shareholder, director, officer, consultant, agent or sales
representative or employee, or entry into or variation of any employment,
severance or similar Contract with any director, officer or employee;
(g) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement or other employee benefit plan for or with any employees;
(h) damage to or destruction of any asset or property, whether or not
covered by insurance, or loss of any Customer, which could reasonably be
expected to have a Material Adverse Effect on the Company, taken as a whole;
(i) entry into, termination of, or receipt of notice of termination of
any Contract or transaction involving a total remaining commitment by or to the
Company of at least $25,000 including the entry into (i) any document evidencing
any indebtedness; (ii) any capital or other lease; or (iii) any guaranty;
(j) sale, lease or other disposition (other than in the ordinary course
of business consistent with past practice) of any asset or property;
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(k) cancellation, compromise, release or waiver of any debt, claim or
right with a value to the Company in excess of $10,000;
(l) creation, incurrence or assumption of any indebtedness for borrowed
money or guarantee of any obligation in an aggregate amount in excess of
$10,000, except for endorsements of negotiable instruments for collection in the
ordinary course of business;
(m) discharge or satisfaction of any Encumbrance other than those which
are required to be discharged or satisfied during such period in accordance with
their original terms;
(n) payment, discharge or satisfaction of any material obligation or
liability, absolute, accrued, contingent or otherwise, whether due or to become
due, except for any current liabilities, and the current portion of any long
term liabilities, shown on the Interim Financial Statements (or not required as
of the date thereof to be shown thereon in accordance with GAAP) or incurred
since the date of the most recent balance sheet in the ordinary course of
business consistent with past practice;
(o) loan or advance to any Person other than travel and other similar
routine advances in the ordinary course of business consistent with past
practice, or acquisition of any capital stock or other securities of or any
ownership interest in, or a significant portion of the assets of, any other
business enterprise;
(p) capital investment or capital expenditure or capital improvement,
addition or betterment in amounts that exceed $10,000 in the aggregate or lease
or agreement to lease assets with an annual rental that exceeds $10,000 in the
aggregate;
(q) institution or settlement of any Proceeding before any Governmental
Authority relating to it or its assets or properties;
(r) except in the ordinary course of business consistent with past
practice, commitment to provide services or goods for an indefinite period or a
period of more than three (3) months;
(s) change in the method of accounting or the accounting principles or
practices used by the Company in the preparation of the Financial Statements
except as required by GAAP;
(t) entry into other Contracts, except Contracts made in the ordinary
course of business consistent with past practice;
(u) amendment or other modification of any of the Organizational
Documents of the Company;
(v) transfer or grant of any rights or licenses under, or entry into
any settlement regarding the infringement of, any Intellectual Property Assets,
or entry into any licensing or similar agreements or arrangements;
(w) agreement, whether oral or written, by the Company to do any of the
foregoing;
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(x) change in the management or supervisory personnel of the Company;
or
(y) labor trouble or claim of unfair labor practices involving the
Company.
3.15 CONTRACTS; NO DEFAULTS
(a) Section 3.15(a) of the Disclosure Schedule contains a complete and accurate
list, and the Company has delivered to Parent true, correct and complete copies,
of the following Contracts and related documents:
(i) each Contract involving payments of at least $10,000 that
involves performance of services or delivery of goods or materials by
the Company;
(ii) each Contract involving payments of at least $10,000 that
involves performance of services or delivery of goods or materials to
the Company;
(iii) each Contract providing for the purchase of all or
substantially all of its requirements of a particular product from a
supplier;
(iv) each Contract or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting of
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement and the Ancillary
Agreements or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(v) each Contract for joint marketing, teaming or development;
(vi) each Contract with any dealer, franchiser, original
equipment manufacturer, value-added reseller, or manufacturer's
representative;
(vii) each Contract pertaining to the Company's maintenance or
support of its products, services or supplies that varies substantially
from the Company's standard contract which is attached as Section
3.15(a)(vii);
(viii) each Contract for the sale of its products not made in
the ordinary course of business ;
(ix) each Contract with any sales agent or distributor of
products of the Company;
(x) each Contract for a license (other than off-the-shelf,
fully paid up, shrink wrap software licenses) or franchise (as licensor
or licensee or franchisor or franchisee) that varies substantially from
the Company's standard contract which is attached as Section
3.15(a)(x);
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(xi) each Contract involving any arrangement or obligation
with respect to the return of products other than on account of a
defect in condition, or failure to conform to the applicable Contract;
(xii) each Contract with the United States government;
(xiii) each Contract that is material to the assets or
business of the Company;
(xiv) each lease, license and other Contract affecting any
leasehold or other interest in any real or personal property to which
the Company is a party;
(xv) each licensing agreement or other Contract to which the
Company is a party with respect to patents, trademarks, copyrights,
trade secrets or other intellectual property, including agreements with
current or former employees, consultants or contractors regarding the
use or disclosure of any intellectual property;
(xvi) each collective bargaining agreement and other Contract
to or with any labor union or other employee representative of a group
of employees involving or affecting the Company;
(xvii) each joint venture, partnership and other Contract
involving a sharing of profits, losses, costs or liabilities by the
Company with any other Person or requiring the Company to make a
capital contribution;
(xviii) each Contract to which the Company is a party
containing covenants that in any way purport to restrict the business
activity of the Company or any of the employees of the Company or limit
the freedom of the Company or any of the employees to engage in any
line of business or to compete with any Person or hire any Person;
(xix) each employment or consulting agreement between the
Company and its employees and consultants (other than agreements that
are terminable on 30 days notice or less without penalty);
(xx) each agreement between the Company and an officer or
director of the Company or any affiliate of any of the foregoing;
(xxi) each power of attorney granted by the Company that is
currently effective and outstanding;
(xxii) each Contract for capital expenditures by the Company
in excess of $10,000;
(xxiii) each agreement of the Company under which any money
has been or may be borrowed or loaned or any note, bond, factoring
agreement, indenture or other evidence of indebtedness that has been
issued or assumed (other than those under which
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there remain no ongoing obligations of the Company), and each guaranty
by the Company of any evidence of indebtedness or other obligation, or
of the net worth, of any Person (other than endorsements for the
purpose of collection in the ordinary course of business);
(xxiv) each agreement of the Company containing restrictions
with respect to the payment of dividends or other distributions in
respect of its capital stock;
(xxv) each stock purchase, merger or other agreement pursuant
to which the Company acquired any material amount of assets (other than
capital expenditures), and all relevant documents and agreements
delivered in connection therewith;
(xxvi) each material agreement to which the Company is a party
containing a change of control provision applicable to this Agreement,
any Ancillary Agreements or any transaction contemplated hereby or
thereby;
(xxvii) each other agreement to which the Company is a party
having an indefinite term or a fixed term of more than one (1) year
(other than those that are terminable at will or upon not more than
thirty (30) days' notice by the Company without penalty) or requiring
payments by the Company of more than $25,000 per year; and
(xxviii) each standard form of agreement pursuant to which the
Company provides services or goods to customers.
(b) Each Contract identified or required to be identified in Section
3.15(a) of the Disclosure Schedule is in full force and effect and is valid and
enforceable by the Company and, to the Knowledge of the Company, against the
other parties thereto, other than the Company, in accordance with its terms;
(c) The Company is in full compliance in all material respects with all
applicable terms and requirements of each Contract under which the Company has
any obligation or liability or by which the Company or any of the assets or
properties owned or used by the Company is bound;
(d) To the Knowledge of the Company, each other Person that has any
obligation or liability under any Contract under which the Company has any
rights is in full compliance with all applicable terms and requirements of such
Contract;
(e) To the Knowledge of the Company, no event has occurred and no
circumstance exists that (with or without notice or lapse of time or both) is
likely to result in a violation or breach of any Contract;
(f) Except as described in Section 3.15(f) of the Disclosure Schedule,
the Company has not received prepayments of any kind on any Contract;
(g) Except as set forth in Section 3.15(g) of the Disclosure Schedule,
the Company is not a party to any Contract or order for the sale of goods or the
performance of services which, if
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performed by the Company in accordance with its terms, could only be performed
with a negative gross profit margin or which has no reasonable likelihood of
being performed within the time limits provided in such Contract.
3.16 INSURANCE
(a) Section 3.16(a) of the Disclosure Schedule sets forth the premium
payments and describes all the insurance policies of the Company (except
policies relating to Employee Benefit Plans listed on Section 3.19 of the
Disclosure Schedule), which policies are now in full force and effect in
accordance with their terms and expire on the dates shown on Section 3.16(a) of
the Disclosure Schedule. There has been no default in the payment of premiums on
any of such policies that has not been cured, and to the Knowledge of the
Company, there is no ground for cancellation or avoidance of any such policies,
or any increase in the premiums thereof, or for reduction of the coverage
provided thereby. Such policies shall continue in full force and effect up to
the expiration dates shown in Section 3.16(a) of the Disclosure Schedule. True,
correct and complete copies of all insurance policies listed in Section 3.16(a)
of the Disclosure Schedule have been previously furnished to Parent.
(b) The policies listed on Section 3.16(a) of the Disclosure Schedule
(i) are sufficient to enable the Company to comply with all requirements of Laws
and all agreements to which it is subject, (ii) will remain in full force and
effect through the respective expiration dates of such policies without payment
of additional premiums, and (iii) will not be adversely affected by, or
terminate or lapse by reason of, the transactions contemplated by this Agreement
or any Ancillary Agreement. Section 3.16(b) of the Disclosure Schedule also sets
forth all other insurance policies in effect at any time prior to the Closing
Date under which the Company currently may be entitled to give notice or
otherwise assert a claim.
(c) Except for amounts deductible under the policies of insurance
described on Section 3.16 of the Disclosure Schedule or with respect to risks
assumed as a self-insurer and described on such Section, the Company is not, nor
has the Company at any time been, subject to any liability as a self-insurer of
the business or assets of the Company.
(d) Except as set forth on Section 3.16(d) of the Disclosure Schedule,
there are no claims, by or with respect to the Company, pending under any of
said policies, or disputes with insurers. No notice of cancellation or
termination has been received with respect to any such policy. The Company has
not been refused any insurance with respect to assets or operations, nor has its
coverage been limited by any insurance carrier with which it has applied for any
such insurance or with which it has carried insurance. The Company has no
knowledge of any insurance carrier's insolvency or inability to perform its
obligations or pay any claims pursuant to any of the insurance policies
maintained by the Company.
(e) Except as set forth on Section 3.16(e) of the Disclosure Schedule,
the Company has no current or prior insurance policy that remains subject to a
retrospective adjustment of the premiums payable thereunder.
3.17 ENVIRONMENTAL MATTERS
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(a) The Company is in compliance in all material respects with all
applicable Environmental Laws, which compliance includes, but is not limited to,
the possession by the Company of all Governmental Permits required under
applicable Environmental Laws and compliance with the terms and conditions
thereof. The Company has not received notice of, nor is the Company, nor any
predecessor of it, the subject of any Environmental Claim or Remedial Action.
The Company has no Environmental, Health and Safety Liabilities. To the
Knowledge of the Company, there are no circumstances or conditions related to
the Company, the Company's operations or any of the Company's Facilities that
are reasonably likely to prevent or interfere with such compliance or give rise
to an Environmental Claim or Remedial Action in the future.
(b) There are no Environmental Claims that are pending or, to the
Knowledge of the Company, threatened against the Company, the Company's
Facilities or against any Person whose liability for any Environmental Claim the
Company has retained or assumed either contractually or by operation of Law.
(c) The Company, and any other Person acting on behalf of the Company
has not (i) disposed of, transported, stored, or arranged for the disposal of
any Hazardous Materials to, at or upon: (A) any location other than a site
lawfully permitted to receive such Hazardous Materials, (B) any Facilities, or
(C) any site which, pursuant to CERCLA or any similar state Law, has been placed
on the National Priorities List, CERCLIS or their state equivalents, and (ii)
there has not occurred during the period the Company operated or possessed any
Facility or is presently occurring a Release, or threatened Release, of any
Hazardous Materials on, into or beneath the surface of, or adjacent to, any
Facilities.
3.18 EMPLOYEES
(a) Section 3.18 of the Disclosure Schedule contains a complete and
accurate list of the following information for each employee of the Company:
name; job title; bonus; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under any employee benefit plan of any
nature. True and correct information representing each employee's base salary
has previously been delivered to Parent, in form and substance reasonably
satisfactory to Parent.
(b) To the Knowledge of the Company, no officer or employee of the
Company is a party to, or is otherwise bound by, any agreement or arrangement,
including any confidentiality, noncompetition, or proprietary rights agreement,
between such officer or employee and any other Person that could adversely
affect (i) the performance of his or her duties as an officer or employee of the
Company, or (ii) the ability of the Company to conduct its business.
(c) To the Knowledge of the Company, no employee of the Company is
bound by any agreement with any other Person that is violated or breached by
such employee performing the services he or she is performing for the Company.
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(d) The Company has not had a "Plant Closing" or a "Mass Layoff" within
the meaning of the federal Workers Adjustment and Retraining Notification Act of
1988 ("WARN").
(e) The Company has delivered to Parent or its counsel prior to the
date hereof true and complete copies of any employment agreements and any
procedures and policies relating to the employment of employees of the Company
and the use of temporary employees and independent contractors by the Company
(including summaries of any procedures and policies that are unwritten).
3.19 EMPLOYEE BENEFITS
(a) Except for the Employee Benefit Plans listed on Section 3.19(a) of
the Disclosure Schedule, the Company does not maintain, have an obligation to
contribute to or have any actual or contingent liability with respect to any
Employee Benefit Plan. "EMPLOYEE BENEFIT PLAN" means any "EMPLOYEE BENEFIT PLAN"
as defined in Section 3(3) of ERISA and any other plan, policy, program,
practice, agreement, understanding or arrangement (whether written or oral)
providing compensation or other benefits (other than ordinary cash compensation)
to any current or former director, officer, employee or consultant (or to any
dependent or beneficiary thereof), of the Company, which are now, or were within
the past five years, maintained by the Company, or under which the Company has
or could have any obligation or liability, whether actual or contingent,
including, without limitation, all incentive, bonus, deferred compensation,
vacation, holiday, cafeteria, medical, disability, stock purchase, stock option,
stock appreciation, phantom stock, restricted stock or other stock-based
compensation plans, policies, programs, practices or arrangements. The Company
has delivered to Parent or its counsel prior to the date hereof true and
complete copies of (i) plan instruments and amendments thereto for all Employee
Benefit Plans (or written summaries of any Employee Benefit Plans that are
unwritten) and related trust agreements, insurance and other contracts, summary
plan descriptions, and summaries of material modifications, and material
communications distributed to the participants of each Plan, (ii) to the extent
annual reports on Form 5500 are required with respect to any Employee Benefit
Plan, the two most recent annual reports and attached schedules for each
Employee Benefit Plan as to which such report is required to be filed, and (iii)
where applicable, the most recent (A) opinion, notification and determination
letters, (B) audited financial statements, (C) actuarial valuation reports, and
(D) nondiscrimination tests performed under the Code (including 401(k) and
401(m) tests) for each Employee Benefit Plan.
(b) The Company does not have and has never had an ERISA Affiliate.
"ERISA AFFILIATE" means any entity (whether or not incorporated) other than the
Company that, together with the Company is a member of (i) a controlled group of
corporations within the meaning of Section 414(b) of the Code; (ii) a group of
trades or businesses under common control within the meaning of Section 414(c)
of the Code; or (iii) an affiliated service group within the meaning of Section
414(m) of the Code.
(c) The Company does not maintain and has never maintained, nor does it
contribute to or has it ever contributed to, an Employee Benefit Plan subject to
Title IV of ERISA
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(including a multiemployer plan) and, to the Knowledge of the Company, no facts
exist under which the Company could incur any liability under Title IV of ERISA.
(d) With respect to each Employee Benefit Plan, (i) no party in
interest or disqualified person (as defined in Section 3(14) of ERISA and
Section 4975 of the Code, respectively) has at any time engaged in a transaction
that could subject Parent or the Company directly or indirectly to a Tax,
penalty or liability for prohibited transactions imposed by ERISA or the Code
and (ii) no fiduciary (as defined in Section 3(21) of ERISA) with respect to any
Employee Benefit Plan, for whose conduct the Company could have any liability
(by reason of indemnities or otherwise), has breached any of the
responsibilities or obligations imposed upon the fiduciary under Title I of
ERISA.
(e) Each Employee Benefit Plan that is a "welfare plan" within the
meaning of Section 3(1) of ERISA and that provides health, disability or death
benefits is fully insured; the Company is not obligated to directly pay any such
benefits or to reimburse any third Person payor for the payment of such
benefits.
(f) Each Employee Benefit Plan that is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA (a "PENSION PLAN") and that is
subject to Sections 201, 301 or 401 of ERISA has received a favorable
determination letter from the Internal Revenue Service covering all amendments
required by the Tax Reform Act of 1986 and prior legislation and there are no
circumstances that are likely to result in revocation of any such favorable
determination letter. Except as noted on Section 3.19(f) of the Disclosure
Schedule, no Pension Plan has assets other than securities listed on a public
exchange, mutual fund shares registered under federal law, publicly traded debt
or government debt instruments, or participant loans extended in accordance with
Plan Terms. Each Employee Benefit Plan is and has been operated in material
compliance with its terms and all applicable Laws, Orders or governmental rules
and regulations currently in effect with respect thereto, and by its terms can
be amended and/or terminated at any time. As of and including the Closing Date,
the Company (i) shall have performed all material obligations required to be
performed by it under, and shall not be in material default under or in material
violation of any Employee Benefit Plan and (ii) shall have made all
contributions or payments required to be made by it up to and including the
Closing Date with respect to each Employee Benefit Plan, or adequate accruals
(including accruals for 401(k) match, if any) therefor will have been provided
for and will be reflected on the Interim Financial Statements provided to Parent
by the Company. All notices, filings and disclosures required by ERISA or the
Code (including notices under Section 4980B of the Code and certifications under
the Health Insurance Portability and Accountability Act) have been timely made.
(g) The Company has not received nor is it aware of any Proceeding
(other than routine claims for benefits) pending or, to the Knowledge of the
Company, threatened with respect to any Employee Benefit Plan or against any
fiduciary of any Employee Benefit Plan, and to the Knowledge of the Company,
there are no facts that could give rise to any such Proceeding. To the Knowledge
of the Company, there has not occurred any circumstances by reason of which the
Company may be liable for an act, or a failure to act, by a fiduciary with
respect to any Employee Benefit Plan.
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(h) There are no complaints, charges or claims against the Company
pending or, to the Company's Knowledge, threatened to be brought by or filed
with any Governmental Authority and no facts exist as a result of which the
Company could have any liability based on, arising out of, in connection with or
otherwise relating to the classification of any individual by the Company as an
independent contractor or "leased employee" (within the meaning of Section
414(n) of the Code) rather than as an employee.
(i) Section 3.19(i) of the Disclosure Schedule sets forth a true and
complete list of each current or former employee, officer or director of the
Company who holds (i) any option to purchase Company Shares, together with the
number of shares of Company Shares subject to such option, the option price of
such option (to the extent determinable), whether such option is intended to
qualify as an incentive stock option within the meaning of Section 422(b) of the
Code (an "ISO"), and the expiration date of such option; (ii) any Company Shares
that are restricted as a result of an agreement with the Company or the stock
plan of the Company; and (iii) any other right, directly or indirectly, to
receive Company Shares or any other compensation based in whole or in part on
the value of Company Shares, together with the number of Company Shares subject
to such right.
(j) Section 3.19(j) of the Disclosure Schedule sets forth a true and
complete list of (i) all agreements with consultants who are individuals
obligating the Company to make annual cash payments in an amount exceeding
$25,000; and (ii) all agreements with respect to the services of independent
contractors or leased employees who are individuals or individuals doing
business in a corporate form whether or not they participate in any of the
Employee Benefit Plans.
(k) (i) No Employee Benefit Plan is an employee stock ownership plan
(within the meaning of Section 4975(e)(7) of the Code) or otherwise invests in
Company Shares; and (ii) the consummation of the transactions contemplated by
this Agreement will not, alone or together with any other event, (A) entitle any
employee or former employee of the Company to any payment, (B) result in an
increase in the amount of compensation or benefits or accelerate the vesting or
timing of payment of any benefits or compensation payable in respect of any
employee or former employee, or (C) result in any parachute payment under
Section 280G of the Code, whether or not such payment is considered reasonable
compensation for services rendered. The Company will take all actions within its
control to ensure that all actions required to be taken by a fiduciary of any
Employee Benefit Plan in order to effectuate the transaction contemplated by
this Agreement shall comply with the terms of such Plan, ERISA and other
applicable Laws.
(l) No Employee Benefit Plan provides benefits, including, without
limitation, death or medical benefits (through insurance or otherwise) with
respect to any employee or former employee of the Company beyond their
retirement or other termination of service other than (i) coverage mandated by
applicable Law, (ii) retirement or death benefits under any Pension Plan, (iii)
disability benefits under any welfare plan that have been fully provided for by
insurance or otherwise, (iv) deferred compensation benefits accrued as
liabilities on the consolidated books of the Company, or (v) benefits in the
nature of severance pay.
(m) No Employee Benefit Plan is a "multiple employer plan" as described
in Section 3(40) of ERISA or Section 413(c) of the Code.
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(n) No Employee Benefit Plan, other than a Pension Plan, is funded
through a trust intended to be exempt from tax pursuant to Section 501 of the
Code.
(o) The Company has not proposed, agreed nor announced any changes to
any Employee Benefit Plan that would cause an increase in benefits under any
such Employee Benefit Plan (or the creation of new benefits or plans) or to
change any employee coverage that would cause an increase in the expense of
maintaining any such plan.
3.20 LABOR RELATIONS
(a) No condition or state of facts or circumstances exists that could
materially adversely affect the Company's relations with its employees,
including the consummation of the transactions contemplated by this Agreement.
(b) The Company is in compliance in all material respects with all
applicable Laws respecting employment and employment practices, terms and
conditions of employment and wages and hours and is not engaged in any unfair
labor practice.
(c) No collective bargaining agreement with respect to the business of
the Company is currently in effect or being negotiated. The Company has not
encountered any labor union or collective bargaining organizing activity with
respect to its employees. The Company has no obligation to negotiate any such
collective bargaining agreement, and, to the Knowledge of the Company, there is
no indication that the employees of the Company desire to be covered by a
collective bargaining agreement.
(d) There are no strikes, slowdowns, work stoppages or other labor
trouble pending or, to the Knowledge of the Company, threatened with respect to
the employees of the Company, nor has any of the above occurred or, to the
Knowledge of the Company, been threatened.
(e) There is no representation claim or petition pending before the
National Labor Relations Board or any state or local labor agency and, to the
Knowledge of the Company, no question concerning representation has been raised
or threatened respecting the employees of the Company.
(f) There are no complaints or charges against the Company pending
before the National Labor Relations Board or any state or local labor agency
and, to the Knowledge of the Company, no complaints or charges have been filed
or threatened to be filed against the Company with any such board or agency.
(g) To the Knowledge of the Company, no charges with respect to or
relating to the business of the Company are pending before the Equal Employment
Opportunity Commission or any state or local agency responsible for the
prevention of unlawful employment practices.
(h) Section 3.20(h) of the Disclosure Schedule accurately sets forth
all unpaid severance that, as of the date hereof, is due or claimed, in writing,
to be due from the Company to any Person whose employment with the Company was
terminated.
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(i) The Company has not received notice of the intent of any government
body or Governmental Authority responsible for the enforcement of labor or
employment Laws to conduct an investigation of the Company and to its Knowledge
no such investigation is in progress.
(j) The Company is not and, to the Knowledge of the Company, no
employee of the Company is, in violation in any material respect of any
employment agreement, non-disclosure agreement, non-compete agreement nor any
other agreement regarding an employee's employment with the Company.
(k) Except as set forth in Section 3.20(k) to the Disclosure Schedule,
the Company has paid or accrued all wages that are due and payable to each of
its employees and each of its independent contractors.
(l) Except as set forth in Section 3.20(l) to the Disclosure Schedule,
the Company does not have and will not have at the Closing Date any contingent
liabilities for sick leave, vacation, holiday pay, severance pay, accrued pay or
similar items not set forth in the Interim Financial Statements except for such
obligations incurred in the ordinary course of business and consistent with past
practices.
(m) The execution, delivery and performance of this Agreement and the
Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby will not trigger any severance pay obligation of the Company
under any Contract.
3.21 INTELLECTUAL PROPERTY
(a) Except as disclosed in Section 3.21(a) of the Disclosure Schedule,
the Company: (i) owns all right, title and interest in and to the Owned
Intellectual Property Assets, free and clear of all Encumbrances; and (ii)
licenses or otherwise possesses legally valid and enforceable rights to use, the
Licensed Intellectual Property Assets, and, in each case of clause (i) or (ii),
the Company may transfer such rights as contemplated by this Agreement. The
Company has made all filings and recordations which are commercially reasonable
to protect and maintain its interest in the Intellectual Property Assets. The
Intellectual Property Assets include all the intellectual property rights
necessary for Parent to (i) operate the Company's business as currently
conducted or proposed to be conducted; and (ii) deliver existing products and
services and the products and services under development, free of Encumbrances
(b) Schedule 3.21(b) hereto contains a true, correct and complete list
of all Patents which are Owned Intellectual Property. All such Patents which are
issued patents and patent applications are valid and subsisting and all
maintenance fees, annuities and the like have been paid. None of such Patents is
infringed or has been challenged or threatened in any way by any Person.
(c) Schedule 3.21(c) hereto contains a true, correct and complete list
of all Marks which are Owned Intellectual Property. Except as set forth in
Section 3.21(c) to the Disclosure Schedule and to the Knowledge of the Company,
all such Marks are valid and subsisting; and all
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renewal fees and the like have been paid. None of such Marks is infringed or
diluted; and none of such Marks has been challenged or threatened in any way by
any Person, and no claims are pending or threatened against the use by the
Company of such Marks in the Company's business as currently conducted or
proposed to be conducted. All uses of such Marks are in conformance with
applicable statutory and common law; and all materials encompassed by such Marks
have been marked with appropriate trademark, service xxxx, and registration
notices.
(d) Schedule 3.21(d) hereto contains a true, correct and complete list
of all registered Copyrights which are Owned Intellectual Property. All
Copyrights are valid and enforceable; and except as set forth in Section 3.21(d)
to the Disclosure Schedule and to the Company's Knowledge, none of such
Copyrights is infringed or has been challenged or threatened in any way. No
claims are pending or threatened against the use by the Company of any writings
or other expressions used in the Company's business as currently conducted or as
proposed to be conducted. All works encompassed by the Copyrights have been
marked with appropriate copyright notices.
(e) The Company has taken precautions to protect the confidentiality
and value of its Trade Secrets, including executing confidentiality agreements
with Persons who are provided access to the Trade Secrets. The Trade Secrets
have not been used, divulged or appropriated either for the benefit of any
Person or to the detriment of the Company. None of the Trade Secrets is subject
to any material adverse claim or, to the Knowledge of the Company, has been
challenged or threatened in any way.
(f) Schedule 3.21(f) hereto contains a true, correct and complete list
of all contracts, licenses, agreements or understandings relating to the
Intellectual Property Assets (including without limitation, Licensed
Intellectual Property Assets) to which the Company is a party or by which the
Company is bound. The Company is not and will not be in breach or violation of
any agreement listed on Schedule 3.21(f) as a result of the execution and
delivery of this Agreement or the performance of its obligations hereunder. Each
license of Intellectual Property Assets listed in Schedule 3.21(f) is valid,
subsisting, and enforceable, and, subject to possible application of bankruptcy
law, shall continue in effect on its current terms upon consummation of the
transactions contemplated by this Agreement.
(g) None of the services, products or technology used, sold, offered
for sale or licensed or proposed for use, sale, offer for sale or license by the
Company, including those products and services under development set forth under
Schedule 3.21(g) hereto, infringes any intellectual property or proprietary
rights owned or possessed by any Person nor is any claim pending or threatened
alleging such infringement.
(h) No Intellectual Property Asset is subject to any outstanding Court
Order, Proceeding (other than pending applications for patent, trademark
registration or copyright registration) or stipulation restricting in any manner
the licensing thereof by the Company. Except as set forth on Schedule 3.21(h),
the Company has not entered into any agreement to indemnify any other person
against any charge of infringement of any Intellectual Property Asset.
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(i) Except as set forth on Schedule 3.21(i), all employees,
contractors, agents and consultants of the Company have executed a
confidentiality and assignment of inventions agreement substantially in the form
attached to Schedule 3.21(i) hereto to protect the confidentiality and to vest
in the Company exclusive authorship and ownership of such Intellectual Property
Assets. Except as set forth on Schedule 3.21(i), to the Knowledge of the
Company, no employee, former employee, contractor, agent or consultant of the
Company has unlawfully used any Trade Secrets or other confidential information
of any other Person in the course of their work for the Company.
(j) To the Knowledge of the Company, no officer, employee, contractor,
agent or consultant of the Company is, or is now expected to be, in violation of
any term of any employment contract, patent disclosure agreement, proprietary
information agreement, noncompetition agreement, nonsolicitation agreement,
confidentiality agreement, or any other similar contract or agreement or any
restrictive covenant relating to the right of any such officer, employee,
contractor, agent or consultant to be employed or engaged by the Company because
of the nature of the Company's business conducted or proposed to be conducted by
the Company or relating to the use of Trade Secrets or proprietary information
of others, and the continued employment or retention of its officers, employees,
contractors, agents or consultants does not subject the Company to any liability
with respect to any of the foregoing matters in connection with the Company's
business as currently conducted or proposed to be conducted.
(k) Except as set forth on Schedule 3.21(k), the Company has not
deposited, or is obligated to deposit, any source code regarding its services or
products into any source code escrows or similar arrangements and the Company is
not under any contractual or other obligation to disclose the source code or any
other material proprietary information included in or relating to its products.
3.22 CERTAIN PAYMENTS
Neither the Company nor any shareholder, director, officer, agent or
employee of the Company nor, to the Knowledge of the Company, any other Person
associated with or acting for or on behalf of the Company, has directly or
indirectly (i) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback or other payment to any Person, private or public, regardless
of form, whether in money, property or services in violation of the Foreign
Corrupt Practices Act or any similar Law (A) to obtain favorable treatment in
securing business, (B) to pay for favorable treatment for business secured, or
(C) to obtain special concessions, or for special concessions already obtained,
for or in respect of the Company or any affiliate of the Company, or (ii)
established or maintained any fund or asset of the Company that has not been
recorded in the consolidated books and records of the Company.
3.23 RELATIONSHIPS WITH RELATED PERSONS
No shareholder, affiliate, officer, director or employee of the
Company, nor any spouse or child of any of them or any Person associated with
any of them ("RELATED PERSON"), has any interest in any assets or properties
used in or pertaining to the business of the Company. Except as set forth in
Section 3.23 to the Disclosure Schedule, none of the shareholders, affiliates,
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officers, directors or employees of the Company nor any Related Person owns or
has owned, directly or indirectly, and whether on an individual, joint or other
basis, any equity interest or any other financial or profit interest in a Person
(other than less than two percent (2%) of the outstanding capital stock of a
Person subject to the reporting requirements of the Exchange Act) that has (i)
had business dealings with the Company, or (ii) engaged in competition with the
Company. Except as set forth in Section 3.23 to the Disclosure Schedule, no
shareholder, affiliate, officer, director or employee of the Company nor the
Related Person is a party to any Contract with, or has any claim or right
against, or owes any amounts to, the Company.
3.24 BROKERS OR FINDERS
Except as set forth in Section 3.24 to the Disclosure Schedule, neither
the Company nor its agents have incurred any obligation or liability, contingent
or otherwise, for brokerage or finders' fees or agents' commissions or financial
advisory services or other similar payment in connection with this Agreement or
the Ancillary Agreements or the transactions contemplated hereby or thereby.
3.25 CUSTOMER RELATIONSHIPS
Except as set forth in Section 3.25 to the Disclosure Schedule, to the
Knowledge of the Company, there are no facts or circumstances, including the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, that are reasonably likely to result in the loss of any
material customer of the Company or a material change in the relationship of the
Company with such a customer.
3.26 OUTSTANDING INDEBTEDNESS
Section 3.26 of the Disclosure Schedule sets forth as of the Interim
Balance Sheet Date (i) the amount of all indebtedness for borrowed money of the
Company then outstanding (including (A) the interest rate applicable thereto,
(B) any Encumbrances that relate to such indebtedness, and (C) the name of the
lender or the other payee of each such indebtedness), (ii) the amount of all
lending and commitments to lend, and (iii) the amount of all guarantees or
sureties of the Company with respect to the obligations of any Person.
3.27 SUPPLIERS; RAW MATERIALS CONTRACTORS
Section 3.27 of the Disclosure Schedule sets forth for the year ended
December 31, 2001, and the six months ended June 30, 2002, (i) the names and
addresses of the ten (10) largest suppliers, contractors and subcontractors of
the Company based on the aggregate value of raw materials, supplies, merchandise
and other goods and services ordered by the Company from such suppliers,
contractors and subcontractors during such period, and (ii) the amount for which
each such supplier, contractor or subcontractor invoiced the Company during such
period. The Company has received no notice and has no reason to believe that
there has been any material adverse change in the price of such raw materials,
supplies, merchandise or other goods or services, or that any such supplier,
contractor or subcontractor will not sell raw materials, supplies, merchandise
and other goods and services to the Company at any time after the Closing
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Date on terms and conditions substantially the same as those used in its current
sales to the Company, subject to general and customary price increases.
3.28 INVENTORIES
(a) All inventories of finished goods and raw materials of the Company
reflected on the Base Balance Sheet or to be reflected on the Closing Balance
Sheet and existing on the date of Closing are, will be of a quantity and quality
normally salable in the ordinary course of business at commercially reasonable
prices consistent with the Company's prior experience, except to the extent of
the obsolete inventory reserve in the amount shown on the Interim Balance Sheet
or to be shown on the Closing Balance Sheet. All such inventories are valued on
a lower of cost or market basis and in accordance with the Company's normal
valuation methods and policies, consistently applied. Purchase commitments for
raw materials and parts are not in excess of normal requirements and none are at
prices in excess of current market prices. Except as shown in Section 3.28 of
the Disclosure Schedule, since the Interim Balance Sheet Date, no inventory
items have been sold or disposed of except through sales in the ordinary course
of business at prices no less than prevailing market prices. All of the
foregoing shall be effected in accordance with GAAP.
(b) The value of the finished goods inventory of the Company on the
Interim Balance Sheet and the value to be shown on the Closing Balance Sheet,
does not and will not, when added to the cost of the variable expenses of
freight, commissions and discounts, exceed the market price. Except for the
items listed on Section 3.28(b) of the Disclosure Schedule, all inventories of
finished goods existing on the Interim Balance Sheet Date, and at the Closing
and shown on the Closing Balance Sheet will be salable on or before 180 days
from the Closing Date through the Company's normal and ordinary course of
business and consistent with the past practices of the Company.
3.29 CUSTOMERS
Section 3.29 of the Disclosure Schedule sets forth a true, complete and
correct listing of the twenty (20) largest customers (the "CUSTOMERS") of the
Company (based upon the amounts for which each such Customer was invoiced during
the year ended December 31, 2001, and the six months ended June 30, 2002.
3.30 PAYABLES
There has been no material adverse change since the date of the Interim
Financial Statements in the amount or delinquency of accounts payable by the
Company (either individually or in the aggregate).
3.31 PRODUCT WARRANTIES; PRODUCT LIABILITY
Attached to Section 3.31 of the Disclosure Schedule are complete and
correct copies of the standard terms and conditions of sale, license or lease
for each of the products or services of the Company (containing applicable
guaranty, warranty and indemnity provisions). Except as required by Law or as
set forth in such standard terms and conditions, no product manufactured,
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sold, licensed, leased, or delivered by, or service rendered by or on behalf of,
the Company is subject to any guaranty, warranty or other indemnity, express or
implied, beyond such standard terms and conditions. Section 3.31 of the
Disclosure Schedule sets forth the aggregate expenses incurred by the Company's
customer support and service center in fulfilling its obligations under its
guaranty, warranty and right of return provisions during the periods covered by
the Financial Statements and the Company has no Knowledge of any reason why such
expenses should materially increase as a percentage of sales in the future.
Except as set forth in Section 3.31 of the Disclosure Schedule, there are no
existing or, to the Knowledge of the Company threatened claims, against the
Company for services or merchandise that are defective or fail to meet any
service or product warranties other than in the ordinary course of business
consistent with past experience. Except as set forth in Section 3.31 of the
Disclosure Schedule, no claim has been asserted against the Company since its
formation for renegotiation or price redetermination of any completed business
transaction. To the Knowledge of the Company, the Company's products are free
from significant defects and, to the Knowledge of the Company, conform in all
material respects to the specifications, documentation and sample demonstration
furnished to the Company's customers and made available to Parent.
3.32 FINANCIAL SERVICE RELATIONS AND POWERS OF ATTORNEY
All of the arrangements that the Company has with any bank depository
institution or other financial services entity, whether or not in the Company's
name, are completely and accurately described on Section 3.32 of the Disclosure
Schedule, indicating with respect to each of such arrangements the type of
arrangement maintained (such as checking account, borrowing arrangements, safe
deposit box, etc.) and the current balance as of the date reported, banking
institution and person or persons authorized as signatories in respect thereof.
The Company has no outstanding written powers of attorney.
3.33 REGULATORY CORRESPONDENCE
The Company has made available to the Parent true and correct copies of
any and all material correspondence from and to any Governmental Authority.
3.34 DISCLOSURE
Neither this Agreement nor any Ancillary Agreement, nor the financial
statements (including the footnotes thereto), nor any Disclosure Schedule, any
exhibit, document or certificate delivered by or on behalf of the Company
pursuant hereto, contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements herein or therein not
misleading. To the Knowledge of the Company there is no fact which has had or
may in the future have a Material Adverse Effect on the Company taken as a
whole.
3.35 INVESTMENT MATTERS
(a) The Company represents that each Company Shareholder has had the
opportunity to ask questions of the officers of Parent on any matter material to
his or her decision to purchase Parent Shares hereunder and all such questions
were answered to his or her satisfaction.
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(b) On or before the Closing Date, the Company will deliver to Parent
certain representations and warranties of each of the Company Shareholders
regarding investment matters as follows:
(i) that the Company Shareholder is acquiring the Parent
Shares for his own account and not with a view to distribution within
the meaning of Section 2(11) of the Securities Act;
(ii) that the Company Shareholder acknowledges that the Parent
Shares may not be sold, transferred or otherwise disposed of in the
United States unless in compliance with the Securities Act and any
applicable U.S. state securities laws; and
(iii) that the Company Shareholder alone or with his purchaser
representative has such knowledge and experience in financial and
business matters that he is capable of evaluating the risks and merits
inherent in the purchase of Parent Shares contemplated by this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company and Company Shareholders as follows:
4.1 ORGANIZATION AND GOOD STANDING
Each of Parent and Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each of
Parent and Merger Sub has full corporate power and authority to conduct its
business as it is now being conducted and to own or use the assets and
properties that it purports to own or use. Each of Parent and Merger Sub is duly
qualified to do business as a foreign corporation and is in good standing under
the Laws of each state or other jurisdiction in which either the ownership or
use of the assets or properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification, except where the
failure to be so qualified could not reasonably be expected to have a Material
Adverse Effect on Parent and its Subsidiaries, taken as a whole.
4.2 AUTHORITY; NO CONFLICT
(a) Merger Sub is a wholly-owned subsidiary of Parent, and Parent shall
cause Merger Sub to perform as provided in this Agreement. Each of Parent and
Merger Sub has the right, power, authority and capacity to execute and deliver
this Agreement and the Ancillary Agreements to which each of them is a party, to
consummate the transactions contemplated hereby and thereby and to perform their
obligations under this Agreement and the Ancillary Agreements to which each is a
party. This Agreement has been duly authorized and approved, executed and
delivered by each of Parent and Merger Sub and constitutes the legal, valid and
binding obligation of each of Parent and Merger Sub, enforceable against each of
them in accordance with its terms, except (i) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, and (ii) that the
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remedy of specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought. Upon the execution
and delivery by each of Parent and Merger Sub of the Ancillary Agreements to
which each of them is a party, such Ancillary Agreements will constitute the
legal, valid and binding obligations of each of Parent and Merger Sub,
enforceable against each of them in accordance with their respective terms,
except (i) as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally, and (ii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(b) Neither the execution and delivery of this Agreement nor any
Ancillary Agreement by each of Parent and Merger Sub nor the consummation or
performance by each of Parent and Merger Sub of the transactions contemplated
hereby or thereby, including issuance of the Parent Shares pursuant to this
Agreement, will, directly or indirectly (with or without notice or lapse of time
or both):
(i) contravene, conflict with, or result in a violation or
breach of (A) any provision of the Organizational Documents of each of
Parent and Merger Sub, (B) any resolution adopted by the board of
directors or the shareholders of each of Parent and Merger Sub, (C) any
legal requirement or any Order, award, decision, settlement or process
to which Parent or Merger Sub or any of the assets or properties owned
or used by each of them may be subject, or (D) any Governmental Permit
held by Parent or Merger Sub, excluding from clauses (C) and (D) any
contravention, conflict, violation or breach that would not, either
individually or in the aggregate, have a Material Adverse Effect on
Parent and its Subsidiaries taken as a whole;
(ii) result in a breach of or constitute a default, give rise
to a right of termination, cancellation or acceleration, create any
entitlement to any payment or benefit, or require the consent or
approval of or any notice to or filing with any third Person, under any
material Contract to which Parent or Merger Sub is a party or by which
their assets or properties are bound, or require the consent or
approval of or any notice to or filing with any Governmental Authority
to which either Parent or its assets or properties are subject or
either Merger Sub or its assets or properties are subject, except for
any breaches, defaults, rights of termination, cancellation or
acceleration, entitlements, consents, approvals, notices or filings
that would not, either individually or in the aggregate, have a
Material Adverse Effect on Parent and its Subsidiaries taken as a
whole; or
(iii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets or properties owned or used
by Parent or Merger Sub except for any imposition or creation that
would not, either individually or in the aggregate, have a Material
Adverse Effect on Parent and its Subsidiaries taken as a whole.
4.3 CAPITALIZATION; PARENT SHARES; MERGER SUB SHARES
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(a) The authorized capital stock of Parent consists of 1,000,000 shares
of preferred stock, $.01 par value per share, of which as of the date of this
Agreement no shares are issued or outstanding, and 100,000,000 shares of Parent
Common Stock, of which as of September 17, 2002, 36,099,077 shares were issued
and outstanding.
(b) The Parent Shares issuable as a result of this Agreement have been
duly authorized and, upon consummation of the transactions contemplated hereby
will be duly and validly issued, fully paid and nonassessable and approved for
listing on the Nasdaq National Market. Assuming the accuracy of the Company
Shareholders' representations referenced in Section 3.35 hereof, the Parent
Shares will be issued pursuant to an exemption from registration under the
Securities Act.
(c) The authorized capital stock of Merger Sub consists of 1,000 shares
of common stock, $.01 par value per share.
4.4 FILINGS WITH THE COMMISSION
(a) Parent has delivered or made available to the Company a true,
correct and complete copies, as amended of its Annual Report on Form 10-K for
the year ended September 30, 2001 and Quarterly Reports on Form 10-Q for the
quarters ended December 31, 2001, March 31, 2002, and June 30, 2002
(collectively, the "PARENT SEC REPORTS"). The Parent SEC Reports have been
timely filed pursuant to the Exchange Act.
(b) Except as set forth in Section 4.4 of the Disclosure Schedules, the
Parent SEC Reports complied as to form in all material respects with the
requirements of the Exchange Act in effect on the date thereof. Except as set
forth in Section 4.4 of the Disclosure Schedules, the Parent SEC Reports, when
filed pursuant to the Exchange Act, did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(c) Except as set forth in Section 4.4 of the Disclosure Schedules,
each of the Parent financial statements (including the related notes) included
in the Parent SEC Reports presents fairly, in all material respects, the
consolidated financial position and consolidated results of operations and cash
flows of Parent as of the respective dates or for the respective periods set
forth therein, all in conformity with GAAP consistently applied during the
periods involved except as otherwise noted therein, and subject, in the case of
any unaudited interim financial statements included therein, to normal year-end
adjustments and to the absence of complete footnotes.
4.5 LEGAL PROCEEDINGS
There is no pending Proceeding against Parent that challenges, or that
may have the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the transactions contemplated hereby. To the Knowledge
of Parent, no such Proceeding has been threatened.
4.6 BROKERS OR FINDERS
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Neither Parent nor any of its agents has incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or financial advisory services or other similar payment in
connection with this Agreement or the Ancillary Agreements or the transactions
contemplated hereby or thereby.
4.7 DISCLOSURE
Except as set forth in Section 4.7 of the Disclosure Schedules, neither
this Agreement nor any Ancillary Agreement, nor the financial statements
(including the footnotes thereto), nor any exhibit, document or certificate
delivered by or on behalf of the Parent pursuant hereto, contains any untrue
statement of a material fact, or omits to state a material fact necessary to
make the statements herein or therein not misleading. To the Knowledge of the
Parent there is no fact which has had or may in the future have a Material
Adverse Effect on the Parent and its Subsidiaries, taken as a whole.
4.8 CURRENT CLAIMS
As of the Closing Date, Parent has no Knowledge of any fact or
circumstance that it believes gives rise to a claim of indemnification under
Section 9 against Company by Parent.
5. COVENANTS
The parties, as applicable, hereby covenant and agree as follows:
5.1 NORMAL COURSE
From the date hereof until the Closing Date, the Company shall: (i)
maintain its corporate existence in good standing; (ii) maintain the general
character of its business; (iii) maintain in effect all of its presently
existing insurance coverage (or substantially equivalent insurance coverage);
(iv) preserve intact in all material respects its business organization,
preserve its goodwill and the confidentiality of its business know-how, exercise
its best efforts to keep available to the Company the services of its current
officers and employees and preserve its present material business relationships
with its collaborators, licensors, customers, suppliers and other Persons with
which the Company has material business relations; and (v) in all respects
conduct its business only in the usual and ordinary manner consistent with past
practice and perform all Contracts.
5.2 CONDUCT OF BUSINESS
From the date hereof until the Closing Date, except as set forth in
Section 5.2 to the Disclosure Schedule, the Company shall not and the Company
Shareholders shall not permit the Company to, directly or indirectly do, or
propose to do, any of the following without the prior written consent of Parent,
which consent shall not be unreasonably withheld:
(a) amend or otherwise modify its Organizational Documents;
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(b) issue, sell, dispose of or Encumber or authorize the issuance,
sale, disposition or Encumbrance of, or grant or issue any option, warrant or
other right to acquire or make any agreement of the type referred to in Section
3.3 with respect to any shares of its capital stock or any of its other
securities or any security convertible or exercisable into or exchangeable for
any such shares or securities, or alter any term of any of its outstanding
securities or make any change in its outstanding shares of capital stock or its
capitalization, whether by reason of a reclassification, recapitalization, stock
split, combination, exchange or readjustment of shares, stock dividend or
otherwise;
(c) encumber any material assets or properties of the Company;
(d) declare, set aside, make or pay any dividend or other distribution
to any shareholder with respect to its capital stock;
(e) redeem, purchase or otherwise acquire any capital stock or other
securities of the Company;
(f) increase the compensation or other remuneration or benefits payable
or to become payable to any director or officer of the Company, or increase the
compensation or other remuneration or benefits payable or to become payable to
any of its other employees or agents, exclusive of the Company option
acceleration referenced in Section 2.9(e);
(g) adopt or (except as otherwise required by law) amend or make any
unscheduled contribution to any Employee Benefit Plan for or with employees, or
enter into any collective bargaining agreement;
(h) terminate or modify any Contract requiring future payments to or
from the Company, individually or in the aggregate, in excess of $10,000, except
for termination of Contracts upon their natural expiration during such period in
accordance with their terms;
(i) create, incur, assume or otherwise become liable for any
indebtedness in an aggregate amount in excess of $10,000, or guarantee or
endorse any obligation or the net worth of any Person, except for endorsements
of negotiable instruments for collection in the ordinary course of business;
(j) pay, discharge or satisfy any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, in an aggregate
amount in excess of $10,000, except for liabilities incurred in the ordinary
course of business prior to the date hereof;
(k) sell, transfer, lease or otherwise dispose of any of its assets or
properties, except in the ordinary course of business consistent with past
practice and for a cash consideration equal to the fair value thereof at the
time of such sale, transfer, lease or other disposition;
(l) cancel, compromise, release or waive any material debt, claim or
right;
(m) make any loan or advance to any Person other than travel and other
similar routine advances in the ordinary course of business consistent with past
practice, or acquire any capital
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stock or other securities or any ownership interest in, or substantially all of
the assets of, any other business enterprise;
(n) make any material capital investment or expenditure or capital
improvement, addition or betterment;
(o) change its method of accounting or the accounting principles or
practices utilized in the preparation of the Financial Statements, other than as
required by GAAP;
(p) institute or settle any Proceeding before any Governmental
Authority relating to it or its assets or properties;
(q) adopt a plan of dissolution or liquidation with respect to the
Company;
(r) enter into any Contract, except Contracts made in the ordinary
course of business consistent with past practice;
(s) make any new election with respect to Taxes or any change in
current elections with respect to Taxes, or settle or compromise any federal,
state, local or foreign Tax liability or agree to an extension of a statute of
limitations;
(t) take or omit to take any action that would constitute a material
violation of or material default under, or waive any rights under, any material
Contract;
(u) enter into any commitment to do any of the foregoing, or any action
that would make any of the representations or warranties of the Company
contained in this Agreement untrue or incorrect in any material respect (subject
to the knowledge and materiality limitations set forth therein) or cause any
covenant, condition or agreement of the Company in this Agreement not to be
complied with or satisfied in any material respect; or
(v) enter into any contracts or other agreements of any nature
whatsoever that are not by their express terms freely transferable and
assignable to Parent.
5.3 CERTAIN FILINGS
The Company shall cooperate with Parent with respect to all filings
with Governmental Authorities that are required to be made by the Company to
carry out the transactions contemplated by this Agreement. The Company shall
assist Parent in making all such filings, applications and notices as may be
necessary or desirable in order to obtain the authorization, approval or consent
of any Governmental Authority that may be reasonably required or which Parent
may reasonably request in connection with the consummation of the transactions
contemplated hereby.
5.4 NOTIFICATION OF CERTAIN MATTERS
The Company and/or each of the Company Shareholders shall promptly
notify Parent of (i) the occurrence or non-occurrence of any fact or event of
which the Company and/or each of
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the Company Shareholders has knowledge that would be reasonably likely (A) to
cause any representation or warranty of the Company and/or each of the Company
Shareholders contained in this Agreement or any Ancillary Agreements to be
untrue or incorrect in any material respect at any time from the date hereof to
the Closing Date or (B) to cause any covenant, condition or agreement of the
Company and/or each of the Company Shareholders in this Agreement or any
Ancillary Agreements not to be complied with or satisfied in any material
respect and (ii) any failure of the Company and/or each of the Company
Shareholders to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder or thereunder in any material
respect; provided, however, that no such notification shall affect the
representations or warranties of the Company and/or each of the Company
Shareholders, or the right of Parent to rely thereon, or the conditions to the
obligations of Parent, or the remedies available hereunder or thereunder to
Parent. The Company and/or each of the Company Shareholders shall give prompt
notice to Parent of any notice or other communication from any third Person
alleging that the consent of such third Person is or may be required in
connection with the transactions contemplated by this Agreement or any Ancillary
Agreement.
5.5 NO SOLICITATION
From the date hereof until the earlier of (i) October 15, 2002, or (ii)
termination of this Agreement by Parent, the Company and the Company
Shareholders shall not, and shall not permit any, officer, director,
shareholder, employee, investment banker or other agent of the Company to,
directly or indirectly, (A) solicit, engage in discussions or negotiate with any
Person (whether or not such discussions or negotiations are initiated by the
Company), or take any other action intended or designed to facilitate the
efforts of any Person, other than Parent, relating to the possible acquisition
of the Company (whether by way of merger, purchase of capital stock, purchase of
assets or otherwise) or any significant portion of its capital stock or assets
(with any such efforts by any such Person to make such an acquisition referred
to as an "ALTERNATIVE ACQUISITION"), (B) provide information with respect to the
Company to any Person, other than Parent, relating to a possible Alternative
Acquisition by any Person, other than Parent, (C) enter into an agreement with
any Person, other than Parent, providing for a possible Alternative Acquisition,
or (D) make or authorize any statement, recommendation or solicitation in
support of any possible Alternative Acquisition by any Person, other than by
Parent.
5.6 ACCESS TO INFORMATION; CONFIDENTIALITY
Upon reasonable written notice, the Company shall permit
representatives of the Parent to have access (at all reasonable times and in a
manner so as not to interfere with the normal business operations of the other
party) to all premises, properties, financial and accounting records, Contracts,
other records and documents, and personnel of or pertaining to the Company, all
in accordance with the terms of the Confidentiality Agreement. No investigation
or examination by Parent shall diminish, obviate or constitute a waiver of the
enforcement of any of the representations, warranties, covenants or agreements
of the Company or the Company Shareholders under this Agreement except to the
extent that such investigation or examination results in the Company acquiring
specific Knowledge of the existence and magnitude of claim for indemnification
pursuant to Section 9 prior to the Closing Date.
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5.7 REASONABLE BEST EFFORTS; FURTHER ACTION
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use its reasonable best efforts (exercised diligently and
in good faith) to take, or cause to be taken, all actions and to do, or cause to
be done, all other things reasonably necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, to obtain in a timely manner all necessary
waivers, consents, authorizations and approvals and to effect all necessary
registrations and filings, and otherwise to satisfy or cause to be satisfied all
conditions precedent to its obligations under this Agreement.
(b) Notwithstanding any provision of this Agreement to the contrary,
Parent shall not be obligated to divest, abandon, license, dispose of, hold
separate or take similar action with respect to any portion of the business,
assets or properties (tangible or intangible) of Parent, any of its Subsidiaries
or the Company in connection with seeking to obtain or obtaining any waiver,
consent, authorization or approval of any Person associated with the
consummation of the transactions contemplated hereby or otherwise.
(c) If, at any time after the Closing Date, any such further action is
necessary or desirable to carry out the purposes of this Agreement or any
Ancillary Agreements, each of the Company Shareholders and the officers and
directors of the Company and Parent are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such lawful and
necessary or desirable action.
5.8 RESTRICTION ON DISPOSITION OF XXXXXX SHARES
Each Company Shareholder agrees, without regard to the existence or
absence of any securities law restrictions, not to offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, any Parent Shares,
enter into a transaction which would have the same effect, or enter into any
swap, hedge or other arrangement that transfers, in whole or in part, any of the
economic consequences of ownership of the Parent Shares, whether any such
aforementioned transaction is to be settled by delivery of the Parent Shares, in
cash or otherwise, or publicly disclose the intention to make any such offer,
sale, pledge or disposition, or enter into any such transaction, swap, hedge or
other arrangement, except as follows:
(a) the restriction of this Section shall not apply to 50% of the
aggregate number of Parent Shares issuable to each Company Shareholder under
this Agreement (the "UNRESTRICTED PARENT SHARES"); and
(b) the restrictions on the remaining Parent Shares issuable to each
Company Shareholder under this Agreement (the "RESTRICTED PARENT SHARES") shall
lapse with respect to one-half of such Parent Shares on each of the first and
second anniversary dates of the Closing Date.
For the purpose of this Section 5.8, the number of Parent Shares delivered by
Xxxxxx to the Escrow Agent pursuant to this Agreement, shall be counted as
Restricted Parent Shares with
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respect to which the restrictions of this Section 5.8 shall lapse on the second
anniversary date of the Closing Date.
5.9 TAX RETURNS FOR YEARS ENDING ON OR PRIOR TO THE CLOSING DATE
(a) The Shareholder Representative will cause all Tax Returns for the
Company for Company tax years ending on or prior to the Closing Date to be
prepared and will provide such Tax Returns to Parent at least 90 days prior to
the deadline for filing such Tax Returns and no later than one year after the
Closing Date. Parent shall cooperate with the Shareholder Representative to
provide such information as may be reasonably necessary to permit the
Shareholder Representative to cause such Tax Returns to be prepared. Parent
shall be entitled to review, make changes to, and approve any such Tax Return.
Upon Parent's approval of such a Tax Return or the final, binding and conclusive
determination of any dispute with respect to any such Tax Return, Parent shall
cause such Tax Return or application to be properly signed and submitted to the
appropriate Tax Authority.
(b) In the event that any dispute shall arise as to the manner of
preparation or the accuracy of any Tax Return submitted by the Shareholder
Representative, Parent shall provide the Shareholder Representative with written
notice of each disputed item. In the event of such a dispute, Parent and the
Shareholder Representative shall attempt to reconcile in good faith their
differences as to such items within twenty (20) calendar days (the "TAX
RESOLUTION PERIOD") of the Shareholder Representative's receipt of such notice,
and any resolution by them as to any disputed items shall be final, binding and
conclusive on the Company Shareholders and Parent. If Parent and the Shareholder
Representative are unable to reach a resolution with such effect within the Tax
Resolution Period, Parent and the Company Shareholders shall submit the dispute
to Deloitte & Touche (the "INDEPENDENT TAX AUDITOR"). The determination of such
dispute by the Independent Tax Auditor shall be final, binding and conclusive on
the Company Shareholders and Parent. The fees and expenses of the Independent
Tax Auditor shall be assessed by the Independent Tax Auditor fifty percent (50%)
against the Company Shareholders and fifty percent (50%) against Parent, and
shall be paid by each of them in those proportions. This section and any
resolution hereunder shall not affect the Company Shareholders' indemnification
obligations for Taxes under this Agreement.
6. ADDITIONAL COVENANTS OF PARENT AND MERGER SUB
Parent hereby covenants and agrees as follows:
6.1 CERTAIN FILINGS
Parent agrees to make or cause to be made all filings with Governmental
Authorities that are required to be made by Parent to carry out the transactions
contemplated by this Agreement and the Ancillary Agreements.
6.2 NOTIFICATION OF CERTAIN MATTERS
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Parent shall promptly notify the Company of (i) the occurrence or
non-occurrence of any fact or event of which Parent has Knowledge which would be
reasonably likely (A) to cause any representation or warranty of Parent
contained in this Agreement and/or the Ancillary Agreements to be untrue or
incorrect in any material respect at any time from the date hereof to the
Closing Date or (B) to cause any covenant, condition or agreement of Parent in
this Agreement and/or the Ancillary Agreements not to be complied with or
satisfied in any material respect and (ii) any failure of Parent to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder in any material respect; provided, however, that no such
notification shall affect the representations or warranties of Parent, or the
right of the Company to rely thereon, or the conditions to the obligations of
the Company, or the remedies available hereunder to the Company. Parent shall
give prompt notice to the Company of any notice or other communication from any
third Person alleging that the consent of such third Person is or may be
required in connection with the transactions contemplated by this Agreement.
6.3 REGISTRATION
(a) Not later than 90 calendar days after the Closing Date, Parent
shall file with the SEC, the Registration Statement (or any successor short form
registration involving a similar amount of disclosure) for a public offering of
all the Parent Shares then outstanding, including the Parent Shares held by the
Escrow Agent, to be made on a continuous basis pursuant to Rule 415 of the
Securities Act and will use its commercially reasonable efforts to cause such
registration statement to become effective (subject to review of such
Registration Statement by the SEC) and remain continuously effective until the
earlier of (i) two (2) years from the Closing Date or (ii) such time as all of
the Parent Shares may be sold pursuant to Rule 144 promulgated under the
Securities Act on a single day. The Parent may, upon written notice to the
selling shareholders listed therein, suspend use of the Registration Statement
for a reasonable period if the Parent in its reasonable judgment believes it may
possess material nonpublic information the disclosure of which at that point in
time in its reasonable judgment would have a Material Adverse Effect on the
Parent and its Subsidiaries taken as a whole.
(b) The Company and each of the Company Shareholders covenant and agree
that they shall provide to Parent on a timely basis such consents,
representations and information and execute such documents as may reasonably be
required by Parent in connection with such Registration Statement.
(c) Parent shall pay all expenses of registration of the Parent Shares
pursuant to Section 6.3(a), except brokerage commissions, legal expenses and
such other expenses as may be required by law to be paid by the Company
Shareholders.
(d) To the extent permitted by law, the Parent will indemnify and hold
harmless each of the Company Shareholders, their respective officers and
directors and each person, if any, who controls the Company Shareholders within
the meaning of the Securities Act, against any costs or expenses (including
attorney's fees), judgments, fines, losses, claims, damages, liabilities or
amounts paid in settlement, joint or several, to which any of them may become
subject under the Securities Act or otherwise, insofar as such costs or expenses
(including attorney's fees),
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judgments, fines, losses, claims, damages liabilities or amounts paid in
settlement (or actions in respect thereof) arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained or expressly
incorporated by reference in any such Registration Statement, including any
preliminary prospectus or final prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse each
of the Company Shareholders and their respective officers and directors and each
such controlling person for any legal or other expenses reasonably incurred by
any of them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this Section 6.3(d) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Parent (which consent shall not be
unreasonably withheld) nor shall the Parent be liable in any such case for any
such loss, claim, damage, liability or action to the extent that it arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in connection with such Registration Statement,
preliminary prospectus, final prospectus or amendment or supplement thereto in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by the Company Shareholders or any
person controlling the Company Shareholders.
(e) To the extent permitted by law, the Company Shareholders will,
severally and not jointly, indemnify and hold harmless Parent, its directors,
its officers who have signed such Registration Statement and each person, if
any, who controls the Parent within the meaning of the Securities Act against
any losses, claims, damages or liabilities to which the Parent or any such
director, officer or controlling person may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained or expressly incorporated by
reference in such Registration Statement, including any preliminary prospectus
or final prospectus contained therein or any amendment or supplement thereto, or
arise out of or based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in such Registration Statement, preliminary prospectus, final
prospectus or amendments or supplements thereto, in reliance upon and in
conformity with written information furnished by the Company Shareholders
expressly for use in connection with such registration; and the Company
Shareholders will reimburse any legal or other expenses reasonably incurred by
the Parent or any such director, officer and controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
Section 6.3(e) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the indemnifying party (which consent shall not be unreasonably
withheld), nor shall the Company Shareholders be liable in any such case for any
such loss, claim, damage, liability or action to the extent that it arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in connection with such Registration Statement,
preliminary prospectus, final prospectus or amendment or
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supplement thereto in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by the Parent
or any person controlling the Parent.
(f) Promptly after receipt by a party indemnified under this Section
6.3 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against any indemnifying party under
this Section 6.3, notify the indemnifying party in writing of the commencement
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however that if the defendants
in any such action include both the indemnified party and the indemnifying party
and, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of the indemnified party and the
indemnifying party exists, the indemnified party or parties shall have the right
to select one separate law firm, at the indemnifying party's or parties'
expense, to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. The
failure to notify any indemnifying party promptly of the commencement of any
such action, shall not relieve such indemnifying party of any liability to the
indemnified party under this Section 6.3, except to the extent that such
indemnifying party is actually prejudiced thereby.
6.4 NASDAQ NATIONAL MARKET LISTING
Parent agrees to authorize for listing on the Nasdaq National Market
the Parent Shares issuable, and those required to be reserved for issuance, in
connection with the transactions contemplated hereby, upon official notice of
issuance.
7. CONDITIONS TO OBLIGATIONS OF PARENT
The obligations of Parent under this Agreement and the Ancillary
Agreements to consummate the transactions contemplated hereby and thereby shall
be subject to the satisfaction, at or prior to the Closing Date, of each of the
following conditions:
7.1 REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company and each of the
Company Shareholders contained in this Agreement or in the Disclosure Schedule
or any certificate delivered pursuant hereto shall be complete and correct as of
the date when made, shall be deemed repeated at and as of the Closing Date as if
made on the Closing Date, and shall then be complete and correct.
7.2 PERFORMANCE OF COVENANTS
The Company and each of the Company Shareholders shall have taken all
necessary corporate or other actions to consummate the transactions contemplated
hereby and shall have performed and complied in all respects with each covenant,
agreement and condition required by
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this Agreement and the Ancillary Agreements to be performed or complied with by
them at or prior to the Closing Date.
7.3 UPDATE CERTIFICATE
Parent shall have received a certificate or certificates, dated the
Closing Date, signed by the Company and each of the Company Shareholders as to
the matters set forth in Sections 7.1 and 7.2.
7.4 NO GOVERNMENTAL OR OTHER PROCEEDING; ILLEGALITY
No Order of any Governmental Authority shall be in effect that
restrains or prohibits any transaction contemplated hereby or that would limit
or affect Parent's ownership or operation of the business or assets of the
Company; no suit, action, investigation, inquiry or Proceeding by any
Governmental Authority shall be pending or threatened against Parent or the
Company or any director or officer of either, as such, that challenges the
validity or legality, or that restrains or seeks to restrain the consummation,
of the transactions contemplated hereby, or that limits or otherwise affects or
seeks to limit or otherwise affect Parent's right to own or operate the business
or assets of the Company or that compels or seeks to compel Parent or any of its
Subsidiaries to divest, abandon, license, dispose of, hold separate or take
similar action with respect to any portion of the business, assets or properties
(tangible or intangible) of Parent or any of its Subsidiaries or the Company;
and no written advice shall have been received by Parent or the Company or by
any of their respective counsel from any Governmental Authority, and remain in
effect, stating that an action or Proceeding will, if the transactions
contemplated hereby are consummated or sought to be consummated, be filed
seeking to invalidate or restrain any such transaction or limit or otherwise
affect Parent's ownership or operation of the business or assets of the Company.
No Law or Order shall be enacted, entered, enforced or deemed applicable to the
transactions contemplated hereby that makes the consummation of any such
transaction illegal.
7.5 APPROVALS AND CONSENTS
All material waivers, approvals, authorizations or Orders required to
be obtained, and all filings required to be made by the Company for the
authorization, execution and delivery of this Agreement, the consummation by it
of the transactions contemplated hereby and the continuation in full force and
effect of any and all material rights, documents, instruments or Contracts of
the Company shall have been obtained and made, including without limitation all
consents or approvals of any Person that may be required under any lease for
real property to which the Company is a party or which are required to be
disclosed in Section 3.2 to the Disclosure Schedule. The Company shall use
commercially reasonable efforts to obtain landlord consents and estoppel
certificates reasonably satisfactory in form and substance to Parent from the
lessors/owners of the real property leased by the Company in Colorado Springs,
Colorado.
7.6 APPROVAL OF BOARD OF DIRECTORS
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This Agreement and the transactions contemplated hereby shall have been
approved by the Board of Directors of each of Parent and Merger Sub in
accordance with the DGCL.
7.7 OPINION OF COUNSEL
The Company shall have delivered to Parent an opinion of Sparks Xxxxxxx
Xxxxxx Xxxxxx & Xxxxxxx, P.C., dated the Closing Date and addressed to Parent,
as to the matters set forth on Exhibit D hereto.
7.8 ESCROW AGREEMENT
There shall have been executed and delivered to Parent the Escrow
Agreement with such modifications thereto as may be required by the Escrow Agent
and agreed to by the parties hereto.
7.9 CONFIDENTIALITY, NONSOLICITATION, NONCOMPETITION AND INTELLECTUAL
PROPERTY AGREEMENTS
Parent shall have received executed Confidentiality, Nonsolicitation,
Noncompetition and Intellectual Property Agreements substantially in the form of
Exhibit E from each of the Key Employees.
7.10 [RESERVED]
7.11 TERMINATION OF RIGHTS AND VOTING AGREEMENTS
All agreements among the Company and any of its security holders, or
among any of the Company security holders, providing for registration rights,
rights of first refusal, rights of co-sale, relating to the voting of the
Company securities or requiring the Company to obtain the consent or approval of
any such security holders prior to taking or failing to take any action, shall
have been, as of or prior to the Closing Date, terminated in their entirety.
7.12 RESIGNATION
Parent shall have received the written resignations, dated as of the
Closing Date, of each of the directors and corporate and executive officers of
Company.
7.13 RIGHTS TO CONVERSION
Parent shall have received evidence that any and all options, warrants
or rights of the Company Shareholders and any other Persons, outstanding prior
to Closing, to acquire the Company's capital stock, whether by contract, law or
otherwise, including but not limited to (i) any anti-dilution rights and (ii)
any rights to convert the right to receive unpaid wages into shares of the
Company's capital stock have, prior to Closing, been waived, extinguished, or
duly exercised or converted as the case may be, such that at the Closing Date no
such options, warrants or rights whatsoever shall be exercisable by any Person
or outstanding in any form. Such evidence shall be in form and substance
reasonably satisfactory to Parent.
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7.14 SECRETARY'S CERTIFICATE
On the date hereof, Parent shall receive from the Company a Secretary's
or an Assistant Secretary's Certificate certifying (i) the bylaws of the
Company, (ii) incumbency of the officers of the Company, (iii) resolutions of
the Board of Directors of the Company approving the transactions contemplated
hereby; and (iv) those documents referenced in the Disclosure Schedule. Such
Certificate shall be in form and substance reasonably satisfactory to Parent.
7.15 OTHER DOCUMENTS
At the Closing, Parent shall receive such other certificates and
documents as the Parent shall have reasonably requested.
7.16 KEY EMPLOYEES
The Key Employees shall have agreed to accept employment with the
Parent.
7.17 DUE DILIGENCE REVIEW
Parent shall have completed a review of the assets and business of the
Company which is satisfactory to the Parent in its sole discretion in all
respects. Such review shall include a review of all of the Schedules of the
Company to this Agreement delivered to the Parent on the date hereof and a
review of the financial files and records of the Company, including, without
limitation, review of the financial budget of the Company for the next two
fiscal years of the Company, the business and legal records and files of the
Company, including customer files, correspondence, invoices, licenses and
permits (provided that Parent shall refrain from contacting any customers or
suppliers of the Company without the prior approval of the Company), full access
to the Company's physical properties and appropriate personnel of the Company,
and all patents and written materials related to the Company's trade secrets and
proprietary systems, all of which shall be made available to Parent.
7.18 RESULTS
The Company shall have gross revenues for the quarter ending September
30, 2002 of at least the amount set forth in Section 7.18 of the Disclosure
Schedule.
7.19 NO MATERIAL ADVERSE EFFECT
There shall have been no Material Adverse Effect upon the Company since
the date of this Agreement, including, but not limited to, there being no
material change in the net tangible asset value of the Company.
7.20 APPROVAL OF parent'S COUNSEL
All actions, proceedings, instruments and documents required to carry
out this Agreement and all related legal matters contemplated by this Agreement,
including, without limitation,
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opinions of counsel, shall have been approved by counsel for the Parent,
provided that the approval of such counsel shall not be unreasonably withheld or
conditioned.
7.21 DISSENTING SHARES
Not more than 2% of the Company Shares shall be Dissenting Shares.
7.22 FIRPTA.
The Company shall have delivered to Parent statements meeting the
requirements of Sections 1.1445-2(b)(2), 1.1445-2(c)(3) and 1.897-2(h) of the
Treasury Regulations promulgated under the Code.
7.23 SALES TAX.
Prior to or concurrent with the Closing, the Company shall have filed
all Tax Returns (if any) and remitted all Taxes (if any) relating to amounts
received for taxes by the Company in connection with the sale of its products
prior to the Closing to the appropriate Tax Authority and shall have provided
Parent with copies of such Tax Returns or shall have otherwise addressed the
potential liability identified in Section 3.6 of the Disclosure Schedule in a
manner reasonably satisfactory to the Parent.
7.24 EXHIBIT A.
Company shall deliver a completed Exhibit A in form and substance
reasonably satisfactory to Parent.
8. CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company and the Company Shareholders, as
applicable, under this Agreement to consummate the transactions contemplated
hereby shall be subject to the satisfaction, at or prior to the Closing Date, of
each of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES
The representations and warranties of Parent and Merger Sub contained
in this Agreement or in the Disclosure Schedule or any certificate delivered
pursuant hereto shall be complete and correct as of the date when made, shall be
deemed repeated at and as of the Closing Date as if made on the Closing Date,
and shall then be complete and correct.
8.2 PERFORMANCE OF COVENANTS
Each of Parent and Merger Sub shall have taken all necessary corporate
actions to consummate the transactions contemplated hereby and shall have
performed and complied in all respects with each covenant, agreement and
condition required by this Agreement to be performed or complied with by it at
or prior to the Closing Date.
8.3 UPDATE CERTIFICATE
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The Company and the Company Shareholders shall have received a
certificate or certificates, dated the Closing Date, signed by each of Parent
and Merger Sub as to the matters set forth in Sections 8.1 and 8.2.
8.4 NO GOVERNMENTAL OR OTHER PROCEEDING; ILLEGALITY
No Order of any Governmental Authority shall be in effect that
restrains or prohibits any transaction contemplated hereby; and no written
advice shall have been received by Parent, Merger Sub, Company or by any of
their respective counsel from any Governmental Authority, and remain in effect,
stating that an action or Proceeding will, if the transactions contemplated
hereby are consummated or sought to be consummated, be filed seeking to
invalidate or restrain any such transaction. No Law or Order shall be enacted,
entered, enforced or deemed applicable to the transactions contemplated hereby
that makes the consummation of any such transaction illegal.
8.5 OFFICER'S CERTIFICATE
At the Closing, Company shall receive from each of Parent and Merger
Sub an Officer's Certificate certifying (i) the bylaws of Parent and Merger Sub,
respectively, (ii) incumbency of the officers of Parent and Merger Sub,
respectively, and (iii) resolutions of the Board of Directors of Parent and
Merger Sub, respectively, approving the transactions contemplated hereby. Such
Certificate shall be in form and substance reasonably satisfactory to the
Company.
8.6 ADJUSTMENTS
The Merger Consideration shall be adjusted to reflect appropriately the
effect of any stock split, reverse stock split, stock dividend, reorganization,
recapitalization, reclassification or other like change with respect to Parent
Common Stock payable on or after the date hereof and prior to the Effective
Time.
8.7 TAX-FREE MERGER
The Merger shall remain eligible for qualification as a tax-free
reorganization under Section 368(a) of the Code. The Company acknowledges that
an adjustment to the Merger Consideration pursuant to Section 2.12 of a
sufficient magnitude may cause the Mergers to be taxable.
9. INDEMNIFICATION.
9.1 SURVIVAL
The representations and warranties made by the parties in or pursuant
to this Agreement shall survive the Closing for the period specified in Section
9.2(b)(i).
9.2 INDEMNIFICATION BY THE COMPANY SHAREHOLDERs
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(a) Subject to the limitations in paragraph (b) below, the Company
Shareholders, jointly and severally, shall defend, indemnify and hold harmless
the Parent's Indemnified Persons from and against all Losses directly or
indirectly incurred by or sought to be imposed upon any of them and whether or
not caused by negligence or willful act:
(i) resulting from or arising out of any breach of any of the
representations or warranties (other than those in Sections 3.1, 3.2,
3.3, 3.8, 3.9, 3.10, 3.13, 3.17, 3.21 and 3.28) made by the Company or
the Company Shareholders in or pursuant to this Agreement or any
Ancillary Agreement;
(ii) resulting from or arising out of any breach of any of the
representations or warranties made by the Company Shareholders or the
Company pursuant to Section 3.10;
(iii) resulting from or arising out of any breach of any of
the representations and warranties made by the Company Shareholders or
the Company pursuant to Sections 3.9 and 3.28;
(iv) resulting from or arising out of any breach of any
covenant or agreement made by the Company Shareholders or the Company
in or pursuant to this Agreement or any Ancillary Agreement;
(v) resulting from or arising out of any breach of any of the
representations and warranties made by the Company Shareholders or the
Company pursuant to Section 3.8 or any liability, payment or obligation
in respect of any Taxes owing by the Company or the Parent, as
successor to the Company, of any kind or description (including
interest and penalties with respect thereto) for all periods, or
portions thereof, up to and ending on the Closing Date;
(vi) resulting from or arising out of (A) any breach of any of
the representations and warranties made by the Company Shareholders or
the Company pursuant to Section 3.17, or (B) any Third Party Action,
whether by a Governmental Authority or other third party for damages,
including fines or penalties, or clean-up costs or other compliance
costs under any Environmental Law or from the violation of any
Environmental Law arising out of the acts or omissions of the Company
on or before the Closing Date;
(vii) resulting from or arising out of any breach of any of
the representations and warranties made by the Company Shareholders or
the Company pursuant to Section 3.21; or
(viii) resulting from or arising out of any breach of any of
the representations or warranties made by the Company Shareholders or
the Company pursuant to Sections 3.1, 3.2, 3.3 and 3.13.
(b) The Parent's right to indemnification under paragraph (a) is
subject to the following limitations:
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(i) The Company Shareholders shall have no liability under
paragraph (a) unless one or more of the Parent's Indemnified Persons
gives written notice to the Company Shareholders asserting a claim for
Losses, including reasonably detailed facts and circumstances
pertaining thereto, before the expiration of the period set forth
below:
a. for claims under clauses (i), (iii), (iv), (vii) and
(viii) of paragraph (a) above, a period of two (2)
years from the Closing Date; and
b. for claims under clauses (ii), (v) and (vi) of
paragraph (a) above, for so long as any claim may be
made in respect of such matters under any applicable
statute of limitations, as it may be extended.
(ii) For the purpose of this Section 9.2, any qualification of
any representations and warranties by reference to the materiality of
matters stated therein, and any limitations of any representations and
warranties in Sections 3.13, 3.17, 3.18, 3.20 (j), 3.21 or 3.31 as
being "to the Knowledge of" or "known to" or words of similar effect,
shall be disregarded in determining any breach thereof or any Losses.
(iii) Indemnification for claims under paragraph (a) shall be
payable by Company Shareholders only if the aggregate amount of
indemnifiable Losses for all claims under this Section 9.2 is in excess
$50,000, at which point the Company Shareholders shall be responsible
only for such excess.
(iv) The Company Shareholders aggregate liability for claims
made under paragraph (a) shall not exceed the amount set forth below:
a. for claims under clauses (i), (iii), (iv) and (vii)
of paragraph (a), an amount equal to 50% of the
Merger Consideration;
b. for claims under clauses (ii), (v), (vi) and (viii)
of paragraph (a), an amount equal to 100% of the
Merger Consideration; and
c. for claims arising from the Company Shareholders'
fraud or willful misconduct or the fraud or willful
misconduct of the Company, without limit as to
amount.
9.3 INDEMNIFICATION BY parent
Subject to the limitations of this Section 9.3, for a period of one (1)
year after the Closing Date, Parent shall defend, indemnify and hold harmless
the Company Shareholders' Indemnified Persons from and against all Losses
directly or indirectly incurred by or sought to be imposed upon any of them and
whether or not caused by negligence or willful act resulting from or arising out
of any breach of any of the representations or warranties made by Parent or the
Merger Sub in or pursuant to this Agreement or any Ancillary Agreement.
Indemnification for claims under this
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Section 9.3 shall be payable by Parent only if the aggregate amount of
indemnifiable Losses for all claims under this Section 9.3 is in excess $50,000,
at which point the Parent shall be responsible only for such excess. The
Parent's aggregate liability for all claims made under this Section 9.3 shall
not exceed an amount equal to the Merger Consideration.
9.4 DEFENSE OF THIRD PARTY ACTIONS
(a) Promptly after receipt of notice of any Third Party Action, any
person who believes he, she or it may be an indemnified person (the "INDEMNIFIED
PERSON") will give notice to the potential Indemnifying Person (the
"INDEMNIFYING PERSON") of such action. The omission to give such notice to the
Indemnifying Person will not relieve the Indemnifying Person of any liability
hereunder unless it was prejudiced thereby, nor will it relieve it of any
liability which it may have other than under this Article 9.
(b) Upon receipt of a notice of a Third Party Action, the Indemnifying
Person shall have the right, at its option and at its own expense, to
participate in and be present at the defense of such Third Party Action, but not
to control the defense, negotiation or settlement thereof, which control shall
remain with the Indemnified Person, unless the Indemnifying Person makes the
election provided in paragraph (c) below.
(c) By written notice within forty-five (45) days after receipt of a
notice of a Third Party Action, an Indemnifying Person may elect to assume
control of the defense, negotiation and settlement thereof, with counsel
reasonably satisfactory to the Indemnified Person; provided, however, that the
Indemnifying Person agrees (i) to promptly indemnify the Indemnified Person for
its expenses to date, and (ii) to hold the Indemnified Person harmless from and
against any and all Losses caused by or arising out of any settlement of the
Third Party Action approved by the Indemnifying Person or any judgment in
connection with that Third Party Action. The Indemnifying Person shall not in
the defense of the Third Party Action enter into any settlement that does not
include as a term thereof the giving by the third party claimant of an
unconditional release of the Indemnified Person, or consent to entry of any
judgment except with the consent of the Indemnified Person.
(d) Upon assumption of control of the defense of a Third Party Action
under paragraph (c) above, the Indemnifying Person will not be liable to the
Indemnified Person hereunder for any legal or other expenses subsequently
incurred in connection with the defense of the Third Party Action, other than
reasonable expenses of investigation.
(e) If the Indemnifying Person does not elect to control the defense of
a Third Party Action under paragraph (c), the Indemnifying Person shall promptly
reimburse the Indemnified Person for expenses incurred by the Indemnified Person
in connection with defense of such Third Party Action, as and when the same
shall be incurred by the Indemnified Person.
(f) Any person who has not assumed control of the defense of any Third
Party Action shall have the duty to cooperate with the party that assumed such
defense.
9.5 MISCELLANEOUS
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MICROTOOL, INC.
(a) Parent's Indemnified Persons shall be entitled to indemnification
under Section 9.2(a) regardless of whether the matter giving rise to the
applicable liability, payment, obligation or expense may have been previously
disclosed to any such person, unless disclosed in the Disclosure Schedule.
(b) If any Loss is recoverable under more than one provision hereof,
the Indemnified Person shall be entitled to assert a claim for such Loss until
the expiration of the longest period of time within which to assert a claim for
Loss under any of the provisions which are applicable.
(c) Parent may, at its option, recover any amount owing by the Company
Shareholders for indemnification hereunder by setoff against any amounts that
may otherwise be due from the Parent or the Company to the Company Shareholders,
or any of them, whether hereunder or otherwise; provided that Parent shall not
be required to recover such claims in such manner and may proceed against the
Indemnified Party at an y time or times for recovery of indemnification claims
as provided herein.
9.6 PAYMENT OF INDEMNIFICATION
Claims for indemnification under this Article 9 shall be paid or
otherwise satisfied by Indemnifying Persons within thirty (30) days after notice
thereof is given by the Indemnified Person. Any amount which may become due and
payable to any of the Parent's Indemnified Persons under Section 9.2(a) shall
first be paid or otherwise satisfied out of the Escrow Shares until the same has
been exhausted. Any claims in excess of the Escrow Shares may be satisfied by
whatever remedy is available at law or equity.
10. TERMINATION OF AGREEMENT
10.1 TERMINATION
This Agreement shall not be terminated, except in accordance with the
provisions of this Article 10, strictly construed against the party seeking such
termination. This Agreement may be terminated any time prior to the Closing
Date:
(a) by mutual written consent of the parties;
(b) by either the Parent or the Shareholder Representative, if, without
fault of such terminating party, the transactions contemplated by this Agreement
shall not have been consummated on or before November 30, 2002 unless such
failure shall be due to a material breach of any representation or warranty, or
the nonfulfillment in a material respect, and failure to cure such
nonfulfillment, of any covenant or agreement contained herein on the part of the
party or parties seeking to terminate; and
(c) by Parent or the Shareholder Representative if a Governmental
Authority shall have issued a nonappealable final Order or taken any other
action having the effect of permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement (provided that the
right to terminate this Agreement under this Section 10.1 shall not be available
to any party who has not complied with its obligations under this Agreement if
such
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noncompliance materially contributed to the issuance of any such Order or the
taking of such action).
10.2 TERMINATION BY PARENT
This Agreement may be terminated by Parent, at any time prior to the
Closing Date, if:
(a) the Company or the Company Shareholders shall have failed to comply
with any of the covenants or agreements contained in this Agreement such that
the closing condition set forth in Section 7.2 would not be satisfied; provided,
however, that if such breach or breaches are capable of being cured prior to the
Closing Date, such breach or breaches shall not have been cured within 15 days
of delivery to the Company or the Company Shareholders of written notice of such
breach;
(b) there exists a breach of any representation or warranty of the
Company or the Company Shareholders contained in this Agreement such that the
closing condition set forth in Section 7.1 would not be satisfied; provided,
however, that if such failure or failures are capable of being cured prior to
the Closing Date, such failure or failures shall not have been cured within 15
days of delivery to the Company or the Company Shareholders of written notice of
such failure; or
(c) the Company or the Company Shareholders engage in any conduct or
take any action concerning an Alternative Acquisition as provided in Section 5.5
hereof.
10.3 TERMINATION BY THE COMPANY
This Agreement may be terminated at any time prior to the Closing Date
by action of the Shareholder Representative, if:
(a) the Parent shall have failed to comply with any of the covenants or
agreements contained in this Agreement such that the closing condition set forth
in Section 8.2 would not be satisfied; provided however, that if such failure or
failures are capable of being cured prior to the Closing Date, such failure or
failures shall not have been cured within 15 days of delivery to the Parent of
written notice of such failure; or
(b) there exists a breach or breaches of any representation or warranty
of the Parent contained in this Agreement such that the closing condition set
forth in Section 8.1 would not be satisfied; provided however, that if such
breach or breaches are capable of being cured prior to the Closing Date, such
breach or breaches shall not have been cured within 15 days of delivery to the
Parent of written notice of such breach.
10.4 PROCEDURE FOR TERMINATION
In the event of termination by the Parent or the Shareholder
Representative pursuant to this Article 10, written notice thereof shall
forthwith be given to the other party.
10.5 EFFECT OF TERMINATION
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In the event of termination of this Agreement in accordance with the
provisions of this Article 10, this Agreement shall forthwith become void and no
party to this Agreement shall have any liability or further obligation to any
other party, except as provided in the Confidentiality Agreement and in Sections
11.1 and 11.2 of this Agreement, which provisions shall survive such
termination, and except that nothing herein shall relieve any party from
liability for any breach of this Agreement.
10.6 RIGHT TO PROCEED
Anything in this Agreement to the contrary notwithstanding, if any of
the conditions specified in Article 7 hereof have not been satisfied, Parent
shall have the right to waive the satisfaction of any such condition as provided
in Article 7 and to proceed with the transactions contemplated hereby, however,
it shall be deemed to have waived any claim for indemnification arising out of
any condition which has been so waived. If any of the conditions specified in
Article 8 hereof has not been satisfied, the Shareholder Representative shall
have the right to waive the satisfaction of any such condition as provided in
Article 8 and to proceed with the transactions contemplated hereby.
11. GENERAL PROVISIONS
11.1 EXPENSES
Unless as otherwise set forth herein, the Company Shareholders will pay
their own and the Company's legal, accounting, investment, banking, financial
advisory and other expenses in connection with the negotiation and the
consummation of the transactions contemplated by this Agreement. The Company
Shareholders shall bear such expenses in such proportions as they may agree. No
expenses of the Company Shareholders or the Company relating in any way to the
purchase and sale of the Company Shares hereunder shall be included in any
account of the Company as of the Closing or shall be charged to or paid by
Parent. Parent will pay its own legal, accounting, investment, banking,
financial advisory and other expenses incurred in connection with the
negotiation and consummation of the transactions contemplated by this Agreement.
11.2 PUBLIC ANNOUNCEMENTS
Unless required by law, any public announcement or similar publicity
with respect to this Agreement, the Closing, or the other transactions
contemplated hereby will be issued, if at all, at such time and in such manner
as Parent determines with the concurrence of the Company, which concurrence
shall not be unreasonably withheld or delayed by the Company. Unless disclosure
is consented to by Parent in advance or required by law or disclosure has
otherwise already been made, the Company and the Company Shareholders shall keep
this Agreement and the transactions contemplated hereby strictly confidential
and may not make any disclosure of this Agreement or such transactions to any
Person other than its or their directors, officers, employees or agents who need
to know such information to enable the Company to comply with this Agreement,
provided that each such director, officer, employee or agent shall agree, for
the benefit of Parent, to maintain the confidentiality of such information as
provided in this
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Section 11.2. The Company, the Shareholders Representative and Parent will
consult with each other concerning the means by which the Company's employees,
customers and suppliers and other Persons having dealings with the Company will
be informed of this Agreement, the Closing, and the other transactions
contemplated hereby, and representatives of Parent may at its option be present
for any such communication.
11.3 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by fax (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses or fax numbers set forth below (or to
such other address, person's attention or fax number as a party may designate by
notice to the other parties given in accordance with this Section 11.3):
(a) If to Parent:
Xxxxxx-PRI Automation, Inc.
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx
With a copy to:
Xxxxx Xxxxxxx Berlack Israels LLP
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esquire
(b) If to the Company:
MicroTool, Inc
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx Xxxxxxx, XX 00000
With a copy to:
Sparks Xxxxxxx Xxxxxx Xxxxxx & Xxxxxxx, P.C.
24 X. Xxxxx, Suite 400
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MICROTOOL, INC.
X.X. Xxx 0000
Xxxxxxxx Xxxxxxx, XX 00000
Telephone No.: 000-000-0000
Attention: Xxxxx Xxxxxxxxxxx, Esquire
(c) If to the Company Shareholders:
Xxxxxxx X. Xxxxxxx, as Shareholder Representative
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx Xxxxxxx, XX 00000
11.4 JURISDICTION; SERVICE OF PROCESS
Any Proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any of the parties
in the courts of The Commonwealth of Massachusetts or any United States District
Court of The Commonwealth of Massachusetts, and each of the parties consents to
the jurisdiction of such courts (and of the appropriate appellate courts) in any
such Proceeding and waives any objection to venue laid therein.
11.5 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE
No failure or delay on the part of any party hereto in the exercise of
any right hereunder shall impair such right or be construed to be a waiver of,
or acquiescence in, any breach of any representation, warranty, covenant or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
11.6 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
No party may assign any of its rights under this Agreement without the
prior written consent of the other parties except that Parent may assign any of
its rights, but not its obligations, under this Agreement to any direct
wholly-owned Subsidiary of Parent. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy or
claim under or with respect to this Agreement or any provision of this
Agreement.
11.7 SEVERABILITY
If any provision of this Agreement or the application of any such
provision to any party or circumstances shall be determined by any court of
competent jurisdiction to be invalid or unenforceable to any extent, the
remainder of this Agreement, or the application of such provision to such party
or circumstances other than those to which it is so determined to be invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall be
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MICROTOOL, INC.
enforced to the fullest extent permitted by law. If the final judgment of a
court of competent jurisdiction declares that any item or provision hereof is
invalid or unenforceable, the parties hereto agree that the court making the
determination of invalidity or unenforceability shall have the power, to reduce
the scope, duration or area of the term or provision, to delete specific words
or phrases and to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified.
11.8 GOVERNING LAW
This Agreement will be governed by the internal laws of The
Commonwealth of Massachusetts without regard to principles of conflict of laws.
11.9 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
11.10 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements (other than the
Confidentiality Agreement), whether written or oral, between or among the
parties with respect to its subject matter and constitutes (along with the
documents referred to in this Agreement) the entire agreement among the parties
with respect to its subject matter. This Agreement may not be amended except by
a written agreement executed by each party hereto.
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IN WITNESS WHEREOF, a duly authorized representative of the parties has
executed and delivered this Agreement as of the date first written above.
BUYER:
XXXXXX-PRI AUTOMATION, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President, Finance &
Administration, Chief Financial Officer
MERGER SUB:
MTI ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President, Finance &
Administration, Chief Financial Officer
COMPANY:
MICROTOOL, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
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MICROTOOL, INC.
LIST OF EXHIBITS
Exhibit A List of Company Shareholders
Exhibit B Escrow Agreement
Exhibit C Release
Exhibit D Form of Company's Counsel's Legal Opinion
Exhibit E Form of Confidentiality, Nonsolicitation,
Noncompetition and Intellectual Property
Agreement
Exhibit F Form of Voting Agreement
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